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Johannesburg - A powerful surge by the rand, which traded at the highest level against the dollar in more than two months on Thursday morning, continued to put pressure on the JSE.
However, losses in early trade were limited and some of the big losers of the previous day, including Vodacom and some of the banking shares, recovered modestly.
The rand strengthened to R12.77 to the dollar in early trade compared to Wednesday night’s close of R12.91, and also gained against all the other major currencies. By mid-morning it traded at R12.82/$.
Traders said the unit responded to the better-than-expected growth figures for the local economy earlier this week, as this limits the possibility of further downgrades of the country’s credit rating. That is good news for foreign investors who are seeking higher yields on the local bond market. Bond rates were firmer and the yield on the benchmark bond due in 2026 dropped 0.5 basis points to 8.43%.
The dollar is also under pressure due to the political crisis in North Korea, which has the whole world on tenterhooks.
By mid-morning the All-share index was 0.52% lower at 55 193 points, and the Top 40 index traded 0.48% softer at 48 785 points. The resources and gold sectors were the hardest hit by the firm rand, with resources losing 0.75% and gold 1.99%. The Industrial index, which includes many of the rand sensitive shares, was 0.35% down.
The Financial index lost 0.51%, but the losses were smaller than on Wednesday when investors took profits as some of the banking shares are perceived to be overvalued. The profit-taking was sparked by Capitec’s half-year results, as some investors were disappointed by the group’s growth. The Banking index was 2.8% down on Wednesday, but only 0.34% softer on Thursday morning.
Capitec [JSE:CPI], which lost 2.7% on Wednesday, was 0.85% down at R866.33 at mid-morning on Thursday. The share was at an all-time high of R900.50 last week.
Barclays Africa [JSE:BGA], which lost 6.4% on Wednesday, recovered somewhat and traded 0.45% higher at R141.00. The share price fluctuated between R150 and R140.37 in early trade. Standard Bank [JSE:SBK] lost 0.02% to R163.24 and FirstRand [JSE:FSR] was 1.03% softer at R53.89.
The attention of the financial sector focused on life insurance companies after two of the biggest ones, Sanlam [JSE:SLM] and MMI Holdings [JSE:MMI], reported disappointing results.
Sanlam was the busiest share on the JSE, with more than 2.2 million shares being traded after the company reported a 19% drop in half-year profit. The share price was 2.25% lower at R67.00.
The poor results were ascribed to difficult trading conditions in South Africa, where the economy was in a technical recession for the first half of the reporting period. Diluted headline earnings were 225.3 cents per share compared with 277.2c/share a year earlier.
MMI Holdings reported no growth in diluted core headline earnings of R3.2bn for the financial year to end-June, owing to the impact of underwriting losses and weak investment market performance. The share price was however only 0.02% lower at R19.96.
Vodacom [JSE:VOD], which tumbled almost 8% on Wednesday in reaction to news that its parent company Vodaphone will sell a big chunk of its Vodacom shares through a book building process, traded 0.21% higher at R164.63. MTN [JSE:MTN] lost 0.66% to R123.19.
Steinhoff [JSE:SHF] was 0.16% softer at R63.10 and Naspers [JSE:NPN] continued to drift lower, with the share price 0.79% down to R2 848.20.
The top three commodity giants all lost ground. Anglo American [JSE:AGL] shed 0.99% to R235.02, Glencore [JSE:GLN] was 0.30% lower at R60.79 and BHP [JSE:BIL] lost 0.25% to R242.70.
