JSE up as market more at ease over Gordhan charges

Johannesburg - The mood is far more upbeat on the JSE than a few days ago, as investors are more at ease about fraud charges brought against Finance Minister Pravin Gordhan. All the major indices traded modestly higher by mid-morning on Wednesday.

The market maintained the momentum established on Tuesday, when indices followed global markets sharply higher.

The rand is also trading below R14.00 to the dollar again at R13.89, after Gordhan declined an opportunity on Tuesday to ask the National Prosecuting Authority (NPA) to review the charges against him. Legal experts say the NPA has no case against Gordhan.

The All-share index at mid-morning was 0.64% higher at 51 456 points, while the Top 40 index was 78% stronger at  44 891 points. The Financial index was 0.22% firmer and the Industrial index gained 0.88%, despite lower European markets and a stronger rand than the day before.

The upward momentum of the Industrial index was mainly due to Naspers [JSE:NPN] trading higher, as the share represents more than 20% of the JSE’s market value. The rest of the index was a mixed bag.

European markets were lower on concerns that the Chinese economy is propped up by government spending, high debt levels and an overheated property market.

The latest growth figures from China were however good enough to support a 0.89% gain in the Resources index, as China is the biggest buyer of commodities. Commodity prices, including precious metals, are also higher on the back of a weaker dollar and the Gold index was a solid 3.7% up.

Naspers, which agreed last week to sell Polish online auction site Allegro for $3.25bn, was in the news again. The group said it would combine Ibibo, a travel business in India, with competitor MakeMyTrip to boost its presence in the South Asian country.

By mid-morning the share price was 1.67% higher at R2 3007.95. Naspers, which reached an all-time high of R2 530.00 on September 5 this year, is 10.28% lower over the previous 30 days.

Some of the other big rand hedge shares, most of which are also listed in London, traded lower on Wednesday. British American Tobacco [JSE:BTI] lost 0.84% to R813.42 and is now 8.83% lower over the past month.

Steinhoff [JSE:SHF], which is on the acquisition trail again, traded 0.25% lower at R75.32. The company made an offer of A$361.4m for Fantastic Holdings, an Australian furniture retail group. This is the group’s first acquisition since it sold new shares to the value of €2.45bn to investors.

MTN [JSE:MTN] reached a 52-week low on Wednesday in early trade when it fell to R108.60. The share price later recovered and at mid-morning was 2.61% higher at R111.85. MTN, which had various disagreements with the Nigerian authorities this year, lost more than 22% over the 90 days before Wednesday’s trade.

Aspen [JSE:APN] was 0.29% higher at R304.92 despite the news that it has been fined €5m (R72.2m) by Italy’s competition authorities for market abuse. Aspen denies the finding of the Italian competition authorities that it inflated the prices of anti-cancer drugs by up to 1 500% and plans to appeal the ruling.

The company lost almost 16% of its value of over the last 30 days since GlaxoSmithKline sold its remaining shareholding in the South African group.

Resources shares were boosted by the news that China's gross domestic product expanded 6.7% in the year to September, exactly as forecast. Private investment however remained subdued, with government spending and property strong.

"The upshot from today's data is that economic activity in China seems to be holding up reasonably well, with few signs that a renewed slowdown is just around the corner," said Julian Evans-Pritchard, China economist at Capital Economics.

BHP Billiton [JSE:BIL], the world's biggest diversified miner, also said on Wednesday it was finally detecting indications of a commodity market turnaround, giving its most upbeat assessment in about five years. The share price was however 0.80% lower at R206.10, but Anglo American [JSE:AGL] traded 1.67% higher at R179.05.

Glencore [JSE:GLN], which is already 39.4% higher over the past 90 days and 103.2% for the year to date, gained 1.13% to R41.00 to set yet another 52-week high. The group said it has increased the size of a bond buyback tender to $1.49bn from $1.25bn, seeking to seize on favourable conditions to reduce its debt burden. 

South32 [JSE:S32] also reached another 52-week high after it gained 2.18% by mid-morning to R27.57. The share even outperformed Glencore and gained 52.13% over the past 30 days and 131.45% for the year to date.

Sibanye Gold [JSE:SGL] was 5.30% higher after news that its planned takeover of Anglo American Platinum’s (Amplats') [JSE:AMS] Rustenburg mines for more than R4.8bn was approved by the authorities. Amplats traded 2.20% higher at R349.42.