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Johannesburg - BHP Billiton's [JSE:BIL] spin-off South32 made a very subdued debut on the financial markets in Australia, London and the JSE on Monday.
READ: BHP's South32 debut misses estimates
The company started with a market value of nearly $9bn on Monday, a third below the top end of forecasts. Some analysts had valued South32 at nearly $13bn, but most were expecting early trading to be around $10bn.
Shares in South32 have debuted on the Australian Stock Exchange at Aus$2.13 each, towards the lower end of the Aus$2.00-$2.50 range expected by analysts. By midday on Monday the share traded at R19.57 on the JSE after opening at R19.65. The trading range at that stage was between R18.97 and R20.00 per share.
Analyst said the cautious opening suggests the newly independent firm will need to do more to convince the market it can grow the assets that have long been neglected within BHP. The new company houses BHP Billiton's former alumina, aluminium, manganese, nickel, silver and some South African coal assets. All BHP Billiton’s South African assets are now in the new company.
BHP Billiton also lost ground on Monday and by midday the share price was 3.95% lower at R273.79.
Despite the lack of excitement about South2 the mood on the JSE was fairly favourable and by midday most of the major indices were moderately higher. The All-share index was at that stage 0.53% higher at 54 314 points and the Top 40-index gained 0.54% to 48 194 points.
The mood was given a boost by Wall Street, which closed at new record levels on Friday.
The Wall Street gains came after more weak data indicating a recovery in the US economy may not be as strong as thought, making an expected interest rate hike unlikely in the near future.
US industrial production fell 0.3% in April, the fifth straight month of decline, according to Federal Reserve data, while the University of Michigan's US consumer sentiment index plummeted to 88.6 in May from 95.9 in April.
Last week it was announced the US producer price index fell in April, confounding forecasts for a rise, while retail sales saw their weakest year-on-year growth since 2009.
The resources sector was the star performer on the JSE, gaining 1.65%, despite the fact that the two biggest shares in the index, BHP Billiton and Anglo American [JSE:AGL], both lost ground. Anglo American dropped 0.45% to R202.12.
Kumba [JSE:KIO] gained a solid 4.29% to R164.50 and Glencore [JSE:GLN] traded 1.49% stronger at R55.31. Among the platinum shares Anglo American Platinum traded 0.53% higher at R311.79 but Impala Platinum [JSE:IMP] lost 0.68% to R65.36.
Company results are now very much on investors' minds and Netcare [JSE:NTC] gained more than 5% after strong results, but Vodacom slipped after announcing an earnings drop. By midday on Monday Netcare traded 5.49% higher at R41.29 after posting a 19.6% rise in half-year profit, helped by a strong demand at its home market and favourable currency swings.
Netcare, which also runs Britain’s largest private hospital network, BMI Healthcare, said adjusted headline earnings per share totalled 91 cents in the six months to the end of March compared with 76c a year earlier.
The market did not like Vodacom’s [JSE:VOD] announcement that full-year earnings declined as increasing competition weighed on calling prices. The share price lost 1.13% to R142.35 and traded as low as R141.94.
The company said it faced major cuts in mobile termination rates, a weak economic environment, exchange rate volatility and increased price competition in South Africa. Price pressure also impacted its performance in Tanzania and the Democratic Republic of Congo.
Pioneer Foods [JSE:PFG] said first-half profit dropped 9.7% after it took a charge relating to the spinoff of its chicken unit, but the share price gained 5.19% to R189.35. The charge relates to a black economic empowerment transaction for Quantum Foods [JSE:QFH].
Investors were more interested to hear that adjusted headline earnings from continuing operations for the six months were 40% higher than the corresponding period in the previous year.
Barloworld [JSE:BAW] reported a rise of 16% in half-year profit on Monday but the share price dropped 0.03% to R97.77. The group said after-market sales helped overcome weak demand for its heavy equipment from the mining industry.
Astral [JSE:ARL] announced spectacular results, most of which are already discounted as the share price gained only 0.88% to R182.59. Headline earnings per share increased 159% and the operating profit rosed 158%.
