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Richemont steals the show on JSE

Johannesburg - Richemont [JSE:CFR] was on Wednesday one of the exceptions among the blue chip shares on the JSE, when its share price gained more than 3% in morning trade.

Surprisingly good results from the European luxury group LVMH did not only pull other luxury groups such as Christian Dior and Kering higher on the European markets, but also gave Richemont a boost after the group’s share price was lingering around 52 week lows recently.

Richemont, one of the double listed giants on the JSE, is already more than 23% lower for the year-to-date on concerns about falling demand in the luxury goods markets. An announcement earlier this month that Swiss watch sales exports were down sharply, led to the share price to reach a 52-week low of R82.40 after trading as high as R120.58 as recently as November last year.

But the French group, LVMH, surprised world markets on Wednesday by gaining more than 7% in Paris, after its fashion and leather Q2 sales beat forecasts, helped by solid demand in the US and improved trading in Asia, excluding Japan.

The share prices of other luxury goods firms also rose sharply and contributed towards the European markets trading higher on Wednesday.

The stronger European markets, however, did not do much for the local markets and most of the big double listed shares on the JSE were lower by midmorning on Wednesday. All the major indices, except resources, were at that stage also lower.

By midmorning the All-share index was 0.23% lower on 53 513 points and the Top 40-index lost 0.22% to 46 687 points. At that stage the industrial index was 0.44% lower and the financial index 0.18%, but the resources index had gained 0.44%.

World markets received a boost from the news that the Japanese government is busy with a stimulus package of more than $265bn to reflate the country’s flagging economy.

The government’s announcement came earlier than expected and pressured the Bank of Japan to match its big spending plan with additional monetary easing at its closely-watched rate review ending on Friday.

Asian stocks settled near one-year highs on Wednesday while the stocks markets in Germany and France were substantially higher on good company results in the luxury goods and automobile sectors. This was, however, not good enough to kick start the local markets.

SABMiller [JSE:SAB] was 2.63% lower on R811.14 and the share price is now almost 10% lower over the past 30 days, as it seems the proposed take-over of the group by Anheuser Busch ABInBev (AB InBev) is sailing into troubled waters at a stage when almost all the regulatory approvals for the deals have been dealt with.

Major shareholders like Aberdeen Asset Management are now putting pressure on SABMiller’s board to walk away from the deal, as the offer is now much less than before, because of the sharp drop in the value of the pound. Aberdeen said a revised offer from AB InBev to compensate for the weaker pound after Britain’s decision to leave the European Union is not high enough. AB InBev traded 1.14% lower on R1 806.78.

British American Tobacco [JSE:BTI] traded 1.12% lower on R891.45 and MTN [JSE:MTN]  lost 1.29% to R145.69. Naspers [JSE:NPN] was only 0.10% softer on R2 262.10 after earlier having traded almost 1% lower at  R2 242.05.

In the resources sector BHP Billiton [JSE:BIL] was 1.82% higher on R181.27, while Anglo American [JSE:AGL] lost 0.08%.

Kumba [JSE:KIO] was the star performer gaining 4.03% to R129.30 after the company announced on Tuesday an earnings growth of 20% in the first half of the year. Analysts are impressed with the way the company restructured its activities to be profitable at a much lower iron ore price.

Shoprite [JSE:SHP], which surprised last week with strong sales growth in Africa despite depressed economic conditions, was trading at another 52-week high. By midmorning the share price was 1.14% up on a high of R200.87.

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