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JSE backtracks as hefty valuations weigh

Jan 25 2012 18:31 Reuters

Company Data

Top 40 [JSE : J200]

Last traded R29,189.72
Change R115.53
% Change 0.40%
Cumulative volume 0
Market cap R0.00

Last Updated: 28/05/2012 at 17:43. Prices are delayed by 15 minutes. Source: McGregor BFA

 

All Share [JSE : J203]

Last traded R33,104.06
Change R111.81
% Change 0.34%
Cumulative volume 0
Market cap R0.00

Last Updated: 28/05/2012 at 17:43. Prices are delayed by 15 minutes. Source: McGregor BFA

 

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Johannesburg - South African stocks backtracked on Wednesday for the second straight session, as Standard Bank and other recent gainers were hit by concerns of overblown valuations following a string of record highs.

Shares of Vodacom bucked the trend, gaining 0.4 percent to 92.35 rand after the UBS raised its rating on the mobile operator to “buy” from “neutral”, citing the strength of its recent performance.

After hitting record highs for the five straight days to Monday, South Africa’s broad All-share index appears to be taking a breather. Investors have worried that the index, which is up 5 percent so far for 2012, may be too pricey given the prospects for future growth.

“We’re definitely seeing a bit of profit-taking,” said Mitchell Gannaway, a trader at Thebe Stockbroking.

“I don’t think we can continue to see the market shoot up like it’s been going in the past couple of days.”

The All Share [JSE:J203] index, the broadest measure of South African stock performance, fell 0.29% to 33 637.27. The index hit a lifetime high of 33 949.41 on Monday.

The benchmark Top 40 - (Tradeable) [JSE:J200] index gave up 0.34% to 30 073.99, after posting its highest close since May 2008 on Monday.

Standard Bank, Africa’s largest lender, fell 0.7 percent to 105.30 rand. Shares of the bank have risen about 7 percent so far this month, putting it at a price-to-earnings ratio of nearly 14, a level some investors say is too high for South African stocks.

Currently, South African equities are trading at about 13 times earnings, putting them roughly in line with U.S. stocks.

That is a clear sell signal, fund manager John Biccard of Investec Asset Management said in an interview last week.

“It’s not often that South Africa trades at the same PE as America. That happens once every 20 years,” Biccard said.

“If you sold South Africa and bought the U.S. every time that happened in the last 50 years you would have been right.”

Shares of oil refiner Sasol slid 2.5 percent to 393.60. The firm, which is also listed in the United States, has come under pressure due to worries about the impact of possible U.S. sanctions against oil exporter Iran.

Sasol said in November it had entered talks to potentially divest of its Iranian operations. A spokeswoman said the company procures a relatively small amount of Iranian oil and is looking to diversify to avoid any supply disruptions.

Trade was relatively active, with 216 million shares changing hands on the exchange, according to preliminary exchange data and compared to last year’s daily average of 256 million shares.

 
 
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