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Johannesburg - Some more bad news about the Chinese economy hurt resources shares on the JSE on Monday, but the Industrial index remained stable after indications from the Central European Bank (ECB) that the European economy is on the recoverey path.
The net result was that the two major indices on the JSE were only marginally lower. By midday on Monday the All-share index was only 0.17% lower at 53 699 points and the Top 40 index had lost 0.28% to 48 184 points.
The news that the JSE has halted trading in MTN’s [JSE:MTN] shares pending an announcement from the company also forced investors to the sideline.
READ: JSE suspends trading in MTN shares
By midday the Resources index was 1.80% lower, but the Industrial index lost only 0.06% as foreigners continued to use cheap money in the developed world to support the big double-listed shares on the JSE.
Global markets were initially lower after official data showed manufacturing in China contracted for a third month and authorities detained a top-performing hedge fund manager in widening probes into market manipulation and insider trading.
READ: China stocks fall on manufacturing data
The Shanghai Composite Index dropped 1.7% to 3 325.08 at the close, while the Hang Seng China Enterprises Index slid 1.5% in a fifth day of losses, the longest losing streak in almost two months.
Slow manufacturing in China is bad news for commodity producers such as South Africa, as it puts a damper on commodities demand.
The official purchasing managers' index was unchanged at 49.8 in October, the National Bureau of Statistics said on Sunday. That compared with a median estimate of 50, the line between expansion and contraction, in a Bloomberg survey of economists. A separate purchasing managers’ index from Caixin Media and Markit Economics was 48.3 in October.
European markets were initially also lower, but recovered after stress tests the ECB performed on Greece's top banks indicated they are in better shape than originally thought.
The euro and the markets also strengthened after ECB president Mario Draghi suggested further stimulus may not be required when policymakers meet in December. The market is however in wait-and-see mood as investors are waiting for the latest non-farm payrolls and Federal Reserve commentary on the prospects for US interest rates later this year.
Lonmin [JSE:LON] was initially one of the biggest losers in the resources sector after the world’s third-biggest platinum producer said it will write down the value of its net assets by as much as $2.05bn.
READ: Lonmin sees $2.05bn impairment halving asset value
“The group’s net assets attributable to equity shareholders are expected to be valued between $1.6bn and $1.8bn following a significant impairment charge of $1.85bn to $2.05bn for the year ended September 30,” the Johannesburg-based company said in a statement on Monday.
The share price fell by as much as 7.8% in London before it recovered. By midday the price was 0.56% softer at R5.36 on the JSE after the share traded as low as R4.65 earlier in the day. Lonmin’s share price is already 86% down for the year.
Anglo American [JSE:AGL] traded 2.20% lower at R113.96 and BHP Billiton [JSE:BIL] traded 1.9% softer at R219.40.
In the industrial sector SABMiller [JSE:SAB] set yet another record at R851.10, trading 0.25% higher than Friday. Naspers [JSE:NPN] was 1.48% higher at R2 056.90 but British American Tobacco [JSE:BTI] lost 0.41% to R817.31.
