Johannesburg - The JSE’ recent record run came to a standstill on Monday morning as the big market capitalisation shares, with Naspers [JSE:NPN] on the forefront, pushed the market lower.
Investors took profits following the record run on Thursday and Friday and most of the shares with big market capitalisations, including Naspers, SABMiller [JSE:SAB], British American Tobacco [JSE:BT] (BAT) and Richemont [JSE:CFR], fell back on Monday.
Because of their weight in the indices - the top 10 shares represent 60% of the JSE’s market value - the industrial index was the biggest loser on Monday.
By midday, the All-Share index was 0.36% lower on 51 140 points and the Top 40-index decreased by 0.40% to 46 151 points. The Industrial index lost 1.09%. All the indices were down, except the Resources index, which was boosted by platinum shares on the news that the five-month long strike in the platinum industry is about to come to an end.
The biggest loser amongst the big shares was Naspers, which was 3.34% lower on R1 227.46. The share price, which closed at R1 269.86 on Friday, opened sharply lower on R1 231.05 and dropped to R1 119.00, before it recovered somewhat and moved sideways in a narrow band for the rest of the morning.
Investors were disappointed by the news that Naspers’ core headline earnings contracted with 2% after analyst polled by Reuters had forecast the earnings would increase by as much as 15%.
Naspers’ lower earnings are due to a sharp increase in developing spending. The company's revenue grew 26% to R62.7bn ($5.85bn) but development spending jumped 79% to R7.7bn to enable the group to exploit e-commerce opportunities.
The dividend increased with 10% to 425c a share.
The drop in core headline earnings mean that Naspers is still trading at a price earnings ratio of 66.49. Despite the high valuation, and a big correction in the May, the share price has still increased with 16% since the beginning of the year.
A significant shift in the earnings is that the revenue of the internet segment (R57bn) exceeded pay television (R36.2bn), but the internet trading profit of R6.6bn is still lagging the R8.5bn of pay television. Print revenues declined by 2% to R11.6bn and trading profit by 18% to R606m.
Amongst the other big shares in the industrial index, BAT dropped 1.26% to R648.45 and SABMiller dropped 0.86% to R614.04. Richemont was 0.61% lower on R111.58.
The stronger rand also put a damper on these share prices, as these companies earned most of their income abroad.
The resources sector received a boost from manufacturing data from China which showed that factory production in the world's second-largest economy had expanded for the first time in 6 months. The better-than-expected numbers from a key market for South African commodity exports restored belief that China would reach its economic growth target of 7.5% year-on-year.
BHP Billiton [JSE:BIL] improved with 1.33% to R350.61, but Anglo American [JSE:AGL] lost some ground after a strong start. By midday on Monday, the share was only 0.24% higher on R267.64 after trading at R269.30 earlier in the day.
The news that the strike in the platinum industry may end this week gave platinum shares a boost. Anglo American Platinum [JSE:AMS] gained 1.81% to R498.87 and Impala Platinum [JSE:IMP] increased with 1.44% to R114.63.
Investors took profits following the record run on Thursday and Friday and most of the shares with big market capitalisations, including Naspers, SABMiller [JSE:SAB], British American Tobacco [JSE:BT] (BAT) and Richemont [JSE:CFR], fell back on Monday.
Because of their weight in the indices - the top 10 shares represent 60% of the JSE’s market value - the industrial index was the biggest loser on Monday.
By midday, the All-Share index was 0.36% lower on 51 140 points and the Top 40-index decreased by 0.40% to 46 151 points. The Industrial index lost 1.09%. All the indices were down, except the Resources index, which was boosted by platinum shares on the news that the five-month long strike in the platinum industry is about to come to an end.
The biggest loser amongst the big shares was Naspers, which was 3.34% lower on R1 227.46. The share price, which closed at R1 269.86 on Friday, opened sharply lower on R1 231.05 and dropped to R1 119.00, before it recovered somewhat and moved sideways in a narrow band for the rest of the morning.
Investors were disappointed by the news that Naspers’ core headline earnings contracted with 2% after analyst polled by Reuters had forecast the earnings would increase by as much as 15%.
Naspers’ lower earnings are due to a sharp increase in developing spending. The company's revenue grew 26% to R62.7bn ($5.85bn) but development spending jumped 79% to R7.7bn to enable the group to exploit e-commerce opportunities.
The dividend increased with 10% to 425c a share.
The drop in core headline earnings mean that Naspers is still trading at a price earnings ratio of 66.49. Despite the high valuation, and a big correction in the May, the share price has still increased with 16% since the beginning of the year.
A significant shift in the earnings is that the revenue of the internet segment (R57bn) exceeded pay television (R36.2bn), but the internet trading profit of R6.6bn is still lagging the R8.5bn of pay television. Print revenues declined by 2% to R11.6bn and trading profit by 18% to R606m.
Amongst the other big shares in the industrial index, BAT dropped 1.26% to R648.45 and SABMiller dropped 0.86% to R614.04. Richemont was 0.61% lower on R111.58.
The stronger rand also put a damper on these share prices, as these companies earned most of their income abroad.
The resources sector received a boost from manufacturing data from China which showed that factory production in the world's second-largest economy had expanded for the first time in 6 months. The better-than-expected numbers from a key market for South African commodity exports restored belief that China would reach its economic growth target of 7.5% year-on-year.
BHP Billiton [JSE:BIL] improved with 1.33% to R350.61, but Anglo American [JSE:AGL] lost some ground after a strong start. By midday on Monday, the share was only 0.24% higher on R267.64 after trading at R269.30 earlier in the day.
The news that the strike in the platinum industry may end this week gave platinum shares a boost. Anglo American Platinum [JSE:AMS] gained 1.81% to R498.87 and Impala Platinum [JSE:IMP] increased with 1.44% to R114.63.