After the concerns of the commodity fest we have been living through, it seems that further enthusiasm is now being added. The 24th May will be Glencore day in the FTSE 100. The flotation of this commodity leviathan will give it an estimated value of between $48bn and $58bn which is the equivalent of between 1.7% and 2.1% of the value of the entire Index (final pricing is expected on 19th May). London will be the primary listing, with a secondary issue in Hong Kong. The company is being fast tracked directly into the FTSE 100 and the last time that happened was back in 1986 when BG Group floated; prior to that was BT in 1984.

The estimated free float of the stock of the company will likely be around £4.75bn which would make it slightly less than the Chilean copper miner Antofagasta. This then would rank the company at 61st by size in the FTSE100. Mind you, with an astonishing prospectus of 1637 pages you would think that it could be higher up the league – I wonder just how many have waded through each of those fascinating pages to fully understand the Byzantine complexity of this commodity combine. Personally I became exhausted just lifting it onto the desk – it weighs 7.5lbs!

Further to my previous concerns about the domination of the mining, oil and gas sectors over the Index, the Glencore float will just add to this weighting from a figure of currently 34% to 36%, and if the LSE does merge or take over the Canadian TSE, then London will become a global leader in these sectors. This might be good for the London markets but it requires care for innocent investors who may be unaware of such a domination of the FTSE 100 by those sectors - and now with even less connection with the UK economy.

Here are two sobering facts about our current market. Firstly someone has agreed to pay $8.5bn – not million – for a loss making online telephone system. Secondly we are about to see a new flotation of a social networking site whose prospectus has the following statement: “we expect our revenue growth rate to decline and, as our costs increase, we may not be able to generate sufficient revenue to sustain our profitability in the long term”. Hardly the most positive of statements - especially in a prospectus designed to encourage investors to part with their cash. Despite this, the business has an expectation that it will be valued at around $3bn. This would mean that it would be set at around 13 times last year‟s sales. However, maybe this is relatively cheap as only last week the Chinese social network Renren floated at an amazing level of 72 times sales!

The first company is Skype, where the cash laden Microsoft are willing to pay just about anything to find something which will make them more appealing to the user and to get away from their image of being the unacceptable Shrek of the software world. The second is LinkedIn where they hope to entice investors into buying their shares in the vain hope that one day, at the end of the rainbow, there is a crock of gold for bold investors.

In my view this seems to have all of the investment logic of those dotcom days of over a decade ago.

Just an update on the Greek „non default‟ default. As I have been warbling on for an age, a default by whatever nomenclature seems inevitable and frankly constructive given the current impasse. Of course the key issue is the strength of those banks that hold this debt and how much pain they could have to suffer. The FT stated last week that if the bondholders were to take a 50% “haircut” then the pain could be quite significant for some of the lead debt holders, with BNP Paribas taking €1.7bn, Commerzbank €1.1bn, and RBS -whose exposure was thought to be relatively small - an unpleasant half a billion Euros.
Then of course we may well have others to follow, and for Ireland the RBS number with its Ulster Bank subsidiary could be significantly larger.

And finally....I am grateful to my colleague Richard Rowley for spotting this week‟s interesting point.

OTTAWA - The discovery of a drug cocktail that might have potential some day to help patients with cystic fibrosis took first place Tuesday at a national science contest. Marshall Zhang, a Grade 11 student in Richmond Hill, Ont., used the Canadian SCINET supercomputing network at the Hospital for Sick Children in Toronto to identify how two drugs interacted with a specific part of a mutant protein that's responsible for most cases of Cystic Fibrosis. Zhang was awarded $5,000 for first prize. This of course is excellent work and he is to be thoroughly congratulated.

However, what of the runner-up in this cutting edge national science competition?

The second-place prize of $4,000 at the 2011 Sanofi-Aventis BioTalent Challenge went to three 19-year-old students from Montreal who made a vegetarian sorbet without gelatin, potentially opening up a large new vegetarian market for the dessert. "We're hoping to test it with fruit as well and eventually take it to market," said one of the team.

Of all the things one needs from a national science competition is a vegetarian sorbet really at the cutting edge of technology?

Have a good week.

Justin Urquhart Stewart Director Seven Investment Management Limited