JSE retreats as share rally subsides

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Johannesburg – Investors on the JSE took profits on Wednesday after the strong surge in share prices on Tuesday. Almost all the major indices were lower by mid-morning on Wednesday, although the losses were very modest.

Naspers [JSE:NPN], the biggest share on the JSE and the driving force behind the JSE’s strong surge over the past few days, was one of the losers in response to some profit taking on the Hong Kong Stock Exchange, where the share price of the internet giant Tencent was also lower. Naspers owns 34.4% of Tencent.

Tencent gained more than 11% over the previous week which helped Naspers to gain more than 5% over the same period. Tencent was, however, 1.36% softer on Wednesday and Naspers lost 0.85% to R3 601.60 in response. Tencent represent the biggest part of Naspers’s income and market value.

With Naspers representing more than 12% of the industrial index, the index as a whole was 0.45% softer.  The All-Share index which set a new all-time record above 60 000 points on Tuesday, traded 0.18% lower at 60 073 points. The Top 40-index was 0.19% weaker at 53 732 points.   

The industrial index was also pulled lower by Steinhoff [JSE:SNH], which is also listed in Frankfurt, which lost 5.57% to R58.45. Investors were spooked by a Reuters report claiming that the company did not tell investors about almost $1bn in transactions with a related company despite laws that some experts believe require it to do so.

British American Tobacco [JSE:BTI]  traded 1.22% higher at R926.76 but Richemont [JSE:CFR] was 0.19% softer at R128.75.

The resources index was only 0.09%  higher by mid-morning after the rand firmed against the dollar early on Wednesday, staging a recovery from losses suffered in the previous session in a broad emerging markets sell-off. By mid-morning the rand traded at 14.18 per dollar.

The big commodity giants, which were all setting new 52 week highs day after day, were, however, all slightly lower by mid-morning. Glencore [JSE:GLN], which traded on Tuesday at an all-time high, was the biggest loser shedding 0.84% to trade at R68.67.

Anglo American [JSE:AGL] was 0.38% below the previous day’s 52 week high at R278.00 and BHP [JSE:BIL] traded at R270.94, which is 0.45% below the previous day’s 52 week high. All these shares were lower in early trade.

Commodities are prices in dollar and are worth less in rand if the currency is strong.

The financial index was 0.18% higher after financial shares have been on the doldrums lately. The financial index is only 2.7% higher over the past month, compared to the All-Share index which gained more than 9% over the same period and the resources index which is more than 11% stronger.

Financial shares will probably remain on the back foot until it became clear if the international credit rating agencies will downgrade South Africa’s credit rating again in response to the country’s weak fiscal position which was revealed in the latest medium term budget statement last month.

FirstRand [JSE:FSR] traded 1.03% higher at R53.04 after the group said earlier in the week that it had agreed a $1.3bn takeover of the British banking newcomer Aldermore Group. FirstRand said the deal would complement its existing motor finance business in Britain, MotoNovo.

The group said it is seeking to grow its revenue beyond its home continent as it is currently earning 89% of its income in South Africa.

FirstRand’s share price hardly moved lately and the share price gained only 0.98% overthe previous thirty days and 1.35% over the previous thirty days. More than 2.9 million shares were sold in early trade on Wednesday for more than R153m.

Standard Bank [JSE:SBK] traded 0.28% stronger at R165.13 but Barclays Africa [JSE:BGA] lost 0.28% to R143.59. Sanlam [JSE:SLM], which gained more than 7% over the past month, lost 0.11% to R71.89.

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