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Asia's emerging market rally boosts JSE

Johannesburg - The All-Share index on the JSE was just above the 50 000 level at noon on Monday, as an emerging market rally in Asia pulled South African stocks higher.

Emerging market stocks were heading for a three-week high as financial shares rallied on expectations that China would take further measures to bolster economic growth. The oil price also recovered somewhat after reports of armed conflict in Libya, an important oil producer.

Good news about China was also good news for the South African commodity sector and shares such as Sasol [JSE:SOL], Kumba [JSE:KIO] and Assore [JSE:ASR], which have lately pulled the JSE lower, were amongst the biggest risers this morning.

Local financial shares have also rallied with Nedbank [JSE:NED], FirstRand [JSE:FSR], RMB Holdings [JSE:RMH] and the JSE all reaching new 52-week highs.

The All-Share-index broke the 50 000 level just before noon on Monday and was at that stage 1.29% higher on 50 118. The Top 40-index traded 1.41% higher on 44 363.

The resources 10-index was 2.96% stronger than last Wednesday, when the market closed for the Christmas holiday. Gold shares rallied even stronger and gained 8.01% with Gold Fields [JSE:GFI] on a new 52-week high. The financial index was 1.51% stronger and the industrial index gained 0.89%.

China banks good news

All emerging markets in Asia were stronger on Monday morning as people in the know said that the People’s Bank of China planned to temporarily waive a requirement for lenders to set aside reserves for some deposits.

China’s benchmark money-market rate fell for a fifth day in the longest run of declines since October on the speculation deposit rules would cut lenders’ precautionary funding needs.

“China may need both monetary and fiscal stimulus as the economy has underperformed,” Komsorn Prakobphol, an investment strategist at Tisco Financial Group Pcl, told Reuters by phone from Bangkok. “Financial companies will benefit as easing loan policies will boost lending.”

FirstRand’s new high

On the JSE, FirstRand gained another 2.67% to reach a new high of R50.82. The banking group, whose return on equity is far superior to the other banks in South Africa, is now 42.5% higher for the year.

It also pulled RMB Holdings higher and the investment company, whose main investment is a share of 34.9% in FirstRand, traded at a new high of R64.31. This is 2.62% higher than the closing price on Wednesday and 34.2% higher for the year.

Nedbank improved on the new high set last week and was at noon on Monday 2.47% higher on R249.00. This is a gain of 16.8% over the last 12 months.

The JSE reached a new intraday 52-week high of R124 on Monday morning, but lost ground later on and traded only 0.73% higher on R121.00. The gain for the year is 35.4%.

Oil price rise helps Sasol

Amongst the resources stocks, major iron ore producers Kumba and Assore performed strongly on Monday morning. Kumba was at noon 3.92% higher on R242.14 after reaching a high of R244.69. Assore was 2.72% stronger on R149.00.

Sasol responded to a rise in the oil price and traded 2.69% higher on R443.79. The share price was at one stage more than 4% higher on R450.38.

The price of Brent crude rose 0.54% to $59.83 as investors were concerned that the armed conflict in Libya would affect crude oil flows. Forces loyal to Libya's internationally-recognised government on Sunday carried out air strikes against Islamist militia following attacks on the country's crucial Al-Sidra oil export terminal.

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