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Johannesburg - Share prices on the JSE continued their lacklustre performance of the past week on Friday and by midmorning it seems as if the market will close the week slightly lower.
At that stage the All-share index was 0.18% lower on 53 186 points, which was also lower than the 53 292 points on which it started the week. The Top 40-index was trading at 46 312 points, which is about 0.50% lower than the week’s starting level of 46 544 points and 0.17% lower than Thursday’s close.
The big losers on Friday were resources shares as investors took profits after the run in commodity prices lost momentum. By midmorning the resources index was 1.36% lower, but was still about 3% higher for the week. Gold also lost 1.50%.
By midmorning the industrial and financial indices were barely in the black. A recovery in the share prices of Anheuser Busch InBev (AB Inbev) and SABMiller [JSE:SAB], respectively the largest and third largest companies on the JSE, helped the industrial index 0.10% higher. The financial index was only 0.03% stronger despite strong demand for financial shares on the European markets.
The news that the US Federal Reserve did not hike interest rates supported the local market somewhat, and the rand remained strong at R14.17 to a dollar, but a strong rand is negative for the rand hedge shares on the JSE as these companies earn their income in foreign currencies, which means that investors earn less in rand.
There was, however, no good news on the local front to spur the market on. The South African economy lost another 129 000 jobs in the second quarter and economists are doubtful about the economy’s ability to grow enough to turn the situation around.
READ: SA sheds 129 000 jobs in Q2
Barclays Africa’s [JSE:BGA] results, announced on Friday morning, also reflected the poor state of the economy. The group said first-half profit rose 3.7%, a slower pace than last year, after credit impairments and non-performing loans increased and South Africa’s economy shrank. Credit impairments increased 46% to R5.2bn.
Barclays Africa’s share price gained 1.17% to R156.26 in line with Barclays plc in London, which traded 3.6% higher after the group’s results.
Other banking shares moved less with Standard Bank [JSE:SBK] gaining 0.62% to R138.70. Investec [JSE:INP] only 0.39% higher on R84.29 and FirstRand [JSE:FSR] losing 0.04% to R48.67. Old Mutual [JSE:OML], which is also listed in London, was 0.28% stronger on R38.71.
SABMiller’s share price, which lost 2% and dropped below R800 per share on Thursday, recovered on Friday after indications that major shareholders are still prepared to back the proposed takeover of the group by AB InBev. This is despite the fact that the sharp drop in the value of the pound has decreased the value of the offer so much that some shareholders are putting pressure on SAB Miller’ board to walk away from the deal.
AB InBev this week raised its cash offer by one pound a share to £45 and also increased the amount of cash for shareholders who choose a cash-and-stock alternative, but some shareholders are still not happy.
Bloomberg reported on Friday that many shareholders view the takeover’s potential collapse as a larger risk than accepting an offer that falls short of their expectations after AB InBev said its improved offer is final. By midmorning SABMiller traded 2.55 higher o R819.88.
AB InBev, which closed on a 52-week low of R1 732 and even reached an intra-day low of R1 700, was midmorning 2.77% higher on R1 780. The group reported second-quarter profit growth that missed analysts’ estimates due to challenging markets in Brazil and Argentina.
Earnings rose 4.3% to $4.01bn on an adjusted basis before interest, taxes, depreciation and amortisation, but analysts expected 6.9% growth.
In the resources sector Anglo American [JSE:AGL] traded 0.87% lower and BHP Billiton [JSE:BIL] lost 2.09% to R176.25.
Platinum shares were trading lower after several platinum shares reached 52-week highs on Thursday. Among those Impala Platinum [JSE:IMP] traded 0.96% lower on R59.67, Northam [JSE:NHM] lost 1.10% to R51.26 and Royal Bafokeng Platinum [JSE:RBP] was 1.94% softer on R51.15.
