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Johannesburg - The recovery on the JSE after the damage done by Jacob Zuma last week came to an abrupt halt on Friday morning as investors started taking profits.
The process started earlier on Friday in Europe, where the major markets were also down after a strong run earlier in the week. The Stoxx Europe index experienced its biggest three-day gain since August after the US Federal Reserve’s decision to hike US interest rates brought an end of months of uncertainty.
By midday on Friday the All-share index was again below 49 000 points, trading 1.57% lower at 48 924 points. The Top 40 index was also testing the level of 44 000 points and was 1.72% lower at 44 155 points.
The biggest losers were again the Financial index, which lost 1.81%, and the Industrial index, which traded 1.99% weaker in reaction to the softer European markets.
The Financial index, which lost more than a fifth of its value at the end of last week after Zuma sacked the respected Nhanhla Nene as minister of finance, did not make up its losses despite a strong run in response to the president's decision to reappoint Pravin Gordhan as minister of finance.
At the beginning of trade on Friday morning Standard Bank [JSE:SBK] was still 4.29% lower over the past seven days. It lost another 2.15% by midday to trade at R112.35. FirstRand [JSE:FSR] was 1.53% softer by midday at R42.49 after shedding 5.25% over the previous seven days. Sanlam [JSE:SLM] was 1.15% softer at R55.20 on top of the 3.17% it lost over the previous seven days.
MTN’s [JSE:MTN] recovery of the past few days was also stopped by profit-taking. The share traded 3.76% softer at R133.01, about 40% lower than six months ago. The company announced that it is taking the Nigerian telecommunications authorities to court about the massive fine imposed on the company for not cancelling the SIM cards of unregistered users.
READ: MTN to dispute huge Nigeria fine in Lagos court
Resources and gold shares are still influenced by rand movements, which are quite volatile against the stronger dollar supported by higher US interest rates. After weakening on Thursday afternoon the currency strengthened somewhat on Friday, which limited the gains made by resources and gold shares. By midday the Resources index was 0.9% higher and gold 0.98% up.
Lonmin [JSE:LON] was again the centre of attention in the resources sector after it became known that only 71% of the shares in the company’s discounted rights offer were taken up by existing shareholders. That meant the Public Investment Corporation had to increase its stake from 7% to almost 30% to take up most of the unsold shares.
Consolidation of the shares started on Friday morning as every 100 existing shares were consolidated into one new share. The new, consolidated shares were trading at R12.49 at midday, after the stock closed at 16c on Thursday. This meant the share price lost almost 25% of its value in morning trade, as it should have traded at R16 for every consolidated share.
ArcelorMittal [JSE:ACL] lost another 0.54% to trade at R3.17, which means the share price is now almost 90% lower than the 52-week high of R28.12 reached at the beginning of the year.
Glencore [JSE:GLN] lost 4.25% to trade at R18.15 but Anglo American [JSE:AGL] was 2.17% higher at R62.48 at midday, after trading as high as R233.17 in February this year.
Bargain-hunters nibbled at Kumba [JSE:KIO], which lost almost half of its value over the past 30 days. By midday it was 12.2% higher at R34.90. Sappi [JSE:SAP] gained 0.41% to reach a new high of R65.87, almost 50% higher than six months ago.
