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Johannesburg - Investors on the JSE sought safety in the big dual-listed shares on Tuesday morning, all of which were trading higher by mid-morning.
The big market capitalisation of these shares also pulled the market higher and all the major indices, except gold, were stronger at that stage, with the two major indices almost 1% up.
Major dual-listed companies draw investments if there are concerns about the South African economy, because they are less affected as they earn most of their income abroad and in foreign currencies. This means local investors earn more in rand terms if these firms perform well elsewhere, particularly if the unit is weak as is the case at present.
The rand dropped back to R15.13 per dollar on concerns about the the South African economy's growth prospects, particularly after the dire employment figures released on Monday and more weak data about the economy of China, one of South Africa’s major export markets.
The big shares were supported by higher European markets, where they are also listed. These markets had risen by mid-morning for the third consecutive day, in reaction to the latest report on the US job market released on Friday. Although fewer jobs were created than anticipated, investors were encouraged by a wage growth gain of 2.5% year-on-year, a possible sign of continuing firming in the jobs market.
At mid-morning the Industrial index had already gained 1.30%, with the five biggest shares on the JSE all trading higher. At that stage the All-share index was already 0.90% up at 51 813 points, while the Top 40 index had gained 1.19% to 45 674 points. This big difference indicated that the market was driven by shares with big market capitalisations.
Even the Resources index was 1.20% higher despite negative factors such as a strong dollar, lower commodity prices and concerns about the Chinese economy. Some local mining shares were down, but the index was also supported by the top two commodity conglomerates which are listed in London and which both traded higher.
The gold sector was however not so lucky and lost 3.1% as the gold price dropped even further in response to the stronger dollar. By mid-morning gold was trading at $1 265 per fine ounce, after the metal traded as high as $1 300/oz last week.
The biggest share on the JSE, global brewer Anheuser-Busch Inbev [JSE:ANB], made its strongest move in a long time and traded 3.51% higher at R1 979.06. The stock has gained more than 4.7% over the previous seven days.
British American Tobacco [JSE:BTI] (BAT), the second-biggest share, rose 2.57% at R940.96 and SABMiller [JSE:SAB], the third-biggest, gained 1.62% to R933.31. Before Tuesday’s trade BAT was 6.8% higher than a week ago and SABMiller 5.65% up.
Naspers [JSE:NPN] traded 2.18% stronger at R1 974.95 and Richemont [JSE:CFR] gained 2.57% to R98.60. Steinhoff [JSE:SHF], which is listed on the Frankfurt Stock Exchange, at mid-morning was 0.76% up at R88.92.
In the resources sector dual-listed BHP Billiton [JSE:BIL] was 1.89% higher at R175.91 and Anglo American [JSE:AGL] traded 1.48% stronger at R124.82. Glencore [JSE:GLN] was however 0.31% softer at R28.75.
Some local mining shares were hit by softer commodity prices. The two biggest platinum shares were both sharply down as the platinum price followed gold lower. Anglo American Platinum [JSE:AMS] lost 3.68% to R355.66 and Impala Platinum [JSE:IMP] (Implats) was 3.53% softer at R45.63. Before Tuesday’s trade Implats was already 17.7% lower over the past seven days.
Kumba’s [JSE:KIO] recent strong run of more than 200% also seems to be halted by a declining iron price, which dropped back to below $60 a ton. The share was 1.08% lower on Tuesday morning at R88.08. Kumba, which at one stage was more than 200% higher than three months ago, dropped 27% over the past seven days, but the gain for the past three months is still 127.7%.
