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Johannesburg - Attention on the JSE initially centred on SABMiller [JSE:SAB] on Wednesday morning, but the excitement over a new higher offer from Anheuser-Busch InBev, the world’s largest brewer, did not last long.
By midday most of the focus was on the resources sector, which was already more than 5% higher with some of the big name shares, which had suffered huge losses lately, firmly on a recovery path which could be as dramatic as the recent losses.
SABMiller opened almost 6% higher on news that AB InBev launched an improved bid for the brewer, offering just over £68bn for its largest rival to extend its reach into Africa and other markets.
READ: AB InBev makes new R1.4trn bid for rival SABMiller
The company said in a statement it was offering £42.15 per SABMiller share, having already made two prior offers at £38 and £40.
It seems however that the offer was already discounted as SABMiller’s share price soon gave up most of the initial gains; by midday the stock traded only 0.53% higher at R756.00 after reaching a new high of R789.00. SABMiller was however at that stage the most active share in terms of value, with more than 2.9 million shares trading for almost R2.3bn.
SABMiller shareholders were offered cash, but AB Inbev also added an alternative to the cash offer of partial payment in shares. AB InBev said it would limit this to 41% of SABMiller stock and it is primarily designed to suit SABMiller’s major shareholders Altria and the Santo Domingo family.
Attention soon shifted to the resources sector, where shares like Anglo American [JSE:AGL], Glencore [JSE:GLN] and Lonmin [JSE:LON] continued the strong recoveries which started last week.
The strong run in the resources sector lifted the All-share index by midday, which rose 1.05% higher to 52 619 points while the Top 40 index gained 1.18% to 47 174 points. The Financial index was 0.61% higher by midday and the Industrial index gained only 0.61%.
Improved sentiment in the resources sector is ascribed to expectations that US interest rates will not rise as soon as originally expected, after a series of disappointing data on the US economy which had a detrimental effect on the dollar.
Imara SP Reid said in its daily Market Snapshot that commodity prices are beginning to recover as a result of the softer dollar, with the oil price leading the way. The price of Brent crude gained more than 1% on Wednesday morning to trade above $52 per barrel.
Lonmin [JSE:LON] was again the biggest winner on Wednesday morning, trading 28.81% higher at R7.02 after it traded on a 52-week low of only R3.12 as recently as September 28. This represents a jump of almost 150% over the past week, but the share price before Wednesday’s spike was still 79.4% lower than 90 days ago. On November 9 last year it was trading on a 52-week high of R34.39.
Anglo American [JSE:AGL], until recently one of the icons on the JSE, at midday was 10.53% stronger at R136.50. Since September 29, when the share traded at a 52-week low of R115.60, the price has gained more than 18%. It is however still a long way off the 52-week high of R250.49 reached in October last year. That means investors in Anglo American have lost more than 48% of their investment over the past year.
Glencore [JSE:GLN], which was recently in the news when the share price lost more than 30% in one day, climbed another 6.29% on Wednesday to trade at R25.18. This means the price is now more than 60% higher than last week’s 52-week low of only R15.41. However, the share price as recently as May this year was at R58.47. Before Wednesday the share price lost 55.47% over the past 90 days.
Among the other commodity shares BHP Billiton [JSE:BIL] gained 4.36% to R228.35. It survived the latest drop in share prices and gained 5.82% over the past 30 days.
