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Strong rand dulls gold's lustre on JSE

Apr 20 2017 13:55
David van Rooyen
The new JSE logo. (Supplied)

The new JSE logo. (Supplied)

Company Data

GOLD FIELDS LIMITED [JSE:GFI]

Last traded 55
Change 3
% Change 5
Cumulative volume 3776225
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

FIRSTRAND LIMITED [JSE:FSR]

Last traded 55
Change 0
% Change 0
Cumulative volume 19780850
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

GLENCORE PLC [JSE:GLN]

Last traded 59
Change 0
% Change 0
Cumulative volume 3336235
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - Resources shares remained under the whip on Thursday as the rand continued to strengthen, and investors in gold shares in particular are beginning to suffer serious losses.

Some of the top gold shares have already lost almost 15% of their value this week, as the rand gained almost 1.5% over the same period.

By mid-morning the Resources index was already 1.57% lower, while the Gold index had lost 3.6%. At that stage the rand stood at R13.20 to the dollar - 0.51% firmer than the previous day’s close.

The strong rand means that mines received less in rand for their commodities, which are usually priced in dollar. The rand gold price has already dropped almost 4% this week.

READ: Rand rallies as political, global pressures ease

The rest of the market was also lower with the All-Share index 0.32% down to 52 379 points, while the Top 40 index lost 027% to 45 647 points. The Financial index was marginally lower, dropping 0.19% despite good news about inflation, while the Industrial index was only 0.17% stronger.

The Gold index stood at 1 5175 points at mid-morning, 8.5% lower than the close of 1 663 points last Thursday before the Easter weekend. On Thursday morning the gold price was R16 845 per ounce, 3.8% less than the R17 516/oz last Thursday. Investors are also taking profits after gold shares had a strong run since the beginning of the month, with the index still more than 24% higher over the past 30 days before Thursday's trade.

The two biggest losers were Harmony [JSE:HAR] and Sibanye [JSE:SGL], normally the two most liquid gold shares. At mid-morning Harmony was more than 5% down at R31.50, which meant the share was at that stage 14% lower than its closing price of R36.77 last Thursday.

Sibanye, which closed at R35.40 last Thursday, at mid-morning traded at R29.80, which is also more than 5% lower than the previous day and 15.8% softer than last Thursday.

Analysts say Sibanye stocks tend to drop more than the rest of the sector because the group needs billions of rand to fund a takeover of US-based Stillwater Mining Co. Sibanye plans to tap shareholders for about $1bn and raise a further $1bn in debt, most likely in the bond market.

AngloGold [JSE:ANG] was at that stage 3.2% softer at R165.90 and Gold Fields [JSE:GFI] lost 2.76% to R51.79.

Platinum shares were also lower, with Anglo American Platinum [JSE:AMS] losing 4.69% to R352.63 and Impala Platinum [JSE:IMP] dropping 2.92% to R46.21.

Anglo American [JSE:AGL] traded 1.46% weaker at R188.67 and BHP Billiton [JSE:BIL] shed 1.9% to R206.62. Before Thursday’s trade, Anglo American was already 8% lower over the previous seven days and BHP Billiton had lost more than 6%.

The recent strength of the rand - which dropped to R13.98/$ on April 10 after South Africa’s foreign credit rating was downgraded to junk - is attributed to the weak dollar. The currency also received a boost after Finance Minister Malusi Gigaba dismissed calls from one of his own advisers for the nationalisation of banks and mines on Wednesday

An inflation drop bolstered the likelihood of the Reserve Bank keeping interest rates on hold, despite recent shocks to the currency.

The big dual-listed shares received a boost when the FTSE 100 index on the London Stock Exchange recovered somewhat from the losses of the previous two days. The pound, which soared on Tuesday and Wednesday on the news that Britain will hold a snap election soon, stabilised on Thursday and that helped share prices of the companies which earn most of their income abroad.

Naspers [JSE:NPN] was 1.19% higher at R2 480.06 and Steinhoff [JSE:SHF] gained 0.34% to R65.32. British American Tobacco [JSE:BTI] was however 0.35% softer at R879.64.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

equities  |  jse  |  markets

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