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Cape Town - The JSE's All-share index breached the 56 000 level decisively on Monday morning, as the weakening rand continued to support dual-listed shares.
The Industrial and Resources indices, which include most of the dual-listed shares which earn most of their income abroad in foreign currencies, were the best performers on Monday with both almost 1% higher in early trade. These foreign earnings are worth more in rand if the currency is weaker.
The rand continued to drift lower on political uncertainty on the eve of Tuesday’s vote of no confidence in President Jacob Zuma in Parliament and Standard & Poor’s review of South Africa’s credit rating to be announced on Friday. By mid-morning the unit stood at R13.42 to the dollar, after trading as strong as R12.89/$ less than two weeks ago.
By mid-morning on Monday the All-share index was 0.55% higher at 56 267 points. This means the index improved by almost 1.8% since the beginning of last week, when it breached the level of 55 188 points set in April 2015 for the first time.
The Top 40 index was 0.66% higher on a new high of 49 835 points. These indices are mainly driven to by the Industrial index, which gained 0.67% by mid-morning to trade at an all-time high of 83 966 points.
The Resources index, which was as low as 28 996 points on June 25 on the back of a strong rand, continued its recovery and lifted 0.88% to 35 168 points. That means the index gained more than 20% in about six weeks, and the 52-week high of 36 210 set in January this year is again in sight.
Major commodity shares like Glencore [JSE:GLN] and South 32 [JSE:S32] are already trading at 52-week highs, and conglomerates like Anglo American [JSE:AGL] and BHP [JSE:BIL] are within reach.
Glencore was 2.04% firmer on a high of R60.32 and South32 was 2.44% stronger at R32.27. Anglo American gained 1.86% to R227.65 and BHP 1.53% to R243.60.
Most of the market's attention was however on Steinhoff [JSE:SNH] and Shoprite [JSE:SHP], after it became known that Steinhoff plans to acquire a controlling stake in Shoprite through its African spinoff in a share deal worth R35.5bn.
Steinhoff is in the
process of listing its African retail assets separately on the JSE, and said on
Friday it has established a single company - Star - through which to effect the
listing. Star reached an agreement with major shareholders in Shoprite which
will give it control over about 22.7% of the economic
interest and 50% of the voting rights in Shoprite.
Steinhoff shareholders like the idea, but Shoprite’s share price dropped sharply. Both stocks were among the busiest on the JSE in early trade. By mid-morning Steinhoff traded 1.92% higher at R70.15, but Shoprite was 4.35% softer at R199.92.
Naspers [JSE:NPN] also performed strongly on Monday, pulling the market higher with the share 2.21% higher at R2 898.58, just below the all-time high of R2 898.58. In early trade, the stock as as high as R2 930.00.
Richemont [JSE:CFR], which gained more than 8% last week to close on a 52-week high of R118.49 on Friday, took a breather on Monday and shed 0.44% to R118.00.
MTN [JSE:MTN] made a strong recovery on Monday after sharp losses last week in response to its results. The share was 2.76% higher at mid-morning at R119.42, and earlier traded as high as R120.37. Vodacom [JSE:VOD] gained 1.47% to a new 52-week high of R185.25.
Both companies are reported to be interested in Nippon Telegraph & Telephone Corp’s African operations, the former Japanese monopoly acquired with the takeover of Dimension Data. The main prize is Didata’s Internet Solutions.
