Barclays Identifies Opportunity in Rio Tinto Dual-Listing Discount

Rio Tinto Dual-Listing Discount

Barclays Plc analysts have highlighted a significant discount between Rio Tinto’s (NYSE:RIO) UK-listed shares and its Australian counterpart, suggesting a potential opportunity for investors.

As of Thursday’s close, Rio Tinto Ltd traded at $80.58 per share in Sydney, while Rio Tinto Plc was priced at $65.01, indicating a notable price differential. According to Barclays analysts, exploiting this spread by purchasing London shares and shorting Sydney shares during extreme deviations has historically yielded positive returns.

The analysts, led by Amos Fletcher, outlined potential catalysts for narrowing the spread, such as Rio Tinto’s potential buyback of Plc shares or a broader rally in European markets fueled by improvements in China’s economy.

Barclays sees the discrepancy between Rio Ltd and Plc shares as an attractive opportunity for investors to capitalize on potential convergence.

This discrepancy also sheds light on the tendency for stocks to trade at lower valuations in London compared to other markets. This observation underscores the rationale behind companies opting to shift their listings to New York, aiming to access broader markets and achieve higher valuations.

In a similar vein, BHP Group Ltd. transitioned its primary listing to Sydney in 2022, ending its dual-listing arrangement with London. Analysts at Deutsche Bank AG recently speculated that Glencore Plc could be the next major company to reassess its UK listing in light of these dynamics.

Featured Image: Megapixl

Please See Disclaimer

About the author: I am a writer and an editor with experience in publishing, research, and SEO strategies. I have an honors BSc in Social Work from the University of Benin, Nigeria.