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Johannesburg - South African banking shares held the JSE back on Wednesday, on a day when world markets were surging on bigger optimism about the global economy.
Most JSE indices were higher by mid-morning, but the major indices were held back by the Financial index which had lost 0.44% at that stage, with the Banking index already 1.65% down. As a result, the All-share index was only marginally higher.
Banking shares were hurt when Standard Bank [JSE:SBK], the second-biggest lender in South Africa, reported a “low single digit” rise in quarterly net interest income on Tuesday, weighed down by weak credit demand at home and lower appetite for risk elsewhere on the continent.
Investors are concerned about the effect slow economic growth will have on the bank’s lending activities, which are still the mainstay of its business.
At mid-morning Standard Bank was already 1.33% down at R145.96, while FirstRand [JSE:FSR] lost 1.44% to R48.49. Barclays Africa [JSE:BGA] traded 0.93% softer at R146.44.
Financial shares were also dented by a slightly weaker rand, weighed down by a dip in demand for commodity-linked currencies as resource prices faltered. By mid-morning the rand traded at R13.16 to the dollar, compared to the previous day’s close of R13.00/$.
The softer rand did however support resources and industrial shares, which were also boosted by firmer international markets after Wall Street finished strongly on Tuesday evening. The Nasdaq Composite hit a record high on Tuesday, while the Dow and S&P 500 brushed against recent peaks as strong earnings underscored the health of corporate America.
The Asian and European markets followed on Wednesday morning. The rally was boosted by reports that President Donald Trump's tax reform proposals, due to be announced on Wednesday, would include slashing the corporate tax rate and lower taxes on offshore earnings stockpiled by US companies overseas.
By mid-morning the All-share index was 0.13% higher, while the Top 40 index gained only 0.18% to 46 573 points. The industrial sector gained 0.37%.
Richemont [JSE:CFR] was the top performer in the industrial sector, gaining 2.28% to reach a new 52-week high of R110.93. Before Wednesday’s trade the share was already 20.72% higher over the past 90 days, and 9.56% up over the previous 30 days.
British American Tobacco [JSE:BTI] was 0.68% higher at R897.02, but Naspers [JSE:NPN] was the victim of profit-taking after the share closed at a new all-time high of R2 536.72 on Tuesday. By mid-morning it was 0.46% softer at R2 525.00.
The resources sector was a mixed bag, with BHP Billiton [JSE:BIL] showing gains but Anglo American [JSE:AGL] and Glencore [JE:GLN] trading lower. The index was only 0.14% higher as the benefits of the weaker rand were negated by lower commodity prices.
BHP Billiton was 0.75% stronger at R203.60, but Anglo American lost 0.27% to R187.49 and Glencore traded 1.31% softer at R51.85.
Impala Platinum [JSE:IMP] was one of the biggest losers in the sector after the company said it has started a reorganisation process that could lead to more than 1 000 job losses. The company said it was the results of protest at its Marula mine and low metal prices.
Impala was 3.65% lower at R43.47 at mid-morning. The stock has lost almost 9% over the past seven days.
