Question

Identify any additional risks a global investor could face while investing in BHP Billiton and Rio Tinto shares and bonds over the next six to twelve months. (Note: Elaborate two risks each for BHP shares and two risks for BHP bonds and the same for RIO shares and bonds).

Answer 1

Additional risk that global investors would be facing when he is investing into these companies shares and bonds over next 6 to 12 months are as follows-

A. Exchange rate risk is one of the major risk when any Global investor will be investing into the Australian markets.(risk for shares for both the companies)

B. Another risk related to investment in Australian markets is monetary policy changes by the Australian Central banks because monetary policy changes by the Australian Central Bank will be risky for the investors who are investing into the Australian securities from the Global point of view.(risk for bonds for both the companies)

C. change in the metal prices in Australia because these two companies are primarily working in the metal industry in Australia.(risk for shares for both the companies)

D. Change in rules and regulation governing the metal industries in Australia will be reflecting upon the the profits of the company and they will be reflecting through share prices and there will be risk for global investor.(risks for shares and bonds for body companies)

E. political stability and instability in Australia is another factor which will be leading to risk for these global investors because they are not aware about the internal politics of Australian markets.(risks for bonds for both the companies)

F. Risk of going Global by these companies and getting merged with other companies are another factor that should be factored into the Global investors.(risk for BHP shares and Bond as it is trying to go global)

I. risk related to current impending recession which can be a global recession will be impacting the performance of these companies and global investors should be getting affected by the return of this companies(risk for bonds for both companies)