Johannesburg - The JSE's strong pre-Christmas holiday run came to a halt on Monday morning, but the declines were so modest that they could hardly be described as a change in momentum.
The volumes were very low compared to normal trading days and it was mainly traders who used the opportunity to bank some of the profits of last week’s run.
The mood was probably spoiled by more negative news about the Chinese economy which led to the biggest losses in three weeks on the Chinese stock markets, but the local shares which should have been affected most by the news from China were remarkably steady.
The Resources index was only 0.17% lower, despite news that a further decline in Chinese industrial companies’ profits signalled a deepening economic slowdown in the world’s second-biggest economy. The gold sector was only 0.05% softer.
A slowdown in the Chinese industrial sector is bad news for demand in the commodities South Africa produces. The result was that the All-share index at midday was only 0.19% lower at 51 266 points, while the Top 40 index lost 0.15% at that stage to trade at 46 287 points. Both indices moved mostly sideways after a weaker opening.
The Financial index was 0.23% softer while the Industrial index lost 0.17% in line with weaker European markets.
Industrial profits in China declined 1.4% last month, sliding for a sixth month. Slumping industrial profits are the latest sign that China’s government is struggling to reduce overcapacity and halt declines in producer prices.
"We see weakness across industries with few signs of improvement," said Steve Wang, the chief China economist at Reorient Financial Markets in Hong Kong.
Naspers [JSE:NPN], the local company with the biggest exposure to China thorough its 34% interest in Chinese internet giant Tencent, lost 0.92% to trade at R2 129.16.
The other giants in the industrial sector delivered a mixed bag, with Richemont [JSE:CFR] down, but British American Tobacco (BAT) [JSE:BTI] and SABMiller [JSE:SAB] higher. Richemont lost 1.15% to R111.11, while BAT was 1.07% higher at R862.31 and SABMiller 0.05% stronger at R932.00.
Sasol [JSE:SOL], which gained more than 12% over the previous seven days despite an oil price that is in the doldrums, gained another 0.82% to R429.50. Brent crude oil traded 1.72% lower on Monday morning at $37.24. Sasol’s income from synthetic fuel is directly linked to the oil price.
MTN [JSE:MTN] is also continuing its recovery while it waits for the outcome for a court case in Nigeria that must decide if it has to pay a fine of $3.9bn to the Nigerian telecommunications authority for not cutting off subscribers whose SIM cards were not verified. The share price increased 1.59% to R141.21 after gaining 6.92% over the previous seven days.
In the financial sector Sanlam [JSE:SLM] lost 1.96% to R60.10, after gaining 17.2% over the previous seven days. Among the banks FirstRand [JSE:FSR] lost 0.81% to R44.10 and Standard Bank [JSE:SBK] was only 0.13% higher at R118.08.
Anglo American [JSE:AGL] was the busiest share in the resources sector and traded only 0.40% lower at R73.84. The share gained 17.9% over the previous seven days. BHP Billiton [JSE:BIL], which increased 14.17% over the previous week, traded 1.21% softer at R176.08.