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Johannesburg - Some profit-taking in the resources sector put a damper on activities on the JSE on Friday, and the major indices were marginally lower by mid-morning.
The big commodity shares on the JSE, which all traded at record levels on Thursday after making tremendous strides over the past few months due to a weakening rand, were mostly softer on Friday despite the fact that the rand weakened even further.
The local unit traded more than 1.5% lower than the previous day at R14.24 to the dollar, but the resources sector was already 1.84% lower by mid-morning. Normally a weaker rand supports resources shares as the mining companies’ commodities are priced in dollar, which are worth more in rand if the currency is weak, but investors seem to have thought these shares have run far enough.
The weaker rand is the result of concerns about South Africa’s future credit rating after the medium-term budget term statement revealed that the country is in dire fiscal straits.
As a result of the lower Resources index, the All-share index was 0.01% down by mid-morning at 58 572 points and the Top 40 index was 0.04% weaker at 52 252 points. Both indices were at new all-time highs the day before.
The Industrial index however traded 0.56% higher on yet another all-time high of 89 341 points. The index is driven by the big capitalisation shares which have their major listing in London and earn most of their income outside South Africa.
These shares - such as Naspers [JSE:NPN], British American Tobacco [JSE:BTI] and Richemont [JSE:CFR] - are barely touched by the woes of the South African economy and are also performing well in London, where they have their primary listings.
Naspers and Richemont both traded at record highs. Naspers was 1.25% higher at R3 416.16 and Richemont gained 0.71% to a new record of R130.70. British American Tobacco was 1.06% stronger at R933.76.
Even Anheuser-Busch InBev [JSE:ANH], the brewing giant that took over SAB, traded on a new 52-week high despite some poor trading results. The share was 2.21% up at mid-morning on a high of R1 727.03, but this is still way below its listing price.
The company reported that US sales fell 5.6% in the third quarter, as it seems Americans have lost their taste for the iconic Budweiser brand. This will force them to wring out more cost savings to make for lost sales.
Before Friday’s pull back, the resources sector gained more than 27% over the previous 90 days and some individual shares gained even more than 50% over the same period, but some investors seem to be thinking that they are becoming too expensive.
Although a survey by Reuters indicated that some analysts still recommend a share like Anglo American [JSE:AGL] as a strong buy, some now also regard the same share as a strong sell.
Anglo American traded 2.77% softer at R260.19, but earlier fell 3% to R259.19. The share has been one of the strong movers of late and before Friday’s trade was almost 65% higher over the past 90 days.
Its South African subsidiary Kumba [JSE:KIO], which gained almost 90% over the past 90 days, lost 2.51% to R272.00. Anglo American Platinum was however 1.65% higher to reach another 52 -week high of R391.99.
Glencore [JSE:GLN], which increased its value by more than 50% over the past 90 days, lost 2.51% to R68.87. BHP was 2.51% softer at R272.00, Sasol [JSE:SOL] traded 1.63% lower at R407.10 and Impala Platinum [JSE:IMP] shed 1% to R36.63.
