Johannesburg - Investors piled in on Tuesday morning to get rid of their FirstRand [JSE:FSR] shares after the banking group shocked the market with very little growth in the six months until December and a warning that the second half of the year would not be much better.
By mid-morning no less than 4.94 million shares were traded for more than R233m, about eight times more than any of the other blue chip shares.
At that stage the share traded 3.78% lower at R47.40 but in earlier trade it was more than 5% softer at R46.57.
FirstRand’s woes not only pushed the Financial index lower, but also contributed to the market losing ground on Tuesday morning.
By mid-morning the All-share index was 0.22% lower at 52 588 points and the Top 40 index had lost 0.26% at 46 478 points. At that stage the Financial index was 0.51% down but earlier, when FirstRand was its lowest, it lost more than 1.5%. Some sanity returned to the resources sector after wild gains on Monday afternoon and the index was 1.70% softer.
The general mood was more subdued as the news of a 25% drop in Chinese exports on Tuesday kept Asian stock markets on the back foot after they hit a two-month high in the previous session. The dollar extended its slide as investors grew wary ahead of major central bank meetings this week.
FirstRand’s first-half earning earnings per share, excluding one-off items, were only 3% higher than the first half of the previous year. Last week Standard Bank [JSE:SBK] announced earnings growth of 27%, Absa of more than 10% and Nedbank [JSE:NED] of 9%.
READ: FirstRand shares drop as growth slumps
Net income rose to R10.48bn in the six months ended December 31 from R10.3bn a year earlier, the Johannesburg-based company said in a statement on Tuesday. The dividend increased to R1.08 a share from R0.93. Non-performing loans rose 8%.
Even more concerning for investors was the warning that advance growth is likely to decline in the second half of the year as further cuts are made given the deteriorating outlook, and corporate activity is unlikely to pick up significantly. Retail and corporate bad debts are are also likely to increase further in the second half.
The share prices of the other big banks did not move much with Standard Bank trading 0.48% lower at R127.42, Nedbank gaining 0.29% to R189.70 and Barclays Africa [JSE:BGA] losing 0.02% to R139.88.
Old Mutual [JSE:OML], which at one stage was more than 10% higher on Monday on news that the group might be broken up in four different stand alone businesses, was only 0.55% stronger at R41.85.
Investors worldwide were more wary on Tuesday. "We have seen a big move in markets in a very short period of time and investors are calling time ahead of the central bank meetings in the coming days," said Kay Van-Petersen, global macro strategist at Saxo Bank in Singapore.
The European Central Bank is widely expected to ease monetary policy at Thursday's policy review, but there is a great deal of uncertainty about how far it would go.
The bad news about Chinese exports poured cold water on the exuberance in the commodity market and investors took profits after some wild gains on Monday. Kumba [JSE:KIO] gained more than 34% on Monday after the iron ore price surged 20% to an eight-month high on expectations that Chinese steel mills are planning a short-term output boost. However, the share was one of the biggest losers on Tuesday, dropping 11.22% to R98. Before morning trade Kumba gained 239.8% over the previous 30 days.
Lonmin [JSE:LON], which was 22% higher on Tuesday, at mid-morning traded 4.21% softer at R38.50. The share gained 219.2% over the previous days before Tuesday’s drop.
Anglo American [JSE:AGL] was 1.87% down at R128.82 and BHP Billiton [JSE:BIL] dropped 3.55% to R185.47.
Sasol [JSE:SOL] gained 1% R490.85 and is now more than 20% higher over the past 30 days, despite a sharp drop of 24% in reported headline earnings per share of R24.28 for the six months to December. Operating profit was down 50% to R14.9bn. The company declared a cash dividend of 570c per ordinary share. The share price is supported by the higher oil price.