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Naspers leads All-share dip on JSE

Johannesburg - With stock markets - including the JSE - at record levels, fears about overvalued shares are surfacing again.

It started in New York were another huge selloff in technology stocks was followed by declines on the Asian markets.

The All-share index on the JSE, which ended a day of volatile price movements at a new record on Thursday, started the day sharply lower and all the major indices were lower by midday.

The All-share index shed 0.99% by midday to trade at 48 050 and the Top 40-index was 1.06% lower on  43 147. Among the major indices the industrial index was particularly hard hit, as the selloff in technology shares in America and Asia pushed Naspers sharply lower again.
 
Thursday night’s selloff on Wall Street ended a two-day rally, after indications that the Federal Reserve does not intend to increase American interest rates soon.

However, concerns that the valuations of technology stocks such as Facebook and Netflix are too high and will not be matched by earnings soon, surfaced again on Thursday on the Nasdaq which lost more than 3%, the biggest single day drop in percentage terms since November 2011.

There was a similar selloff in these stocks last week and it seems that investors are really worried.

The rout on the Nasdaq spread to other markets. The Dow Jones Industrial index sank 1.62% to 16 170.22, while the broad-based S&P 500 fell 2.09% to 1 833.08. Shares like Facebook, Netflix, Google, Apple and Amazon were all more than 4% down.

Imara SP Reid said in its morning snapshot that the US markets are exhibiting a degree of nervousness ahead of the earnings season as, in relative terms, equities are on fairly high levels, yet the earnings outlook can best be described as “workmanlike” rather than impressive.

Ahead of the earnings season 95 companies in the S&P 500 have downgraded their expectations, which is the second-highest level ever recorded for earnings downgrades.

It is therefore no surprise that Thursday's selloff was not limited to technology stocks only. Some analysts describe it as fairly indiscriminate.  

"The market is on very shaky legs," said Michael James, managing director of equity trading at Wedbush Securities.

Friday's selloff on the JSE was also fairly broad-based. The All-share index immediately dropped more than 300 points and by midday it was almost 500 points lower, just above the 48 000 level.

Among the major indices the financial 15-index was 1.12% weaker, industrials lost 1.21% and resources were 0.73% down.

The biggest loser was again Naspers, which shed 6.03% to trade at R1 072. Exactly a month ago the share price reached a record of R 1354,9.

The high-flying banking stocks were also lower. Standard Bank was 1.07% down at R139.55 and FirstRand lost 0.97% to R37.67.

Among the resources stocks, Anglo American was 1.34% weaker on R266.38 and BHP Billiton shed 0.98% to R332.51.

* Fin24 is part of Media24, a subsidiary of Naspers.
 

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