This Week’s “Falling Knife”: Noble Group

noble groupCommodities are definitely not the flavour of the month. And it certainly hasn’t been a bed of roses for commodities traders such as Noble Group (SGX: N21), which is this week’s “Falling Knife” share.

Noble’s shares have been on the wane this year. It was one of Singapore’s worst-performing blue chips in the first six month of 2013. They lost 16% of their value between 1 January and 30 June. This week, they fell 6% to S$0.90, which values the company at S$5.8b.

Noble manages a diversified portfolio of natural resources that span cocoa to coal and coffee to copper. But with commodity prices likely to remain on the back foot following reports of lacklustre global growth, it is not surprising that investors are giving commodity companies a wide berth.

According to the International Monetary Fund (IMF), global growth this year could be around 3%, which is unchanged from last year’s growth rate. The IMF’s World Economic Outlook makes grim reading for commodity producers, which may have to contend with depressed prices in the face of lower global demand. For instance, cocoa prices are down from US$2,410 a tonne in December 2012 to US$2,284 a tonne in June. Meanwhile, thermal coal has dropped 12% in the same period.

It would seem, for now at least, that the “commodity supercycle” – the era of high commodity prices – may be fading. Interestingly, there might still be pockets of excitement especially in soft commodities such as grains, sugar and coffee, which Noble Group is also exposed to. We’ll find out soon enough how Noble has been coping with depressed commodity prices when it updates the market on 7 August.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.