Publications
Partners
Johannesburg - Share prices on the JSE continued to drift lower on Friday morning, with investors forced to the sidelines by local political uncertainty and a slump in world markets.
All major indices were down by mid-morning on Friday as investors seem to be waiting for new indicators that will steer the market in a definite direction.
Share prices on the JSE were still higher on Thursday morning, but dropped steeply over the afternoon as foreign markets headed for the lowest level in six weeks. The pattern continued on Friday, and by mid-morning the All-share index was 0.82% softer at 51 584 points and the Top 40 index 0.81% lower at 45 626 points.
The local market hardly moved at all over the past three months, with the All-share index only 0.2% higher than three months ago before Friday’s trade. The index lost 3.23% over the past 30 days. The Top 40 index gained 1.9% over the past 90 days, but is 3.3% lower over the past 30 days.
Financial shares were the biggest losers on Thursday after a promising start, and the trend continued on Friday with the Financial index losing 1.12% by mid-morning. All the major banking and insurance shares were substantially down. At that stage the Industrial index was 0.66% lower and the Resources index, which gained more than 5% over the previous seven days, had lost 0.92%.
Sentiment towards local assets remained uneasy after the Public Prosecutor on Thursday said she would oppose legal challenges to her recommendation to change the South African Reserve Bank’s mandate.
Sentiment is also spoiled by the mood on world markets, which are poised to end the week at six-week lows in the face of oil weakness, a spike in bond yields and anticipation of tighter monetary policy, particularly in the United States.
Bets that the world's major central banks are moving closer to unwinding ultra-loose monetary policies have rattled markets, and European Central Bank minutes released on Wednesday indicate its policymakers are open to further steps. This sent German government bond yields to 18-month highs.
Higher interest rates in the developed world can lead to an outflow from emerging markets like South Africa, as investors are currently seeking higher yield in these markets to compensate for the ultra-low rates in the major economies.
These sentiments are hurting the rand, which on Friday morning traded at R13.47 to the dollar, but the weaker currency is not supporting the dual-listed shares on the JSE as it normally does.
Banking shares gave up most of their gains of the last few days. Barclays Africa [JSE:BGA] was the big loser on Friday, shedding 2.32% to R139.08, and Nedbank [JSE:NED] lost 1.95% to R205.83. FirstRand [JSE:FSR] traded 1.21% softer at R48.21 and Standard Bank [JSE:SBK] was 1.01% lower at R144.63.
The top insurers also traded lower with Old Mutual [JSE:OML] losing 1.54% to R32.69. Sanlam [JSE:SLM] was 1.31% weaker at R66.22 and MMI Holdings [JSE:MMI] dropped 1.52% to R20.11. The company, which lost more than 18% of its value over the past 90 days, is now close to its 52-week low of R19.24.
British American Tobacco [JSE:BTI] was a big loser in the industrial sector, trading 1.48% lower at R115.76, and Naspers [JSE:NPN] shed 0.61% of its value to R2 478.77. The stock is now more than 10% lower over the past 30 days.
The promising rally in commodity conglomerates also came to an end on Friday morning. BHP [JSE:BIL] traded 0.66% lower at R214.12, ending a run in which the share price gained almost 10% over the previous seven days. Anglo American [JSE:AGL], which gained more than 7% over the same period, was 1.39% lower at R180.43.
Property shares were among the busiest shares on the JSE. Growthpoint [JSE:GRT] however traded 0.94% lower at R24.27 and Redefine [JSE:RDF] lost 0.67% to R10.42. SA Corporate Real Estate [JSE:SAC] was 0.72% softer at R5.53.
