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Port Elizabeth - The JSE seemed to have organised its own Black Friday sales day this week with most share prices significantly lower on Friday.
Not even the news of the biggest corporate deal to date in SA could fire up the share price of Steinhoff International [JSE:SHF] - the announcement that Steinhoff will acquire 92% of Pepkor pushed Steinhoff’s share up by only 4%.
Other than that, most shares were on offer in the bargain basement. Sasol [JSE:SOL] fell by 8% on Friday to bring losses for the week to nearly 14% after news that Opec has decided not to restrict members’ oil production that saw the oil price decline to around $70 per barrel.
The knock-on effect of lower oil prices on most other commodities – as investors realised commodity prices are low due to very sluggish demand in struggling economies – saw commodity producers fall as well. BHP Billiton [JSE:BIL] ended the week 9% lower and dropped by nearly 6% on Friday only.
Arcellor Mittal [JSE:ACL] fell 14% last week and AngloGold Ashanti [JSE:ANG] lost 10%. Platinum counters were also down with Implats [JSE:IMP] showing the biggest decline with a drop of nearly 6% for the week.
The rest of the market was not spared either. Amongst industrials Bidvest [JSE:BVT] fell more than 9% and Naspers [JSE:NPN] declined nearly 4% despite the announcement of very good results in the first 6 months of its financial year.
The reasons for the JSE’s weak performance were not difficult to identify. The news that the SA economy was growing even slower in the quarter to end September than what was expected focused minds on how bad things really are, with little indication of improvement in sight.
Our GDP increased by only 1.4% in the third quarter compared to the (already low) forecasts of 1.5%. It seems that economists took their cue from this to adjust their growth rates for next year down. A shortage of electricity and more labour strikes are expected to reduce economic growth to less than 2% next year. In short, very few of the matriculants who just finished their exams this week will be able to find employment next year.
And inflation is set to remain high. Stats SA announced last week that the producer price index increased by 6.7% in September, which indicates that consumer prices will continue to increase quite fast.
Meanwhile, shares are once again on relatively high ratings after the recovery during the last 6 or 7 weeks, especially taking into account the expected lower economic growth.
The week ahead
Sanlam [JSE:SLM] is due to publish a trading update which will give investors an indication what to expect from the insurer and asset manager in its current financial year.
The National association of Automobile Manufacturers of SA (Naamsa) will announce new car sales figures for November.
The biggest event to wait for is the Bank of England’s monetary committee report later this week which will give their view of economic problems in the EU.
Not even the news of the biggest corporate deal to date in SA could fire up the share price of Steinhoff International [JSE:SHF] - the announcement that Steinhoff will acquire 92% of Pepkor pushed Steinhoff’s share up by only 4%.
Other than that, most shares were on offer in the bargain basement. Sasol [JSE:SOL] fell by 8% on Friday to bring losses for the week to nearly 14% after news that Opec has decided not to restrict members’ oil production that saw the oil price decline to around $70 per barrel.
The knock-on effect of lower oil prices on most other commodities – as investors realised commodity prices are low due to very sluggish demand in struggling economies – saw commodity producers fall as well. BHP Billiton [JSE:BIL] ended the week 9% lower and dropped by nearly 6% on Friday only.
Arcellor Mittal [JSE:ACL] fell 14% last week and AngloGold Ashanti [JSE:ANG] lost 10%. Platinum counters were also down with Implats [JSE:IMP] showing the biggest decline with a drop of nearly 6% for the week.
The rest of the market was not spared either. Amongst industrials Bidvest [JSE:BVT] fell more than 9% and Naspers [JSE:NPN] declined nearly 4% despite the announcement of very good results in the first 6 months of its financial year.
The reasons for the JSE’s weak performance were not difficult to identify. The news that the SA economy was growing even slower in the quarter to end September than what was expected focused minds on how bad things really are, with little indication of improvement in sight.
Our GDP increased by only 1.4% in the third quarter compared to the (already low) forecasts of 1.5%. It seems that economists took their cue from this to adjust their growth rates for next year down. A shortage of electricity and more labour strikes are expected to reduce economic growth to less than 2% next year. In short, very few of the matriculants who just finished their exams this week will be able to find employment next year.
And inflation is set to remain high. Stats SA announced last week that the producer price index increased by 6.7% in September, which indicates that consumer prices will continue to increase quite fast.
Meanwhile, shares are once again on relatively high ratings after the recovery during the last 6 or 7 weeks, especially taking into account the expected lower economic growth.
The week ahead
Sanlam [JSE:SLM] is due to publish a trading update which will give investors an indication what to expect from the insurer and asset manager in its current financial year.
The National association of Automobile Manufacturers of SA (Naamsa) will announce new car sales figures for November.
The biggest event to wait for is the Bank of England’s monetary committee report later this week which will give their view of economic problems in the EU.
