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Johannesburg - All eyes on the JSE were on investment house Brait [JSE:BAT], which lost almost 10% of its value in very brisk trade on Friday morning.
READ: Investors dump Brait after bond offering
By midday the stock was already 9.76% lower at R127.30, with more than 10.7 million shares sold in more than 12 000 transactions for over R1.3bn. Besides the sharp drop on the JSE, the share price also traded more than 7% lower in Luxembourg where it is also listed.
The share price fall was started by news that Brait is to raise £350m via a convertible bond to fund acquisitions. Investors seem perturbed by the dilution effect of these bonds as the group is aiming to set the conversion price at a premium of 30% to 35% to the current price.
The 2020 bonds are expected to carry a coupon of between 2.25% and 2.75%, which will be payable twice a year, Brait said, adding that the final terms would be released later on Friday.
Brait was one of the star performers on the JSE until Friday’s dive. The stock gained 63.24% over the past 90 days and before Friday was 89.4% higher than a year ago. The share price drifted mostly sideways during the past month’s uncertainty on the JSE and traded just over 5% lower over that period.
The steep drop in Brait’s share price took place amid a mood of continued uncertainty, and the major JSE indices drifted moderately lower for the second day in a row.
Both the All-share and the Top 40 indices are again below important psychological levels. The All-share index is now solidly below 50 000 points having lost another 0.58% to 49 240 points, while the Top 40 index again slipped below 44 000 points.
By midday the index was 0.65% softer at 43 738 points, which meant the breach beyond important resistance levels achieved earlier this week could not be sustained.
Imara SP Reid said in its daily Market Snapshot on Friday morning that the Top 40 index currently remains at the centre of the consolidation range which has characterised trade since the last week of August.
With world markets also losing steam after a brisk rally earlier in the week, the overall trading environment hinges largely on contemplation and speculation about the outcome of the Federal Reserve’s meeting next week and the potential impact of its decision on the US near-term interest rate trajectory.
Given the recent market turmoil it is unlikely that the Fed will make an adjustment in interest rates yet, despite a number of metrics including the labour market suggesting that a marginal rate hike may in fact be appropriate. The market remains inconsistent as investors exhibit signs of nervousness ahead of the meeting.
Among the top shares on the JSE, MMI Holdings [JSE:MMI] reached a new 52-week low after announcing an earnings drop earlier in the week due to current market volatility. The share price lost 3.13% to R25.09, beating the previous low of R25.40. The share traded at a 52-week low of R34.16 as recently as April 15.
Aspen [JSE:APN] is also still at a 52-week low after the share price lost another 3.26% to R312.00.
Steinhoff [JSE:SHF] on the other hand reached a new 52-week high for the second consecutive day when the share price gained another 0.62% to R81.75. Pick n Pay [JSE:PIK] is also on a new high of R65.48 after the share price gained 1.13% in morning trade. The share at one stage was at an intraday high of R66.50.
