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JSE slips as firm rand drags down industrial heavyweights

Johannesburg - Share prices on the JSE were lower on Thursday as weaker European markets and a stronger rand pushed the prices of the dual-listed shares lower.

By mid-morning the Industrial index - which includes shares which represent more than half of the JSE’s market capitalisation - was already 0.82% lower. The shares of financial institutions, which are under increasing political pressure, were also lower as investors took profits after a strong recovery on Wednesday. By mid-morning the Financial index was 0.88% lower.

The result was that the All-share index at mid-morning on Thursday was 0.61% lower at 52 778 points, while the Top 40 index was 0.69% softer at 45 894 points.

The Resources index had hardly moved by mid-morning after some profit-taking losses in earlier trade. Precious metals continued to strengthen and the Gold and Platinum indices were both substantially higher.

Market conditions are still strongly influenced by the weaker dollar, which sagged again on Thursday after the US Federal Reserve stuck to its mildly upbeat economic view but gave no hint of accelerating its interest rate cycle.

The dollar is also under pressure due to uncertainty over Donald Trump’s policies, as the confirmation of his proposed Cabinet is not quite going to plan.

The rand, which dropped back to R13.69 to the dollar earlier in the week on local political uncertainties, was again on the move on Thursday and traded 0.85% stronger at R13.35, only 16c above the 52-week high of R13.22. The unit was also stronger against the euro and slightly softer against the pound.

A firmer rand means dual-listed shares became more expensive in rand for investors. The market was further suppressed by lacklustre markets in Europe, which were a mixed bag following disappointing company results.

The big news was again the new listing African Phoenix [JSE:AXL], which made a strong debut on the JSE on Wednesday. Thursday's news was however somewhat different as investors took the opportunity to take profits.

African Phoenix arises from the ashes of Abil, the previous holding company of African Bank, whose listing was suspended in 2014. Shares and preference shares in Abil were converted into shares in African Phoenix.

The share price, which was suspended at 31c per share in 2014, surged to 54c in early trade on Wednesday, but lost 11.54% on Thursday to trade at 46c. More than 13 million shares were sold for more than R6m. The ordinary shares have a net asset value of 36c, according to results for the year ending September 2016.

The banking sector has lately been under political pressure from supporters of President Jacob Zuma, who allege South Africa’s biggest banks are frustrating efforts to address racial inequalities. Protestors from the ruling African National Congress’s youth wing invaded a Barclays Africa [JSE:BGA] branch on January 26.

On Monday, the ANC’s top leaders said the four biggest lenders can’t be allowed to continue dominating the industry. These banks have refused to do business with companies linked to the Gupta family, who are in business with Zuma’s son.

Barclays Africa traded 1.25% lower at R154.45 and FirstRand [JSE:FSR] gave up 1.35% to R49.62. Standard Bank [JSE:SBK] lost 0.68% to R142.70. Among the insurers Sanlam [JSE:SLM] lost 3.12% to R61.86.

In the industrial sector Naspers [JSE:NPN] traded 0.77% lower at R2 183.00 and British American Tobacco [JSE:BTI] lost 0.44% to R821.44. Richemont [JSE:CFR] was 1.15% softer at R102.35.

Harmony [JSE:HAR] was one of the busiest shares in the gold sector, gaining 3.92% after the gold price rose to $1 216.90 per ounce. At mid-morning Harmony was 5.47% higher at R35.86; the stock is now more than 26% higher over the past 30 days.

Harmony announced an interim dividend of 50c and said its headline earnings were R1.50 in the six months ended December 31 2016, more than 100% higher than the headline loss of R1.03 reported in the previous comparable period in 2015. Six-month gold production increased by 8% to 17 227kg.

AngloGold Ashanti [JSE:ANG] gained 4.39% to R177.32 and Sibanye [JSE:SGL] was 2.47% higher at R30.74.

The Platinum index gained 2.03% with the platinum price again above $1 000 per ounce, trading 0.84% stronger at $1 002/oz. Impala Platinum [JSE:IMP] was 2.13% higher at R55.65.

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Rand - Dollar
18.94
-0.1%
Rand - Pound
23.92
-0.0%
Rand - Euro
20.42
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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