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Johannesburg - With the uncertainty about African Bank Investments [JSE:ABL] (Abil) out of the way, the JSE rallied strongly on Monday with all the major indices higher.
After the South African Reserve Bank announced a bailout package for the troubled lender, trading in Abil’s shares were suspended on Monday morning. The share price fell from R6.80 to only 35c on Friday after it became known that the company expected a loss of R6.4bn and needed a massive capital injection.
The uncertainty of Abil’s future was the trigger that pulled other shares lower, particularly ones that were perceived to be expensive.
However, on Monday the All-share index started strongly and was by 12:00 already 1.42% higher on 51 389 points. The Top 40 index performed even better and traded 1.56% higher on 46 271 points.
The only other major index that did not improve this morning was gold, which was marginally lower due a slight drop in the gold price.
International sentiment, which also put a dampener on the JSE last week, appeared to be improving. Last week, share prices on Wall Street were under pressure due to uncertainty about the political situation in Iraq and possible military intervention by the US, but the mood changed on Friday and the indices closed slightly higher. Asian markets also followed Wall Street higher on Monday morning.
Last week, Abil’s problems put the spotlight on the difficult economic circumstances that other banks found themselves in, resulting in all major banking shares losing ground.
On Monday, the Financial index recovered, adding 1.42% and all the major banking shares were higher. FirstRand [JSE:FSR] were again the star performer and improved with 1.31% to R43.99. The share gained 38.1% over the last six months and was on Monday 44.1% stronger than a year ago.
Standard Bank [JSE:SBK], whose results this week would give another glimpse into the health of the South African banking sector, traded 0.33% stronger on R144.92. Barclays Africa [JSE:BGA] was 0.80% better on R168.20 and Nedbank [JSE:NED] was only 0.19% higher on R236.96
The Industrial index also improved with 1.50%. All the big shares with overseas listings traded higher, which might be an indication that foreign investors returned on Monday morning.
Naspers [JSE:NPN], which reached a high of R1 400 last week before losing ground again, was by Monday noon 1.96% stronger on R1 386.70. Richemont [JSE:CFR] improved with 2.16% to R102.45 and British American Tobacco [JSE:BTI] gained 0.97% tot R619.48.
The Resources index gained 1.74% on Monday and Anglo American [JSE:AGL] led the way with an improvement of 2.27% to R284.15.
