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Strong rand puts damper on JSE

Johannesburg - A strong inflow of foreign capital into the South African bond market which pushed the rand to the strongest level since March this year, put a damper on share prices on the JSE on Monday morning.

The news on Friday evening that Standard & Poor's decided to keep South Africa’s credit rating intact supported financial shares on Monday and gave the bond market a huge fillip.

Analysts said there is a huge demand for emerging market bonds among investors using carry trade to finance these investments. Although South African bonds’ foreign credit rating is below investment grade due to political uncertainty, investors feel the local political situation does not differ much from that of many other developing markets.

The strong inflow, which can easily be turned around at any time in response to political upheaval, pushed the rand to R1.69 to the dollar by mid-morning, the strongest since March 23 this year.

READ: Rand powers ahead on heightened global risks

The firm rand is however bad news for the big dual-listed shares on the JSE, which earn most of their income in other currencies and earn less in rand if the currency is strong.

Most of these shares are listed in the Industrial and Resources indices, which both traded lower by mid-morning on Monday. The Industrial index was at that stage 0.31 lower while the Resources index was 1.63% down. The Financial index was however 0.32% higher, supported by the strong rand.

The result was that the All-share index shed 0.42% to 52 668 points, while the Top 40 index was 0.55% softer at 46 255 points. As recently as May 29 the All-share index was still above 54 000 points; it has lost more than 2% over the previous seven days.

Implala Platinum [JSE:IMP] was once again among the top losers in the resources sector, trading 4.17% lower at R33.80. The share has now lost 24.3% of its value over the previous 30 days. It has been under pressure since the group announced a rights issue that will dilute current shareholders' interest in the company.

Gold mining group Sibanye [JSE:SGL], which offers shares at a 60% discount to finance the acquisition of the Stillwater platinum mine in the United States, lost 2.02% to a new 52-week low of R15.05 a share. Before Monday's trade it was already 14.71% lower over the previous seven days. The company lost almost half of its value (46.8%) over the past 30 days.

BHP [JSE:BIL] traded 1.7% softer at R191.50 and Anglo American [JSE:AGL] lost 1.23% in morning trade to R166.90. As recently as January 31 this year, Anglo stood at a 52-week high of R235.49. Sappi [JSE:SAP] was 1.13% softer at R90.91.

The demand for shares in Barclays Africa [JSE:BGA] continued on Monday morning and the stock gained 1.54% to R151.30. There is a big demand for shares after Barclays Plc said last week that it managed to place far more of its Barclays Africa shares with institutional investors than originally planned.

Old Mutual [JSE:OML], which last week announced plans to list some of its interests in Old Mutual Wealth separately, was the busiest share on the market and more than 10 million shares were sold for over R339m in early trade. The share price gained 1.97% to R33.13.

Retail shares were again the spotlight, with Mr. Price [JSE:MRP] gaining 4.93% to R164.74. Woolworths [JSE:WHL] advanced 2.89% to R68.94, but Spar [JSE:SPP] reached a new 52-week low after disappointing results last week and was 0.63% softer at R159.76.


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Rand - Dollar
18.93
-0.1%
Rand - Pound
23.90
-0.0%
Rand - Euro
20.44
+0.1%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.1%
Platinum
904.58
+0.9%
Palladium
1,012.82
+1.1%
Gold
2,218.03
+1.1%
Silver
24.80
+0.7%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.9%
Resource 10
57,251
+2.9%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
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