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Johannesburg - The JSE’s upward momentum seems to be re-established with the All-share index well on its way to the magic level of 50 000 points.
A set of solid company results, despite fears that the prolonged strike action and consumers high debt levels is strangling the economy, have laid the foundation for a solid run in share prices.
The All-share index rose sharply after the opening on Tuesday but then investors became cautious and the intraday graph moved sideways for the rest of the morning.
By midday, the All-share index was up 0.42% to 49 715 points, while the Top 40-index gained 0.51% to 44 640. All the other indices were higher, except the Resources and Gold indices which were marginally lower despite a slightly weaker rand.
After various companies announced strong results on Monday, investors again heard more positive news on Tuesday from companies such as PPC [JSE:PPC] and Coronation [JSE:CML] which lifted their headline earnings for the first half of the year by 50% or more.
The market is however not only driven by good results. All the major emerging markets are supported by solid inflows from foreign investors who are looking for higher yields from bonds and shares.
In the last four months investors invested R60bn in South African markets, after massive outflows at the end of last year, which caused concerns about South Africa’s current account.
The outflows was based on perceptions that American interest rates would be hiked and that US bond yields would rise, after the Federal Reserve announced that it would gradually decreased its programme of buying back bonds to support the US economy.
The opposite happened and US bond yields are now even lower, which make the yield difference with emerging markets even more attractive, particularly after some of them (including South Africa) raised their interest rates.
The steady inflow of foreign capital is also the real reason why the rand strengthened from R11.30/$ to Tuesday morning’s level of R10.44/$.
Foreigners are particularly interested in companies with big market capitalisations and international activities and that is why shares like Richemont [JSE:RCH] and SABMiller [JSE:SAB] trade close to their previous highs. Richemont was 1.83% higher by midday on R107.60 and is well on its way to the record of R109.37 established in February.
SAB Miller was 0.52% higher on R570.25 and is now close to last week’s high of R574.47.
Reinet [JSE:REI], the investment company in the Rupert-stable, which declared its maiden dividend, was only 0.04% lower than Monday’s record on R24.94.
Naspers [JSE:NPN] is again on the way up after the big correction of the last few weeks and strengthened on Tuesday by 2.87% to R1 193.24. That is one of the reasons why the Industrial index was the star performer with an increase of 0.90% to 57 459 points.
The news that Coronation Fund Managers and PPC both increased their first half earnings with 50% or more are already discounted as both shares traded at new records earlier this month. Coronation, whose earnings rose 55%, was 3.28% lower on R99.52. PPC was 5.16% softer on R31.25 despite earnings growth of 50%.
Investors are pouring into health shares, with Netcare [JSE:NTC] another 3.96% higher on yet another record of R27.56. The star performer in this sector was Litha [JSE:LHG] which traded 10.18% higher on R1.80. Mediclinic International [JSE:MDC] was 0.42% higher on R78.38 and is only 8c lower than the record set earlier this month. Discovery [JSE:DSY] gained 0.69% to R93.85.
A set of solid company results, despite fears that the prolonged strike action and consumers high debt levels is strangling the economy, have laid the foundation for a solid run in share prices.
The All-share index rose sharply after the opening on Tuesday but then investors became cautious and the intraday graph moved sideways for the rest of the morning.
By midday, the All-share index was up 0.42% to 49 715 points, while the Top 40-index gained 0.51% to 44 640. All the other indices were higher, except the Resources and Gold indices which were marginally lower despite a slightly weaker rand.
After various companies announced strong results on Monday, investors again heard more positive news on Tuesday from companies such as PPC [JSE:PPC] and Coronation [JSE:CML] which lifted their headline earnings for the first half of the year by 50% or more.
The market is however not only driven by good results. All the major emerging markets are supported by solid inflows from foreign investors who are looking for higher yields from bonds and shares.
In the last four months investors invested R60bn in South African markets, after massive outflows at the end of last year, which caused concerns about South Africa’s current account.
The outflows was based on perceptions that American interest rates would be hiked and that US bond yields would rise, after the Federal Reserve announced that it would gradually decreased its programme of buying back bonds to support the US economy.
The opposite happened and US bond yields are now even lower, which make the yield difference with emerging markets even more attractive, particularly after some of them (including South Africa) raised their interest rates.
The steady inflow of foreign capital is also the real reason why the rand strengthened from R11.30/$ to Tuesday morning’s level of R10.44/$.
Foreigners are particularly interested in companies with big market capitalisations and international activities and that is why shares like Richemont [JSE:RCH] and SABMiller [JSE:SAB] trade close to their previous highs. Richemont was 1.83% higher by midday on R107.60 and is well on its way to the record of R109.37 established in February.
SAB Miller was 0.52% higher on R570.25 and is now close to last week’s high of R574.47.
Reinet [JSE:REI], the investment company in the Rupert-stable, which declared its maiden dividend, was only 0.04% lower than Monday’s record on R24.94.
Naspers [JSE:NPN] is again on the way up after the big correction of the last few weeks and strengthened on Tuesday by 2.87% to R1 193.24. That is one of the reasons why the Industrial index was the star performer with an increase of 0.90% to 57 459 points.
The news that Coronation Fund Managers and PPC both increased their first half earnings with 50% or more are already discounted as both shares traded at new records earlier this month. Coronation, whose earnings rose 55%, was 3.28% lower on R99.52. PPC was 5.16% softer on R31.25 despite earnings growth of 50%.
Investors are pouring into health shares, with Netcare [JSE:NTC] another 3.96% higher on yet another record of R27.56. The star performer in this sector was Litha [JSE:LHG] which traded 10.18% higher on R1.80. Mediclinic International [JSE:MDC] was 0.42% higher on R78.38 and is only 8c lower than the record set earlier this month. Discovery [JSE:DSY] gained 0.69% to R93.85.
