Industrials edge higher on JSE as weak rand boosts heavyweights

May 19 2017 13:43
David van Rooyen
The new JSE logo. (Supplied)

The new JSE logo. (Supplied)

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Johannesburg - Industrial shares on the JSE edged higher on Friday as the weaker rand continued to support dual-listed shares. The Industrial index traded at a new 52-week high at mid-morning and the All-share index was also on a new 52-week high.

The resources sector however did not share in the run, as investors are concerned about low commodity prices and rising costs, particularly in the platinum mining industry.

The dual-listed shares were also supported by stronger international markets, where risk appetite is returning despite caution over political turbulence in the United States.

The rand at mid-morning traded at R13.29 to the dollar, as the greenback held most of the gains it made overnight on strong US economic data.

The Industrial index was already 0.54% higher, trading at a new 52-week high with Naspers [JSE:NPN] again the big mover, trading at yet another all-time high. The index is strongly supported by the media group, which represents more than 12% of the JSE’s value.

The move in the industrial sector pulled the All-share index 0.36% higher to 54 395 points, less than 100 points away from a 52-week high but still well short of the all-time high of 55 148 points reached in April 2015. The Top 40 index was 0.33% higher at 47 929 points.

The softer rand however did not do much for resources shares, with the Resources index trading only 0.11% higher. The Financial index was 0.07% up on the stronger rand.

Some sections in the resources sector were still under pressure, particularly platinum where 60% of the industry was loss-making. It was announced this week that South Africa’s platinum output dropped 7% in 2016 as producers cut capital expenditure and shut unprofitable areas, but this is not happening fast enough to tackle the industry’s bigger problem - low prices for the metal itself.

Platinum prices in dollar terms rose just 4% this year in the face of a much bigger rally in other precious metals like palladium and gold, and are 32% below their ten-year average of $1 375 an ounce.

Naspers [JSE:NPN] again attracted a great deal of attention in the industrial sector, gaining 0.64% to trade at R2 779.80. The share price is already more than 5% higher this week after Tencent, the Chinese internet giant in which Naspers holds a 34% stake, announced better-than-expected results.

Steinhoff’s [JSE:SHF] share price responded strongly on Friday to news that the international retail group plans to list its retail interest in Africa separately. Such a company will include brand names like Pep Stores and the JD Group.

The share price, which gained more than 8% over the previous 30 days, traded 3.11% higher at R71.72.

Aspen [JSE:APN] was however 0.88% softer at R274.04, and Mondi plc [JSE:MNP] traded 0.81% down at R341.45. British American Tobacco [JSE:BTI] lost 0.50% to R931.75.

BHP [JSE:BIL] and Anglo American [JSE:AGL], two of the big guns in the resources sector, both showed gains. BHP lifted 0.78% to R209.22 and Anglo American was 0.88% stronger at R187.60.

Lonmin [JSE:LON], which dropped more than 11% on Thursday in response to poor results, lost 1.56% to R17.62.

Merafe Resources [JSE:MRF], which lost more than 13% over the previous seven days, traded 2.92% higher at R1.41 after it announced a jump of 23% in revenue and 65% in earnings per share.

Merafe has a 20.5% claim on the earnings before interest, tax, depreciation and amortisation (Ebitda) of the Glencore-Merafe joint venture, which owns a collection of chrome mines and ferrochrome smelters. It is one of the largest and cheapest producers of ferrochrome in the world – accounting for 17.5% of global market share.

The Gold index was 1.09% lower, with Sibanye [JSE:SGL] the big loser after the group announced that it will tap shareholders for funds in a $1bn rights issue. Sibanye will use the rights issue to repay a portion of a $2.65bn loan facility it used to acquire US platinum producer Stillwater.

The company will offer new shares at R11.28 each, a discount of 60% to its closing price on May 17.

Shareholders did not like this and at mid-morning Sibanye was 4.36% lower at R26.11, after losing more than 6% in early trade.

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