Johannesburg - The JSE followed world markets firmly higher on Friday morning after the chief of China's central bank said the bank still has enough monetary firepower to keep the world's second-largest economy on track as G20 ministers gathered in Shanghai.
All major indices on the JSE were higher by mid-morning, except for the Gold index which traded marginally lower on the back of a slightly weaker gold price.
At that stage the All-share index was already 2.06% higher at 49 370 points, while the Top 40 index traded 2.43% stronger at 43 780 points.
The star performer was the Industrial index, which gained 2.45% by mid-morning on the back of stronger European markets, while the Financial index gained 1.93% and the Resources index 2.04%.
The JSE is now firmly on the recovery path after losses on Wednesday, when the initial reaction to Finance Minister Pravin Gordhan’s Budget Speech was disappointment in the lack of concrete measures to achieve the optimistic targets set out in the address.
Fears that South Africa’s credit rating could be downgraded to junk status subsided since then, as the rating agencies adopted a wait and see attitude towards the prudent measures announced in the budget.
Attention is now firmly on the international economy, amid investors' hopes that the G20 ministers will announce measures to stem volatility on global markets after their summit this weekend in Shanghai.
US Treasury secretary Jacob Lew however said earlier this week that an “emergency response” should not be expected from the group, despite market gyrations. Niv Dagan, Melbourne-based executive director at Peak Asset Management, said there could be well be a lot of talk and little action.
The markets were however encouraged by the People’s Bank of China governor Zhou Xiaochuan, who said China still has monetary policy tools at its disposal and that there is no reason for yuan depreciation.
Making his second public appearance in a week following months of silence as officials try to soothe anxiety over China’s currency, Zhou said the Chinese economy remains strong and its structure and quality is improving. The PBOC published a separate statement defining current policy as "prudent with a slight easing bias".
Asian stocks rose, with the benchmark measure set for a second weekly gain, with major European markets also firmly higher after the opening.
READ:Asian stocks rise, headed for weekly gain
Some of the big dual-listed shares in the Industrial index made solid gains, including Naspers [JSE:NPN] and Richemont [JSE:CFR], the two industrial shares with the biggest exposure to the Chinese economy. Richemont was 3.5% higher at R100.70 while Naspers traded 2.52% stronger at R1 835.12.
Steinhoff [JSE:SHF], which has taken on the famous Sainsbury group in a battle to acquire British retail chain Home Retail Group, traded 3.13% stronger at R82.10. British American Tobacco [JSE:BTI] was 2.90% stronger at R860.63.
Sasol [JSE:SOL], which gained 10% over the past 30 days, traded another 2.26% higher at R425.42.
BHP Billiton [JSE:BIL] surged 4.33% to R157.95 in the resources sector, and Anglo American [JSE:AGL] was 1.18% stronger at R96.28.