Noble Group falls to 7-year-low on commodity slide amid buybacks

[SINGAPORE] Noble Group Ltd, Asia's largest commodity trading firm, fell to the lowest share price level since Nov 2008 amid concern that demand is weakening for raw materials and the company's ongoing repurchases of its securities.

The stock fell as much as 12 per cent to 52 Singapore cents, the biggest decline in the benchmark Singapore Straits Times Index, which lost as much as 0.9 per cent.

The company, which has been targeted by short-sellers and critics of its accounting since February, has bought back its stock at least 11 times since last month and built up a 2.8 per cent stake from zero. Noble used S$131 million on the purchases, which company spokesman Stephen Brown said Wednesday is a good way to use excess cash.

"Despite all the buy backs, the stock continues to fall," Nicholas Teo, a strategist at CMC Markets in Singapore, said by phone. "Investors are concerned about the outlook for commodities and the impact the buy backs might have on the company's balance sheet." The stock was down 10.2 per cent to 53 Singapore cents as of 2:19 pm in Singapore. Mr Brown declined to comment on the share price move when contacted Thursday.

Standard & Poor's changed Noble's outlook last month to negative from stable, yet retained an investment grade rating on the company. Moody's Investors Services in May said it will maintain a stable outlook for Noble.

Crude oil entered a bear market and gold headed for its biggest monthly slump in two years this month as investors sold commodities on concern that China's economic slowdown will dent demand and in anticipation of a rise in US interest rates. The Bloomberg Commodity Index of 22 raw materials is poised for its biggest monthly loss since September 2011.

Noble has curtailed investments in mines and energy assets since 2011 to focus on trading, which the company says does not make it favor either a rise or a fall in raw material prices.

The company has also rejected criticism of its accounting and hired PricewaterhouseCoopers LLP this month to review its practices.

BLOOMBERG