BHP Billiton Limited (ASX: BHP) shares have continued their steep decline today, falling a further 1.6% or 48 cents after Monday's 7.3% plunge. Down 8.7% in just two days, the stock is now trading at $29.66 after falling as low as $29.54 earlier in the session.
Of course, yesterday's decline wasn't anywhere near as bad as it might seem at first glance. Although it was the miner's biggest single-day loss in nearly a decade, its decline was only marginal when readjusted for the demerger of South32 Ltd (ASX: S32), which hit the ASX boards with a market capitalisation of $11.3 billion.
While South32's debut was anything but spectacular, with the stock closing nearly 4% below its opening price at $2.05, investors have piled into the new entity today, sending the shares more than 13% higher to $2.32.
Indeed, this could be one of the primary reasons behind BHP's fall today. South32 opened with a significantly lower valuation than many analysts were anticipating, giving value investors an opportunity to stock up at a reasonable price. Analysts have debated whether BHP Billiton or South32 would be the better investment going forward, and from this price it seems investors could be making the switch from the parent entity to the newly formed one.
A tumbling iron ore price is also likely to be weighing on the market's appetite for BHP's shares today. Fellow iron ore miners Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) are also trading 0.6% and 2.4% lower, after the commodity dropped 1.1% overnight to just US$60.65 a tonne, according to the Metal Bulletin.
Although it remains well above its 10-year low price recorded early last month, some analysts believe that the rebound will only be short lived and have offered bearish forecasts for the remainder of the year. Given that iron ore is BHP's most important commodity, a lower price certainly wouldn't bode well for its future earnings potential.
