Despite having edged 0.3% higher today to trade at $29.34, shares of BHP Billiton Limited (ASX: BHP) have suffered a 9.7% decline over the last week. That compares to a 1.3% decline for the broader S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) and makes it the worst performing blue-chip stocks in that time.
Here are three reasons why the mining behemoth has taken such a belting:
1) There was plenty of support for iron ore through April and the beginning of May, but the commodity's price is once again on the slide with some analysts suggesting it could fall to a new decade low, below US$47 a tonne.
2) The commodity's fall has been exacerbated by the recent deal struck between China and the Brazilian-based Vale, which will see 90 million tonnes of high-quality ore hit the markets at a very discounted price. While this is bad news for Australia's major players, being BHP and Rio Tinto Limited (ASX: RIO), it's even worse for Fortescue Metals Group Limited (ASX: FMG) (down 8.3% for the week).
3) Monday marked the first day that BHP Billiton's shares traded without rights to its spin-off entity, South32 Ltd (ASX: S32), which listed on the ASX at noon that day. The company has literally being split in two, making every BHP Billiton share worth less.
Investors should note however, that owners of BHP shares received South32 shares on a 1-for-1 basis (that is, one South32 share for every BHP Billiton share held), so on an adjusted basis, BHP's week hasn't been anywhere near as bad as the share price chart would suggest.