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Johannesburg - The news that China’s economy grew in the first quarter at the slowest pace since 2009 has put a damper on the JSE on Friday.
Although the news about the Chinese growth was expected, and other indicators suggest that a recovery in China might be underway, investors are still uncertain about the sustainability of such a recovery.
By lunch time on Friday most of the major indices were still down, although the losses were very modest. The biggest losers were again the resources shares, who are reliant on China as a market for their commodities. The stronger dollar added to pressure on these shares.
The rand remained remarkably strong and traded at R14.55/$, after the currency traded on Thursday at a new high for the year of R15.44.
The All Share-index was 0.25% softer on 52 715 points and the Top 40-index dipped 0.14% to 46 484 points. The Resources Index was down 1.59%, with the Gold Index losing a substantial 3.41%.
Bucking the downtrend was the Industrial Index (+0.22%), with SABMiller [JSE:SAB] and Anheuser-Busch Inbev [JSE:ANB] leading the gains after AB Inbev reached a deal with the South African government.
Official data on Friday showed China's gross domestic product grew at an annual rate of 6.7% in the first quarter of the year, easing slightly from 6.8% in the fourth quarter. However, other indicators released showed new loans, retail sales, industrial output and fixed asset investment were all better than forecast.
Analysts say the data is evidence of a bottoming out in the Chinese economy's slowdown, but some warn that the first quarter of 2015 also got off to a similarly glowing start before a stock market crash later that year.
AB InBev traded 3.31% higher at R1 849.88 on the news that the company would invest R1bn to support small South African farmers as part of concessions agreed with the government to secure regulatory approval for its $100bn-plus takeover of SABMiller.
The world’s biggest brewer said the concessions, which also include a five-year freeze on layoffs, were agreed with the South African Ministry of Economic Development.
“It is expected that the agreement between government and the merger parties will expedite the merger proceedings before the South African competition authorities,” AB InBev said.
AB Inbev reached an all time high of R2 037.97 shortly after its listing earlier this year, but lost ground since then and was before today’s gains 7.8% lower over the past 90 days. SABMiller, which lost 6.8% over the previous 30 days, traded 1.91% stronger on R880.49.
Naspers [JSE:NPN] slipped slightly to R2 120.02 (-0.19%), while MTN gained 2.35% to R139.50.
