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Johannesburg - The major indices on the JSE were in the black by midday on Tuesday, but that was only due to yet another surge in the share price of SABMiller [JSE:SAB].
Many of the major shares were down due to profit-taking and more bad news about the Chinese economy, but SABMiller’s share price gained more than 10% after it became known that Anheuser-Busch (AB) InBev agreed to buy the brewer for about R1.4trn.
READ: BREAKING: AB InBev buys SABMiller for R1.4trn in record deal
This deal, between the two biggest brewery groups in the world, will be the largest merger ever on the London Stock Exchange and it means that one out of every three beers sold in the world will be produced by the new company.
The two companies reached an agreement after AB InBev increased its offer to £44 per share, after several lower offers were rejected by SABMiller’s board of directors.
SABMiller’s share price rose more than 9% in London to more than £39.62 shortly after the announcement, and the JSE followed suit when the share gained 10.56% to trade at another high of R809.33.
READ: JSE cheers historic SABMiller deal
Before Tuesday’s gain the share price had risen almost 19% over the past 30 days on the prospects of a deal and the latest offer represents a premium of 50% of the share price on September 14, the day before news of a possible offer surfaced for the first time.
SABMiller was the busiest share on the JSE on Tuesday morning in terms of volume, and by midday 1.78 million shares had been sold in 4 063 transactions for R1.45bn.
SABMiller is the second-biggest share on the JSE and Tuesday morning’s jump helped push the Industrial index 1.15% higher, although some of the other big shares in the index were lower by midday.
This gain was enough to raise the All-share index 0.14% higher at 52 831 points while the Top 40 index gained 0.37% to 47 415 points. At that stage the Financial index had lost 1.13% as the rand weakened on disappointing news from China, with the Resources index 1.9% lower and the Gold index losing 3.31%.
The rand stumbled on Tuesday to R13.43 a dollar as a sharp fall in Chinese imports increased concerns over the shape of the world’s second biggest economy, denting the appeal of emerging market assets. A drop in Chinese imports indicates weak demand in China, which is bad news for the demand and prices of the commodities produced by emerging markets such as South Africa.
Imara SP Reid also said in its daily Market Snapshot that industrial and resources shares are overbought, and that some more profit-taking can be expected.
This profit-taking brought the sharp recovery of those resources shares which made a strong run over the past week to an abrupt halt. The biggest loser was ArcelorMittal [JSE:ACL], which traded 12.64% lower at R11.27 after the share price gained 44.9% over the previous seven days.
Among the mining shares Lonmin [JSE:LON] was 7.86% weaker at R6.68. Glencore [JSE:GLN], which gained 27.3% over the previous seven days, traded 5.08% lower at R23.73.
Anglo American’s [JSE:AGL] strong run of 20.5% over the previous seven days also came to a halt as the share traded 1.63% softer at R137.50. BHP Billiton [JSE:BIL] lost 1.45% to R137.50 and Impala Platinum [JSE:IMP] was 3.85% softer at R46.15.
Some of the big industrial shares, many of which traded at new highs last week, were also lower and Imara SP Reid warned that industrial shares are particularly overbought. Naspers [JSE:NPN] lost 1.47% to R1 878.00 and Sasol [JSE:SOL] traded 2.74% weaker at R435.71. Steinhoff [JSE:SHF] was 0.82% softer at R81.73,
British American Tobacco [JSE:BTI] was however 0.66% higher at R766.13 and Richemont [JSE:CFR] rose by 0.64% to R116.09.
