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By midday, the Financial index lost another 1.25% with the shares of all four big banks again lower.
Even Capitec [JSE:CPI], the other banking group with big exposure to the developing market, but who has been the darling of investors until now, was sharply lower.
And to add to the mixture of uncertainty on the JSE geopolitical tensions about Iraq, Ukraine and the Gaza strip are continuing and are increasingly forcing investors to look up safe havens like gold and government bonds.
The result is that the All Share-index of the JSE was another 0.43% lower on 50 464 points, while the Top 40-index lost 0.38% to 45 359 points. Initially the All Share-index lost almost a percent, but then clawed its way back to recover some of the early losses.
Another 55 million shares in Abil were sold by midday on Friday but the share price was only 2c or 4% lower on 48c, after it dropped earlier to 38c.
Investors are now not only concerned about Abil’s inability to collect its massive bad debts, but are also worried about the influence that the consumers’ high level of debt in difficult economic circumstances will have on other financial institutions.
Capitec lost almost 4% to R223.01. Nedbank [JSE;NED] was the biggest loser amongst the big banks and traded 1.73% lower on R232.41 followed by Barclays Africa [JSE;BGA] which lost 1.26% to R165.77. Standard Bank [JSE;SBK] was 1.14% weaker on R141.70 and FirstRand [JSE;FSR] lost 1.09% to R48.24.
Coronation Fund Mangers [JSE:CML], the investment company whose funds have the biggest exposure to Abil, weakened 1.44% to R92.15.
Amongst the other indices the Industrial index (0.22%) and Resources (0.20%) was only marginally lower, but the Gold index jumped 1.25% on the back of a stronger gold price due to political tensions and expectations that the gold price might increase even further as there are no solution in sight for the current political flash points.
American investors are particularly concerned about the advances made by the so-called Islamic State fighters against the besieged Yazidi minority in Iraq's north. This increased the possibility of renewed military action by the US in Iraq.
All the major indices on Wall Street were down and may again be under pressure on Friday, after president Barack Obama announced late on Thursday that he ordered the air strikes to help Iraq’s forces to prevent "genocide" in Iraq's north. He did not say whether air strikes have already been carried out.
Brent Schutte, market strategist at BMO Global Asset Management, said Thursday's losses on Wall Street were "completely" due to a sharp worsening of conditions in Iraq.
On Friday morning the Asian markets were also down. "The markets is very thin and highly reactive to overseas inputs," Yutaka Miura, senior technical analyst at Mizuho Securities, added.
In Europe there are also concerns about the ban Russia announced on certain imports from the US and Europe in reaction to the EU’s sanctions against Russia.
This is ideal circumstances for gold to flourish and by midday on Friday the gold price was more than 5% higher on $1 318. Gold Fields [JSE;GFI] benefited most from the improved sentiment toward gold and traded 2.08% higher on R43.58. Sibanye Gold [JSE:SGL] gained 1.82% to R27.90 and Harmony [JSE:HAR] improved with 1.67% to R34.16.
