Johannesburg - Tuesday's recovery on the JSE did not last long, as concerns about China's growth prospects and its influence on the world economy still cast a shadow over world markets. The JSE was again on a downward path by midday on Wednesday.
South African investors received a good idea of the impact of China’s problems on the local economy when Statistics South Africa announced a 1.3% contraction of economic growth in the second quarter. That was due to low commodity prices because of weak demand from China, as well as the negative impact of load shedding and a drought in grain-producing areas.
READ: Load shedding hits home on SA economy
The shock news about the local economy dampened the mood on the market even further, and by midday both major indices on the JSE were more than 1% lower.
The market opened sharply lower and then moved sideways for the rest of the morning. By midday the All-share index was 1.17% lower at 48 409 points - only 113 points lower than the opening level of 48 522 points - and the Top 40-index traded 1.18% softer at 42 925 points.
World markets presented a mixed picture with the major markets in Europe still lower, but not as low as earlier in the morning. In the Far East Japan's Nikkei index gained more than 3%, but the Hang Seng index in Hong Kong was another 1.5% weaker and the Chinese market was lower for the fifth consecutive day.
The Chinese market, whose sharp declines is one of the reasons for current market jitters, ended only marginally lower but was very volatile with swings of more than 3%. The Chinese authorities announced even more measures to stimulate the world’s second-biggest economy by lowering interest rates for the second time in two months.
Financial shares worldwide are now under pressure because of their exposure to the falling markets, and the JSE is no exception. By midday the Financial index was already 2.26% weaker.
Sanlam [JSE:SLM] was one of the financial shares under the whip as a major part of its income and profits is linked to market performance. The share traded 2.71% softer at R62.02 and has now lost 11.22% over the past 30 days.
Old Mutual [JSE:OML] was the busiest share on the JSE on Wednesday morning in terms of volume and lost 0.75% to R39.43, after losing 8.4% over the previous seven days.
Among the banks Standard Bank [JSE:SBK] was 3.11% softer at R144.09 and FirstRand [JSE:FSR] lost 2.87% to R51.80 on heavy volumes.
In the industrial sector Naspers’ [JSE:NPN] sharp recovery of the previous day came to an end when the share price opened 2% lower at R1 693.00 and dropped more than 4% to R1 646.00 before recovering somewhat. By midday the stock was almost at the opening level again and traded 2.05% lower at R1 691.16.
At midday the Industrial index was 1.36% softer.
Bargain-hunting continued in the resources sector, which gained 1.33% with the top platinum shares performing strongly. Anglo American Platinum (Amplats) [JSE:AMS] was one of the strongest performers and at midday was 2.99% higher at R316.77, but traded as high as R327.44 earlier in the morning.
Before Wednesday, Amplats gained 9.8% over the past seven days and 19.3% over the past 30 days.
Among the top resources shares BHP Billiton [JSE:BIL] gained 3.78% to R214.60 and Anglo American [JSE:AGL] was 1.70% stronger at R141.01.