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JSE firmly in record territory

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The new JSE logo. (Supplied)
The new JSE logo. (Supplied)

Johannesburg - The JSE was by midday on Friday again firmly in record territory, after the market made a late run on Thursday afternoon to a new record.

The All-share index added another 0.67% to Thursday's record close to 52 857 points, while the Top 40-index gained another 0.78% to 46 649 points.

The Resources index was at one stage already 1.77% higher on Thursday's close.

Resources shares have been on a run for the last couple of weeks as investors see buying opportunities, after the sector lost more than 30% of if value in recent months.

On Thursday afternoon Rio Tinto, one of the world’s top resources companies, which are not even listed on the JSE, announced solid operating results and the positive sentiment rubbed off on big resources stocks such as Anglo American [JSE:AGL], BHP Billiton [JSE:BIL] and Glencore [JSE:GLN].

These three dual-listed commodity conglomerates all improved with more than 2% on Friday morning. The biggest mover was BHP Billiton which gained 2.82% to R278.80 and has now rose with 9% over the last 30 days, despite its big exposure to the wobbly oil price.

Glencore, which gained 10% over the last seven days, improved with 2.38% to R51.57 and Anglo American was 2.16% higher on R214.52, which means that it gained 6% over the last week.

The fundamentals for commodity shares remain poor with prices still under pressure as the economic prospects for China is still deteriorating, but these companies are at least announcing solid operating results.

The main attraction is low P/E ratios and high dividend yields, although some of the P/E ratios have risen recently. Anglo traded at a P/E of 12.31 on Friday morning and a dividend yield of 4.4% and BHP Billiton’s PE was 10.61 and the dividend yield 4.76%.

Sasol [JSE:SOL], which was the front runner in Thursday afternoon’s rally, gained 0.87% to R474.07. Sasol is now 9% higher than a month ago, after trading at a 52-week low recently. Anglo American, BHP Billiton and Glencore were all at 52-week lows.

The surge in the prices of commodity shares continued despite a strong recovery in the value of the rand. The local currency traded at R11.72/$ on Friday after reaching a low of R11.89 two days ago.

The fact that the chaos in Parliament on Thursday had virtually no influence on the markets, indicates that serious investors did not expect much of the State of the Nation address and were therefore not disappointed.

The market is driven by foreign sentiment which was given a boost by news that an international agreement was reached over the Ukraine. The uncertainty over the extension of Greece’s debt was not solved, but talks are at least continuing.

Foreign investors are also mainly interested in dual-listed shares with business interest all over the world and the doom and gloom about the South African economy is therefore not playing a major role in investment decisions.

Woolworths [JSE:WHL] continued its strong run on Friday after its solid results on Thursday and the share price gained another 3.05% to R89.33. The share price is now 20.9% higher for the last 90 days and has increased with 13.7% over the last month.

     

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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
12.32
+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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