Publications
Partners
Johannesburg - The JSE recovered remarkably well on Monday morning after opening sharply down, tracking global markets lower as the Greek contagion hits emerging market stocks.
The All-share index opened almost 1 000 points - more than 1.8% - lower than Friday’s close, in reaction to news that Greek voters overwhelmingly rejected the austerity measures demanded by the country’s creditors before a new bailout package can be considered.
But by midday more than half of those losses had been made up and the All-share index was at that stage only 471 points or 0.91% lower than on Friday. The Top 40 index opened unchanged, but quickly lost more than 900 points (almost 2%), before starting recovering gradually. By midday the index was 0.98% lower than on Friday.
These recoveries were in line with markets worldwide, which reacted negatively to the news about Greece but did not end up in the rout predicted in some circles.
Emerging markets were in the firing line, because of risk aversion by investors in developed markets in reaction to the Greek crisis, but even here the damage was not that severe.
READ: Emerging stocks tumble most since 2013 on Greece
The most severely hit developing market was Hong Kong, with the Hang Seng index losing 3.18%. That was bad news for the locally-listed Naspers [JSE:NPN] as Tencent, the Chinese internet giant in which Naspers has a 34% stake, traded 5.54% lower.
By midday Naspers traded 4.49% lower at R1 825.23 after it reached a low of R1 791, more than 7% weaker than the previous day. The volatility in the Naspers share price had however nothing to do with Greece, but everything to do with Tencent which represents the biggest part of its income and valuation.
Naspers represents about 12% of the Industrial index and that was the main reason why the industrial sector was the biggest loser on Monday morning, trading 1.23% softer.
Fortunately the Chinese market did not continue with its free fall as Chinese stocks rose on Monday. An unprecedented series of support measures unleashed by Beijing brought some relief to a market whose slide over the past three weeks had raised fears about the stability of the world's second-biggest economy.
Brokerages and fund managers vowed to buy massive amounts of stocks, helped by China's state-backed margin finance company, which in turn would be aided by a direct line of liquidity from the central bank.
The market in Shanghai jumped and the most important indices were at one stage more than 8% higher, but closed 2.9% stronger.
Analysts said markets did not go into free fall as was expected by some because there was still hope that a solution to the Greek crisis could be found. They do however warn that if Greece is eventually forced out of the eurozone, emerging markets will drop even further.
Among the big shares SABMiller [JSE:SAB] hardly moved and was 0.01% lower at R637.45, but British American Tobacco [JSE:BTI] gained 0.47% to R674.00. Richemont [JSE:CFR] was 1.10% lower at R98.60.
Resources shares are still in the doldrums, with the Resources index losing another 1%. Various major resources shares are now trading at 52-week lows. The biggest of these is Anglo American [JSE:AGL], which lost 1.27% on Monday morning to reach a new low of R171.38. Anglo is now almost 20% lower over the past 90 days.
Sasol [JSE:SOL] was a victim of the lower oil price and lost 2.93% to R431.87. The price of Brent slid below $60 a barrel for the first time since April amid fears that Greece’s rejection of austerity measures will prompt its exit from the euro area.
Iran, the fourth-largest member of the Organisation of Petroleum Exporting Countries, has estimated it could double crude exports from about 1 million barrels a day within six months of sanctions being lifted.
