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Johannesburg - Investors on the JSE dumped MTN [JSE:MTN] shares on Tuesday morning after the company warned it expects a drop in first-half earnings, blaming a weaker exchange rate that hurt its international business. Almost R1bn in shares were sold in early trade.
READ: MTN expects first-half profit knock
Africa’s largest mobile operator said in a statement its headline earnings per share will be between 10% and 15% lower for the six months to June 30, compared with the corresponding period last year.
MTN was by far the busiest shares on the JSE on Tuesday morning and at one stage was more than 5% lower. By mid-morning the share price was 4.58% softer at R203.28, and more than 4.5 million shares had been sold for R922.3m in over 4 600 transactions.
That was the biggest excitement on the market as the major indices moved mostly sideways. At mid-morning the All-share index was only 0.03% higher at 51 315 points and the Top 40 index traded only 0.10% stronger at 45 814 points.
The JSE has so far not responded to the sharp drop in Chinese share prices, which pushed all the major world markets lower on Monday. Analysts however say that the local market is already heavily oversold.
The Chinese stock market recovered somewhat on Tuesday after losing another 4% initially and was only 1% lower by mid-morning. The Hang Seng index in Hong Kong responded by gaining more than 1.5%.
MTN blamed the earnings drop on sharply lower oil revenues, which slashed economic growth and pummelled the currency in Nigeria, the group’s largest market.
MTN’s Nigerian unit was also affected by a nationwide fuel shortage in May. The shortage brought much of Nigeria to a standstill as private generators that produce most of the electricity for the nation’s 170 million inhabitants and businesses ran out of fuel.
Vodacom [SE:VOD], MTN’s biggest competitor, which announced an increase in data revenue last week, traded 0.25% higher at R141.88.
Telkom [JSE:TKG] was however 1.29% lower at R56.07. The share price, which recently traded at a five-week high of R85.78, is now heading towards its 52-week low of R48.14.
Telkom said in its integrated report on Monday that possible cost-cutting measures could include flexible working hours, voluntary retirement and severance packages and a freeze on remuneration, including that of management.
The Gold index was as expected -3.79% lower after Monday strong recovery, but the other indices moved very little. The biggest mover was the Financial index which gained 0.54%, but the Industrial index was only 0.09% lower.
The prices of top shares moved very little. SABMiller []JSE:SAB] was only 0.02% higher at R654.49 and British American Tobacco [JSE:BTI] traded only 0.16% softer at R691.75. Naspers [JSE:NPN] was however 1.12% stronger after the rout on the Chinese markets stabilised. Richemont [JSE:CFR] gained 0.72% to R105.05.
Commodity prices are still under severe pressure. The CRB global commodities index is now trading at its lowest level in around six years, but the Resources index was remarkably resilient on Tuesday morning and traded only 0.13% lower at midmorning.
The prices of the top resource shares moved modestly on Tuesday morning. By mid-morning Anglo American [JSE:AGL] was only 0.20% higher at R153.80 while BHP Billiton [JSE:BIL] lost 0.44% to R223.00. Glencore [JSE:GLN] recovered from the 52-week low reached on Monday and was 0.54% higher at R40.80.
