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Sanlam, car sales to light up quiet week on JSE

THE JSE started last week at quite a slow pace and most shares decreased on Monday and Tuesday, as international investors continued to lighten their holdings in SA shares and bonds.

The market was not helped by the announcement that the SA economy grew by only 0.7% in the third quarter as labour unrest in the manufacturing sector took its toll. In the three months to June the economy was still growing at a respectable annual rate of 3.2%.

The outlook for better economic growth still looks uncertain. The production price index increased by 6.3% in October - lower than the 6.7% of September - indicating high inflatrionary pressures in the economy.

The JSE received a bit of support on Wedenesday and Thursday when shares of precious metal producers increased, pulling a few other commodity producers with them. On Friday the market was relatively quiet as Wall Street celebrated Thanksgiving with a shorter trading day on Thursday.

Shares ended the week mostly lower, with only a handful of the larger shares able to close higher than the previous Friday. Anglo Platinum (JSE: AMS), Anglo American (JSE: AGL), African Rainbow Minerals (JSE: ARI), BHP Billiton (JSE: BIL) and Lonmin (JSE: LON) were the best performers among commodity companies.

Industrial shares seemed somewhat stronger than the rest of the market, with Bidvest (JSE: BVT)' Nampak (JSE: NPK) and Imperial (JSE: IPL) showing strong gains. Naspers (JSE: NPN) increased to close to its recent high of R980 after announcing good results and giving investors an in-depth rundown of future plans.

Bank shares, as well as those of other financiuaql services companies, were also strong after figures from the Reserve Bank showed that credit extension increased slightly during October. Private sector credit growth rose by 7.6% in October compared to a year ago. In September credit demand went up by 7%.

The week ahead

Investors can once again expect quite a boring week. There is very little economic news due and no results from large companies to set the tone in a specific direction.

Foreign investors will probably continue to sell shares as continued increases in US markets are starting to convince world citizens that the recovery in these markets is gaining momentum.

Sanlam (JSE: SLM) is due to publish a trading update this week and Naamsa will announce new car sales figures for November.

Car sales figures form an interesting leading indicator as increases in new car sales shows confidence in the future - no consumers or rental companies will buy cars if they are pessimistic about the economic environment over the next few years.

Shares to watch include the so-called defensive stocks, such as food and healthcare suppliers. Banks and financial services could also be more interesting this week, while Richemont (JSE: CFR) seems to have started attracting some attention lately.

 - Fin24

*After chasing money on the JSE for 15 years, Adriaan Kruger is now living a relaxed lifestyle in Wilderness and lectures economics part-time at Nelson Mandela Metropolitan University.


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