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Johannesburg - The JSE started the week slowly on Monday morning with most of the attention on Shoprite [JSE:SHP], which fell sharply after disappointing sales figures painted a sad picture of the South African economy.
The retailer’s share price, which hardly moved over the past 30 days, at midday on Monday was already 5.21% lower and the stock was one of the most widely traded on the JSE. There was also a strong interest in banking shares due to a stronger rand.
The rest of the market did not move much and the All-share index at midday was only 0.04% higher at 52 967 points, while the Top 40 index gained only 0.07% to 47 495 points. The All-share index traded in a range of about 300 points or 0.6% in the morning session.
More than 2.8 million Shoprite shares were sold for R238m in 5 472 transactions after the group announced that turnover increased by only 6.7% in the three months to September, which is a reflection of slower growth in the economy.
READ: Shoprite feels brunt of poor economy
South African supermarkets grew sales by only 4.9% during a period when internal inflation was reduced from 6% in the corresponding quarter to 3.4%. The company said the core customer base of its flagship Shoprite chain is under pressure from mining job cuts, rising electricity costs, labour instability and lack of job creation. Supermarkets outside South Africa achieved turnover growth of 12.8%.
By midday Shoprite already traded 5.21% softer at R145.91 after the share price hardly moved over the previous three months. Before Monday’s sharp drop the share price had lost only 0.18% over the past 30 days.
The two major indices were supported by the Financial index, which traded 1.27% stronger by midday. Banking shares in particular are supported by the stronger rand, which was close to a seven-week high and at midday traded at R13.06 to a dollar.
The Industrial index was almost unchanged (0.09% lower) and the Gold and Resources indices were forced lower by more profit-taking after recent recovery runs. At midday the Resources index lost 1.98% and the Gold index was 3.44% lower than Friday’s close.
World markets are still driven by perceptions that US interest rates will not be raised this year, putting the dollar under pressure. This supported commodity prices and resources shares, but Imara SP Reid said in its daily Market Snapshot that commodities are currently slightly overbought.
The mood in the resources sector was also dampened by news that the Chinese economy expanded by less than 7% in the second quarter, which indicates commodities demand will remain under pressure for some time.
The two resources conglomerates, Anglo American [JSE:AGL] and Glencore [JSE:GLN], were both sharply lower. Anglo American lost 4.31% to R130.61 and Glencore traded 3.72% softer at R22.75.
The weak dollar and strong rand are however good news for South African banking shares and more than 5.5 million FirstRand [JSE:FSR] shares were traded for more than R270m. The share price, which lost 3.43% over the past 30 days and more than 15% over the past six months, gained 1.13% by midday to trade at R49.20.
Standard Bank [JSE:SBK] and Barclays Africa Group [JSE:BGA], which were almost stagnant over the past 30 days, were both higher on Monday morning. Standard Bank gained 2.03% to R145.91 after it lost only 0.18% over the past 30 days and Barclays Africa, which lost only 0.46% over the past 30 days, traded 1.35% stronger at R130.61.
Old Mutual [JSE:OML], which gained more than 8% over the past 30 days, traded 1.46% stronger at R42.92.
Among the top industrial shares SABMiller [JSE:SAB] traded only 0.04% higher at R810.00 while Naspers [JSE:NPN] lost only 0.26% to R1 934.93.
