Publications
Partners
Johannesburg - Resources shares continued their roller coaster ride on Monday, with the Resources index somewhat recovered after Friday’s sharp losses.
The reason for the big swing is the dollar, which lost ground on Monday morning after Friday’s strong surge sent the rand to new record lows after stronger than expected US jobs data strengthened the possibility of a Federal Reserve interest rate hike before the end of the year.
Analysts think however that the pace of the dollar surge, with the greenback on a ten-year high, could harm US exports which might force the Fed to think twice about the possibility of a rate increase.
On Monday morning resources shares were at one stage more than 3% higher but lost some ground later on, trading 2.01% stronger in early afternoon trade. The Gold index was at one stage more than 5% higher.
The star performers among the resources were the big dual-listed commodity conglomerates, which all traded substantially higher. Anglo American [JSE:AGL] traded 4.48% higher at R116.82 and BHP Billiton [JSE:BIL] was 2.28% stronger at R212.00. Glencore [JSE:GLN] gained 6.06% to R35.72.
Lonmin’s [JSE:LON] share price reacted positively to the detail of the company’ rights issue, which was announced on Monday morning. Lonmin priced its $407m rights issue at a 94% discount as the firm fights for survival in the face of depressed commodity prices after writing down $1.8bn in assets.
READ: Lonmin prices rights issue at 1 pence a share
Lonmin plans to sell 27 billion shares at 1.00 pence each to its shareholders in a 46 for 1 rights issue. The share price gained 4.01% to trade at R3.89. At one stage the stock was more than 9% higher in London.
Lonmin said the Public Investment Corporation, which owns about 7% stake of the company, has committed to take up its full entitlement and has “sub-underwritten a material portion of the proposed rights issue in excess of its entitlement”.
The company has said that if shareholders do not approve the rights issue, lenders would not provide the loans to push back the maturity of the 2016 debt to 2020.
The news of Lonmin’s rights issue did not rub off on other platinum producers and Anglo American Platinum [JSE:AMS] and Impala Platinum [JSE:IMP] both reached new 52-week lows. Amplats traded 2.15% lower at R226.93 and Implats was 1.97% weaker at R36.48.
ArcelorMittal [JSE:ARC] was also at a new low of R72.0 after losing another 2.78%. Shareholders were not too impressed with the proposed rights issue, in which the company will raise more money than the current value of the company.
There was a great deal of corporate action in the telecommunication sector with a positive influence on the share prices. MTN [JSE:MTN] gained 1.72% to R160.16 after itse chief executive Sifiso Dabengwa resigned with immediate effect as a result of the fine that was slapped on MTN for not cutting off more than 5 million unregistered SIM card holders. The company said talks with the Nigerian authorities to reduce the fine are in an advanced stage.
Telkom’s [JSE:TKG] share price gained more than 2% after the company said it is in talks to buy Cell C, an acquisition that would add South Africa’s third-biggest mobile phone company to its wireless unit.
READ: Telkom confirms bid to buy Cell C
The landline operator, 40% owned by the South African government, is carrying out due diligence and will update shareholders accordingly. The share price gained 2.28% to R65.08.
