SHARES in ENRC fell 4.6 per cent yesterday after an analyst note from Credit Suisse fanned fears the mining firm may issue more shares to keep its FTSE 100 ranking.
The firm’s free float, the amount of stock freely available for investors to buy, stands at just 18 per cent which is below new listing requirements that stipulate a free float of at least 25 per cent.
Analysts at Credit Suisse yesterday cut ENRC’s target price to 380p from 400p as they warned a “raising remains a possibility.”
Credit Suisse estimated the raising, if it occurs, could dilute existing shareholders’ stock by between two and four per cent.
The note also sparked fears over future demand for metals.
The Swiss bank warned that surplus supplies for metals, particularly iron ore and copper, could see prices drop.
“We see downside risk to prices in the second half of 2013 and this remains a challenging investment backdrop in the short run,” it warned investors in the note.
As a result the bank cut its target prices for Anglo American, Antofagasta, Kazakhmys and Vedanta.