Shares in BHP-Billiton spin off South32 decline on trading debut

South32, which was spun off from mining giant BHP-Billiton, started trading on the Australian Stock Exchange on 18 May, but the shares received a lukewarm reception from investors.

South32 attracted a value at the lower end of analysts' expectations on the debut day. The shares opened at A$2.13, valuing the company at A$11.3bn (£5.8bn, €7.9bn, US$9bn). Analysts had forecast a valuation range of US$7bn-US$13bn.

The stock rose as high as A$2.22, but it is trading down 1.88% at A$2.09 as at 2.23pm local time.

Meanwhile, shares in BHP are trading down 7.20% at A$30.15.

South32's listing is the second biggest in the global mining industry since Glencore in 2011. The company's performance is said to be a litmus test for the mining industry, gauging how investors view mining shares.

BHP earlier decided to spin off its alumina, aluminium, nickel, silver and lead assets to South32 with a view to focus on its core divisions such as iron ore, copper and energy resources including coal, oil and gas, and cut costs further.

As per the spin-off proposal, BHP-Billiton shareholders receive one share in South32 for each BHP share that they own. South32 will be listed in London and South Africa later on 18 May.

The miner has been facing increased pressure to streamline its operations due to lower commodity prices, stemming from a slower economic growth in China. During the China-fuelled commodities boom, Australia's BHP and UK-listed Billiton merged to become a prominent mining company.