Johannesburg - South African stocks hit record highs for the
third straight day on Wednesday, as retailers such as Shoprite Holdings [JSE:SHP] and Mr
Price Group [JSE:MPC] powered higher on expectations of
strong growth.
The benchmark Top 40 - (Tradeable) [JSE:J200] index rose
0.4% to a record 32,896.28, putting in shooting distance of the psychologically
important 33,000 mark for the first time in its 17-year history.
The broader All Share [JSE:J203] index also rose about 0.4%,
to 37,112.75.
“We see consolidation in our local market‚ after reaching a
new high on Tuesday‚ following a similar trend in European markets. Wall Street
had good run yesterday amid good economic data prints. US futures are flat at
the moment‚ pointing towards consolidation in the US market today‚” said Ryan
Wibberley‚ equity dealer at Investec Asset Management in Cape Town.
Leading European markets were trading marginally higher‚
with London’s FTSE 100 last seen 0.12% higher‚ while Japan’s Nikkei 225 closed
1.21% higher.
“We are very much headline driven‚ with traders watching the
local labour situation‚ which has the power to make the market turn one way or
the other. These issues are still making headlines all over the world‚” he
added.
As expected‚ Standard & Poor's on Tuesday downgraded the
credit rating of two of SA's biggest banks - Standard Bank and FirstRand -
following a similar decision on SA's credit downgrade. The government has
already dismissed the sovereign credit downgrade‚ as it did with the one made
by Moody's on September 27.
Both agencies cited the worsening macro-economic situation
in Africa's largest economy. Bankers have also dismissed the Moody's rating‚
saying it would not affect the cost of raising capital‚ which had already been
raised locally.
Standard & Poor's said it had lowered both Standard Bank
and FirstRand's long-term issuer credit rating to BBB from BBB+ but affirmed
their A-2 short-term rating. It said rating action on the two banks followed
the lowering of the sovereign ratings.
The rating agency also lowered the rating of the Development
Bank of Southern Africa to BBB‚ but retained the outlook at negative.
Absa Capital said in a morning newsletter that significant
news related to the strike action in SA came in the way of Gold Fields issuing
an ultimatum to protesting workers on Tuesday. Should striking workers not
return to work by 2pm on Thursday‚ legal action would be taken against them.
There are about 15 000 on strike.
“This will be the third mine to take such action against
striking miners‚ which may go far in changing the precedent set by the high
Marikana wage increases‚” the bank said.
“Global sentiment has improved on the back of
better-than-expected macro data out of the US and Europe‚ while US earnings
releases are also proving encouraging. However‚ given that the rand is taking
very limited direction from offshore developments at the moment we expect the
currency to under-perform other risk assets and still believe it is
particularly vulnerable to the euro this week‚ if the European single currency
rallies in the wake of a Spanish bailout request - which could happen as early
as Thursday‚” the bank added.