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Steinhoff, Naspers shine as JSE stages modest rally

Johannesburg - Share prices on the JSE rose on a broad front on Wednesday in response to a recovery on European markets, as the prospects of a banking crisis diminished somewhat.

The local market tends to follow the European markets, as the big shares on the JSE are also listed on European markets and are normally in line with what happens on the continent.

But the share prices of the two of the biggest companies on the JSE, SABMiller [JSE:SAB] and Anheuser Busch (AB) InBev [JSE:ANB], did not move much as investors were waiting for the outcome of the annual general meeting in London where SABMiller shareholders were to approve the company's proposed takeover by AB InBev.

By mid-morning on Wednesday the All-share index was already 0.87% higher at 51 345 points, while the Top 40 index gained 1.01% to 44 846 points. The Financial index was 0.51% up as European bank prospects improved and the Industrial index, which includes most of the dual-listed shares, followed the European markets higher and gained 1.12%.

The picture for resources shares was a mixed one as the Resources index gained 1.01%, but the Gold index lost 0.89%.

European shares turned around late on Tuesday and improved further on Wednesday, as Deutsche Bank started picking up from record lows on hopes that a US demand for $14bn to settle claims that it mis-sold mortgage-backed securities could be lowered. Deutsche Bank lost 11% of its value on concerns about these claims. Other European banks face similar claims.

Traders said the stock recovered, thanks to remarks by a US Justice Department official on the possibility of lowering mortgage-related penalties for banks if they cooperated with the authorities.

The mood on international markets was also boosted by perceptions that Senator Hillary Clinton, the Democratic candidate in the US presidential election, is getting ahead in the race against Donald Trump, the Republican Party’s controversial candidate.

The only damper on the mood is the lower oil price after Saudi Arabia and Iran dashed expectations that the two major Opec producers would find a compromise at a meeting in Algiers to help ease a global glut of crude oil. Sasol [JSE:SOL] responded by losing 1.99% to R356.43.

Most of the attention on the local market was on SABMiller’s AGM in London, where the deal was expected to be approved. A positive outcome means Thursday will be the last day to trade SABMiller shares on the JSE. The stock will be suspended from the start of trade on September 30, and de-listed at the close of day on October 4.

SABMiller shareholders will receive their cash payment between October 11 and 13. As soon as SABMiller is suspended, it will also fall out of all local indices.

AB InBev will remain listed on the JSE, but it is not part of the All-share index as its local shareholding is too small and it will not change much, as most of the SABMiller shareholders will receive cash for their shares.

By mid-morning SABMiller was 0.95% higher at R777.30 after the share lost over 20% of its value over the past 90 days. AB InBev was unchanged at R1 781.11.

READ: Anheuser-Busch InBev clinches R1.4trn SABMiller deal

Remgro [JSE:REM] was 1.90% lower at R237.12 on news that it plans to raise more than R9.9bn from shareholders as the company considers deals, including a right to buy SABMiller’s stake in Distell.

The investment group has first refusal on SABMiller’s 26% holding in Distell valued at about R9.6bn. The brewer was told to sell the asset by competition authorities as a condition to winning South African approval for its takeover by AB InBev. Remgro already owns almost 53% of Distell.

READ: Remgro to raise R9.9bn as Johann Rupert mulls Distell deal

Steinhoff [JSE:SHF] and Naspers [JSE:NPN] were among the star performers, with Naspers gaining 1.89% to R2 343.51 and Steinhoff lifting 3.76% to R78.84. Steinhoff is raising as much as R36bn by selling shares to repay money the South African furniture and clothing retailer borrowed for recent acquisitions.

Impala Platinum [JSE:IMP], the company that is to replace SABMiller in the Top 40, was 2.32% stronger at R67.40. Its inclusion would have an impact on the make-up of the Top 40 index, as Impala’s market cap is only R49.6bn compared to SABMiller’s R1.3trn.

MTN [JSE:MTN] is in the news again with reports that the Nigerian senate was set to investigate fresh allegations that the company illegally repatriated R187bn out of Nigeria. MTN denied the allegations, but the share price was 1.05% lower at R118.51 and lost almost 4% over the previous seven days.

Capitec’s [JSE:CPI] share price was 0.96% stronger at R614.86 as the banking group reported 19% growth in headline earnings per share to 1 517c in the interim period of 2015. Return on equity at 26% was unchanged, and headline earnings were up 19%.

The bank also recorded a drop in the number of loans granted, as it lent money to "better quality clients" and approved fewer high-risk, low-value, shorter-term loans.

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Rand - Dollar
18.94
-0.2%
Rand - Pound
23.90
-0.0%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.1%
Platinum
907.85
+1.2%
Palladium
1,012.25
+1.1%
Gold
2,221.12
+1.2%
Silver
24.86
+0.9%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
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Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
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