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Johannesburg - The JSE on Friday shared in the excitement of a world wide run in share prices, with gold counters firmly in the spotlight.
By midday, the All-share index was on another record with all the other indices, except the Financial index, higher than the previous session's close.
The All share-index increased by 0.16% to 51 356 points on Friday, while the Top 40-index traded 0.20% stronger on 46 364 points. The Gold index improved with a solid 3.23%, while the Resources index was 0.43% higher and the Industrial index 0.16%.
Expectations that interest rates in the US, Europe and Japan will remain for long on the current low levels are responsible for the strong share prices, as investors are selling bonds to re-invest in assets with better income and growth prospects. The expectations were created by a policy statement by the Federal Reserve on Wednesday that monetary policy in the US will remain very accommodating for quite a while yet.
The result is that the MSCI World index, which represents 85% of the stocks listed in the world today, was on Friday morning at an all time high.
The main indices on Wall Street, the Standard and Poor’s and the Dow Jones, both strengthened on Thursday and European and Asian markets were both running strongly on Friday morning.
The asset class that benefited the most from the low interest scenario was the gold price, which at one stage reached a high of $1 321 per fine ounce. By midday it fell back to $1 310.
Investors think that the authorities are not concerned about the prospect of higher inflation at this moment and gold is regarded as one of the best hedges against inflation.
The demand for gold was spurred on by hedge funds which decided to close short positions which activated a lot of stop-loss buying orders from other funds.
Sibanye Gold [JSE:SBG], recently unbundled from Gold Fields [JSE:GFI], have earned a brilliant return of 237.1% for investors over the last twelve months and 132.5% over the last six months. On Friday, the counter gained another 4.23% to R28.11.
Gold Fields was 4.85% stronger on R41.48. The share price is still 26% lower than a year ago, but improved with 28.5% over the last six months.
Harmony [JSE:HAR], which improved 4.72% to R31.31 on Friday, is still 16.5% lower than a year ago, but 19.9% higher than six months ago.
Anglogold Ashanti [JSE:ANG] however earned a positive return of 20.6% over the last twelve months after it gained 53.1% over the last six months. On Friday morning, the share improved with another 2.17% to R183.90.
The PE/ratios of some of these gold shares are already high, with Anglogold Ashanti trading at a ratio of 76.9. Harmony’s ratio is 20.59 and that of Gold Fields 23.44.
Amongst the bigger resources stocks, Anglo American [JSE:AGL] was 1.11% higher on R267.76 and BHP Billiton gained 0.11% to R346.50.
By midday, the All-share index was on another record with all the other indices, except the Financial index, higher than the previous session's close.
The All share-index increased by 0.16% to 51 356 points on Friday, while the Top 40-index traded 0.20% stronger on 46 364 points. The Gold index improved with a solid 3.23%, while the Resources index was 0.43% higher and the Industrial index 0.16%.
Expectations that interest rates in the US, Europe and Japan will remain for long on the current low levels are responsible for the strong share prices, as investors are selling bonds to re-invest in assets with better income and growth prospects. The expectations were created by a policy statement by the Federal Reserve on Wednesday that monetary policy in the US will remain very accommodating for quite a while yet.
The result is that the MSCI World index, which represents 85% of the stocks listed in the world today, was on Friday morning at an all time high.
The main indices on Wall Street, the Standard and Poor’s and the Dow Jones, both strengthened on Thursday and European and Asian markets were both running strongly on Friday morning.
The asset class that benefited the most from the low interest scenario was the gold price, which at one stage reached a high of $1 321 per fine ounce. By midday it fell back to $1 310.
Investors think that the authorities are not concerned about the prospect of higher inflation at this moment and gold is regarded as one of the best hedges against inflation.
The demand for gold was spurred on by hedge funds which decided to close short positions which activated a lot of stop-loss buying orders from other funds.
Sibanye Gold [JSE:SBG], recently unbundled from Gold Fields [JSE:GFI], have earned a brilliant return of 237.1% for investors over the last twelve months and 132.5% over the last six months. On Friday, the counter gained another 4.23% to R28.11.
Gold Fields was 4.85% stronger on R41.48. The share price is still 26% lower than a year ago, but improved with 28.5% over the last six months.
Harmony [JSE:HAR], which improved 4.72% to R31.31 on Friday, is still 16.5% lower than a year ago, but 19.9% higher than six months ago.
Anglogold Ashanti [JSE:ANG] however earned a positive return of 20.6% over the last twelve months after it gained 53.1% over the last six months. On Friday morning, the share improved with another 2.17% to R183.90.
The PE/ratios of some of these gold shares are already high, with Anglogold Ashanti trading at a ratio of 76.9. Harmony’s ratio is 20.59 and that of Gold Fields 23.44.
Amongst the bigger resources stocks, Anglo American [JSE:AGL] was 1.11% higher on R267.76 and BHP Billiton gained 0.11% to R346.50.
