Barclays Analysts Recommend Exploiting Discount in Rio Tinto’s Dual Listing Discrepancy
Rio Tinto, with its UK-listed shares trading at a significant discount compared to its Australian counterparts, presents an opportunity for investors to capitalize on the disparity, according to Barclays Plc analysts.
On Thursday, Rio Tinto Ltd closed at $80.58 per share in Sydney, whereas Rio Tinto Plc traded at $65.01, over $15 cheaper, as of 2:50 p.m. in London.
Barclays analysts, led by Amos Fletcher, highlighted that historically, purchasing London shares while shorting Sydney shares during periods of extreme spread has yielded positive returns.
They identified potential catalysts for the narrowing of the spread, including Rio Tinto’s buyback of its Plc shares or a broader European market rally, driven by improvements in China’s economy.
In their assessment, the analysts emphasized an appealing opportunity to profit from the reduction of the Rio Ltd-Plc spread.
The discrepancy in stock prices between London and other markets underscores a trend where stocks are generally cheaper in London.
This phenomenon has prompted some companies to consider shifting their listings to New York to access deeper markets and potentially achieve higher valuations.
In 2022, BHP Group Ltd. moved its primary listing to Sydney, terminating its dual listing arrangement with London. Recently, analysts at Deutsche Bank AG speculated that Glencore Plc could be the next major company to reassess its UK listing.
