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JSE down on global Greece jitters

Johannesburg - World markets were in turmoil on Monday morning in reaction to the Greek government's decision to call a referendum on the reform proposals of the country’s creditors.

On the JSE the All-share index opened almost 1 000 points or nearly 2% lower and at midday was still 1.3% softer than Friday’s close at 51 984 points. The Top 40 index traded 1.4% lower at 46 397 points.

The announcement by Greek Prime Minister Alexis Tsipras means that Greece will default on its loan repayment to the International Monetary Fund at the end of the month, as it would not receive funding from its creditors. This could lead to Greece leaving the eurozone with serious repercussions for financial markets.

The European markets were not only sharply lower (as much as 3% in some cases), but the uncertainly led investors to avoid riskier assets with serious implications for emerging markets, particularly in the Far East.

In China the market was hit by yet more volatility, after it lost over 7% on Friday and more than 20% over the past two weeks. The Chinese central bank on Saturday simultaneously cut interest rates and reserve requirements for the first time since the 2008 global financial crisis, but the market was again at one stage as much as 7% lower.

In the light of all this volatility, the JSE performed rather well after steep initial losses. The Financial index, which will be the hardest hit by the turmoil caused by a Greek default, also opened sharply lower and recovered somewhat later on. By midday the index was 1.16% lower.

The Industrial index was 1.58% lower by midday, after it dropped sharply initially and then stabilised somewhat. The big double-listed shares in the index, most of which are also listed in Europe, all traded lower in sympathy with the softer European markets.

The uncertainty about the Greek situation will continue for a while as the European Union and IMF responded by rejecting a request to extend Greece's bailout beyond its June 30 expiry date.

The Greek government has now imposed capital controls throughout the country to avoid flight of cash, with banks closed until July 6 and ATM withdrawals limited to €60 a day.

READ: Call to limit ATM withdrawals in Greece to €60

Naspers [JSE:NPN] was the biggest loser among the major shares on Monday due to its strong ties to the Chinese economy. The group owns 34.4% of Tencent, a Chinese internet giant responsible for most of its profit and market value.

Tencent is listed in Hong Kong which was also 2.61% lower in line with other emerging markets, with Tencent trading 4.6% lower. By midday Naspers was already 4.53% lower at R1 843.55 with the intraday graph still heading lower.

Among the other big double-listed shares SABMiller [JSE:SAB] lost 2.69% to R642.85, while Steinhoff [JSE:SHF] lost 2.05% to R75.34 and British American Tobacco [JSE:BTI] traded 1.98% weaker at R669.89. Richemont’s [JSE:CFR] losses were more subdued and the share traded 0.89% softer on R102.05.

Among the double-listed financial shares Old Mutual [JSE:OML] traded 2.38% softer at R39.45 while Investec [JSE:INL] was 1.54% lower at R110.02. Of the local banks, FirstRand [JSE:FSR] lost 0.81% to R52.85 and Barclays Africa [JSE:BGA] was 1.91% down at R179.14.

With the euro sharply lower against the dollar, one would have expected bigger damage in the resources sector than the 0.79% it lost by midday. The shares were somewhat supported by the weaker rand which lost 1.05% of its value against the dollar and traded at R12.25 a dollar.

READ: Rand weakens sharply in Greece-related sell-off

Among the heavyweights Anglo American [JSE:ANG] lost 2.05% to R192.26 while BHP Billiton [JSE:BIL] traded at R248.51, 1.15% lower than Friday’s closing price.

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Rand - Dollar
18.94
-0.0%
Rand - Pound
23.90
+0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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