Glencore, the world’s largest commodity trading firm, has had a difficult week. Its stock, formerly a high-flyer on the benchmark FTSE100 index, has lost over 80 percent of its value this year in the wake of a global commodities bear market. A market rout ensued on 29 September when an Investec research analyst warned that its equity value could be wiped out if metals prices do not rebound from current levels.
Zambia, one of Africa’s two largest copper producers, is watching this drama with a growing sense of dread. The country has been punished by the copper selloff; its currency has plunged 48 percent against the dollar this year, making the kwacha the world’s worst performing currency. A lack of price transparency and liquidity are not helping matters – the kwacha’s trading is dominated by a handful of local banks. On 25 September Moody’s, the credit rating agency, downgraded Zambia’s bonds to five levels below investment grade. The move prompted angry recriminations from the country’s central bank about ‘unsolicited credit ratings’. Which got us thinking about whether we can successfully employ a similar tactic with our local banker during our next home mortgage application.