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A firm rand is normally detrimental to the dual-listed shares which earn most of their income abroad, as their income is less in rand. There was also no support for these shares from overseas markets, as the markets in London and New York are closed for public holidays.
The rand remained firm despite news that President Jacob Zuma survived another motion of no confidence at the ANC’s national executive meeting. The currency traded at R12.94/$ as a result of strong global demand for emerging market bonds. The local bond market was also supported by the South African Reserve Bank’s decision last week to leave interest rates unchanged.
As a result, at mid-morning almost all the major indices were slightly lower than Friday. The All-share index, which traded at a new two-year high last week, shed 0.17% to 53 902 points. It is now 1.16% lower than the 52-week high of 54 549 reached last week.
Analysts said volatility is at a low level - not a good indicator for strong market movements in the near future. The market is also trading at high earnings ratios, limiting the potential for short-term gains. Foreigners are currently net sellers of South African shares to the value of more than R55bn this year, and trading volumes are also 16% lower than last year.
The Top 40 index, which includes all the big dual-listed shares, lost 0.14% to 47 467 points. The Industrial index traded 0.39% lower and the Financial index gave up 0.30% of its value. The Resources index was 0.48% higher despite the strong rand.
Naspers [JSE:NPN], by far the biggest share on the JSE, which played a big role in pushing the All-share index to new heights last week, lost 0.57% to trade at R2 786.90 . The share is already trading at a price earnings ratio of 100, but analysts said it still has more upside potential.
The company’s interest of 34% in the internet giant Tencent, which announced record results last week, is valued at R3 000 per share, which means that investors still get the rest of the company for nothing.
Anheuser-Busch InBev [JSE:ANH] gained 0.67% to R1 530.12 and Richemont [JSE:CFR] was 0.34% higher at R108.00. Sasol [JSE:SOL] was marginally higher at R393.16, but Tiger Brands [JSE:TSB] lost 1.12% to R358.01.
The four biggest banks were among the busiest shares on the JSE, but they all traded lower after strong gains last week. FirstRand [JSE:FSR] lost 0.39% to R50.98 and Barclays Africa [JSE:BGA] 0.43% to R147.03. Standard Bank [JSE:SBK] gave up 0.55% of its value to trade at R152.50 and Nedbank [JSE:NED] was 0.55% softer at R152.50.
Capitec [JSE:CPI], the fastest growing bank in South Africa, grew its client base by a record 1.3 million to 8.6 million active clients during its financial year to end-February 2017. It expects to reach the 9 million mark in June, but the share price was still 0.86% lower at R791.23.
Fin24's parent company Media24 is part of the Naspers Group.
