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Johannesburg - Share prices on the JSE were mostly lower on Monday as investors seem to be taking a breather after last week's strong run.
By midday on Monday only resources and gold stocks were still higher than on Friday, but both were lower than earlier in the day.
The All-share index and the Top 40-index started the day higher, but gave up almost 1% in morning trade to be modestly softer by midday. The All-share index was 0.35% lower at 51 086 and the Top 40-index 0.45% weaker at 44 910.
These indices were pulled down by the Financial index which was already 1.52% down by midday, and by the Industrial index which lost 0.37%.
These two indices were among the frontrunners during last week’s gains when overseas investors were seeking low risk options.
Last week’s run was ascribed to European investors in particular investing in bonds and shares in emerging markets, looking for higher yields than in their home markets where they have to pay the bank to keep their money.
The quantitative easing recently announced by the European Central Bank will also increase the flow of cheap money to the JSE.
European investors prefer dual-listed shares with big market capitalisations and worldwide business interests, and shares like Naspers [JSE:NPN], SABMiller [JSE:SAB], British American Tobacco [JSE:BTI] and Richemont [JSE:CFR] all performed strongly last week.
But analysts warned that these shares were becoming expensive with all of them having price to earning rations of above 20, with Naspers even trading at a ratio of 99.77.
It was however Naspers which performed the best on Monday morning with the share on yet another high of R1 715.08, 1.01% higher than on Friday. But at one stage on Monday the share was as high as R1 744.64 - almost 2.5% higher than the previous close - before it started losing ground. By midday the trend on the intraday graph was still downwards.
By midday SABMiller traded 0.95% weaker at R627.88 and Richemont lost 0.79% to R95.71. British American Tobacco, which is close to previous highs, traded 0.45% softer at R656.61.
In the banking sector Standard Bank [JSE:SBK], FirstRand [JSE:FSR] and Nedbank [JSE:NED], which all reached new highs last week, were all lower. Standard Bank was the biggest loser and traded 2.33% softer at R151.02, while Nedbank lost 1.19% to R253.44. FirstRand was 1.34% softer at R51.33.
The stronger oil price, with Brent trading at just below $53 a barrel, gave Sasol [JSE:SOL] and BHP Billiton [JSE:BIL] a lift. BHP Billiton was only 0.25% higher at R53.98, but Sasol traded 2.44% stronger at R431.50. Sasol has now become 5.3% stronger over the past seven days.
Anglo American [JSE:AGL] made a strong run last week, but lost 1.81% to R192.46 due to profit taking.
Some analysts think the major resources shares, which lost more 30% of their value over the last six months, are beginning to offer enormous value as they are now trading at low price to earnings ratios and with attractive dividend yields.
Anglo American, which trades at a price to earnings ratio of only 7.7% and a dividend yield of 4.7%, is now regarded as the cheapest it has been in 50 years on a price-to-book metric.
Sasol, which offers a dividend yield of 5.1%, is also trading at a price to earnings ratio of only 7.19%, which means it offers enormous potential when the oil price recovers as its profit is directly linked to the price of crude.
By midday on Monday only resources and gold stocks were still higher than on Friday, but both were lower than earlier in the day.
The All-share index and the Top 40-index started the day higher, but gave up almost 1% in morning trade to be modestly softer by midday. The All-share index was 0.35% lower at 51 086 and the Top 40-index 0.45% weaker at 44 910.
These indices were pulled down by the Financial index which was already 1.52% down by midday, and by the Industrial index which lost 0.37%.
These two indices were among the frontrunners during last week’s gains when overseas investors were seeking low risk options.
Last week’s run was ascribed to European investors in particular investing in bonds and shares in emerging markets, looking for higher yields than in their home markets where they have to pay the bank to keep their money.
The quantitative easing recently announced by the European Central Bank will also increase the flow of cheap money to the JSE.
European investors prefer dual-listed shares with big market capitalisations and worldwide business interests, and shares like Naspers [JSE:NPN], SABMiller [JSE:SAB], British American Tobacco [JSE:BTI] and Richemont [JSE:CFR] all performed strongly last week.
But analysts warned that these shares were becoming expensive with all of them having price to earning rations of above 20, with Naspers even trading at a ratio of 99.77.
It was however Naspers which performed the best on Monday morning with the share on yet another high of R1 715.08, 1.01% higher than on Friday. But at one stage on Monday the share was as high as R1 744.64 - almost 2.5% higher than the previous close - before it started losing ground. By midday the trend on the intraday graph was still downwards.
By midday SABMiller traded 0.95% weaker at R627.88 and Richemont lost 0.79% to R95.71. British American Tobacco, which is close to previous highs, traded 0.45% softer at R656.61.
In the banking sector Standard Bank [JSE:SBK], FirstRand [JSE:FSR] and Nedbank [JSE:NED], which all reached new highs last week, were all lower. Standard Bank was the biggest loser and traded 2.33% softer at R151.02, while Nedbank lost 1.19% to R253.44. FirstRand was 1.34% softer at R51.33.
The stronger oil price, with Brent trading at just below $53 a barrel, gave Sasol [JSE:SOL] and BHP Billiton [JSE:BIL] a lift. BHP Billiton was only 0.25% higher at R53.98, but Sasol traded 2.44% stronger at R431.50. Sasol has now become 5.3% stronger over the past seven days.
Anglo American [JSE:AGL] made a strong run last week, but lost 1.81% to R192.46 due to profit taking.
Some analysts think the major resources shares, which lost more 30% of their value over the last six months, are beginning to offer enormous value as they are now trading at low price to earnings ratios and with attractive dividend yields.
Anglo American, which trades at a price to earnings ratio of only 7.7% and a dividend yield of 4.7%, is now regarded as the cheapest it has been in 50 years on a price-to-book metric.
Sasol, which offers a dividend yield of 5.1%, is also trading at a price to earnings ratio of only 7.19%, which means it offers enormous potential when the oil price recovers as its profit is directly linked to the price of crude.
