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JSE recovers as tech stock rout eases

Johannesburg - Share prices on the JSE recovered on Tuesday, although the negative factors that are supposed to hamper the market, still exist.

The sell-off of technology stocks on Wall Street that started Monday's sharp drop on global markets, continued on Monday afternoon, but the biggest major technology stocks in Asian recovered on Tuesday, which means that Naspers [JSE:NPN], by far the biggest share on the JSE and which lost more than 5.5% of its value on Monday, also regained some of the losses by mid-morning.

The share price was at that stage 1.28% higher at R2 557.22, after Tencent, the Chinese internet giant in which Naspers holds a 34% interest, traded 1.45% stronger. Naspers was at one stage more than 2.5% higher at R2 6883.03.

Analysts said that Asian technology stocks recovered on Tuesday as they still offer value compared to overvalued tech stocks in the United States. The price earnings ratios, which are not as high, are also supported by strong results and most of the technology giants in Asian, including Tencent, still reported strong results in the first quarter.

The European markets were also stronger on Tuesday, after Monday's big losses, as investors are looking for value after losses the past few days.

Dual-listed

Most of the dual-listed shares that also trade on the London Stock Exchange found support in the weak pound, as they derive income from abroad and earn more in pound if the currency is weak.

Political uncertainty in Britain, after last week's shock election results, and in the United States where president  Donald Trump is still under scrutiny for his camp's alleged ties with Russia, continued to put the pound and the dollar under pressure. That is also the reason why the rand strengthened on Tuesday and traded at R12.79 to a dollar.

The local currency has now strengthened 1.2% since Moody's downgrade amidst the uncertainty in their own countries.

A strong rand is normally not good news for the dual-listed shares, which make up a big part of the industrial index, but the industrial index gained in response to the gain in the Naspers share price and the improved mood on global markets.

The financial index was 0.53% higher in response to the stronger rand, despite the news that Moody’s downgraded all of South Africa's major financial institutions. That was expected as no institution in a country can have a higher rating than the sovereign rating.

READ: Moody’s downgrades SA’s top 5 banks … and more

The result was that the All-share index, which lost more than 1% on Monday, traded 0.53% higher at 51 839 points. The Top 40 index was 0.61% stronger at 45 443 points.

Financial shares were among the busiest on the JSE although the share prices did not move much. Barclays Africa [JSE:BGA] was again the busiest, but gained only 0.07% to R149.01. Standard Bank [JSE:SBK] was 0.36% stronger at R143.62 and FirstRand [JSE:FSR] gained 0.46% to R47.81.

Some of the resources shares which suffered big losses lately made strong recoveries. Arcelor Mittal [JSE:ACL], which was 20.7% lower over the previous seven days, gained 5.98% to R6.03. African Rainbow Minerals [JSE:ARM] traded 5.61% higher at R83.45 and Impala Platinum [JSE:IMP] was 3.54% stronger at R37.75.

Sibanye [JSE:SGL] was 3.43% higher at R17.20 after the company announced that its rights issue of $1bn to finance the acquisition of the Stillwater platinum mine was five-fold over-subscribed.

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Rand - Dollar
19.09
-1.0%
Rand - Pound
24.06
-0.7%
Rand - Euro
20.58
-0.5%
Rand - Aus dollar
12.39
-0.3%
Rand - Yen
0.13
-0.9%
Platinum
894.64
-0.3%
Palladium
992.99
-0.9%
Gold
2,196.85
+0.1%
Silver
24.44
-0.8%
Brent Crude
86.09
-0.2%
Top 40
67,964
+0.4%
All Share
74,173
+0.4%
Resource 10
56,465
+1.4%
Industrial 25
103,617
+0.3%
Financial 15
16,480
-0.3%
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