Publications
Partners
Johannesburg - The big dual-listed commodity giants on the JSE led the market lower on Wednesday, as they all suffered sharp drops despite a weak rand which is normally good news for these shares.
Glencore [JSE:GLN], one of the five biggest companies on the JSE, was the leader of the pack and traded 3.32% lower at R48.00. BHP [JSE:BIL] and Anglo American [JSE:AGL] were also lower.
As s result the Resources index lost 1.48% in morning trade, despite the fact that the rand still traded well above R13.00 to the dollar.
Analysts said political uncertainty about the future dispensation for mining in South Africa as well as falling commodity prices are beginning to undermine confidence in the sector.
The rest of the market was however also lower, with the Industrial index 0.70% down after Naspers [JSE:NPN] lost 2.01% to R2 743.83. Financial shares lost 0.80%, pulling the All-share index 0.86% lower at mid-morning to 53 691 points while the Top 40 index, which includes all the dual-listed shares, shed 0.91% to 47 264 points.
Iron ore producers were at the front of the firing line, as iron ore prices have plunged nearly 40% from this year's peak, trading at just below $60 a tonne this week. In May alone, iron ore has fallen 15%, on course for its steepest monthly drop in a year. In 2016, the commodity rallied over 80%.
Analysts said there is currently an over-supply of iron ore despite healthy demand, with stockpiles at Chinese ports swelling to the largest in 13 years.
BHP, a big producer of iron ore in Australia, dropped to below R200 a share and traded 2.46% lower at R198.65. The stock has lost 15.35% of its value over the past 90 days.
Anglo American, the majority shareholder in Kumba Iron Ore [JSE:KIO], was 2.46% softer at R174.34, while Kumba lost 2.61% to R157.40. Anglo shed 18.9% over the past 90 days while Kumba dropped 13% over the past 30 days.
Kumba is also facing tough wage negotiations with the National Union of Mineworkers, which has tabled wage hike demands of 12.5% to 16%.
There is uncertainty among mining companies in South Africa as they have been frozen out of consultation over regulatory changes that could dilute shareholders, raise costs and impose new levies to fund community development.
Cabinet last week approved a new draft of the country’s Mining Charter. Labour leaders have been consulted on the long-delayed new rules, but the Chamber of Mines, which represents producers, says it “does not have any insight” into the latest version and hasn’t met government officials on the subject since March.
Lonmin [JSE:LON], which lost more than 20% of its value over the previous seven days, at mid-morning was 5.47% softer at R12.78.
Retail shares were again in the spotlight, with Spar [JSE:SPP] losing 3.04% after it reported a small fall in half-year earnings per share after issuing shares to fund foreign acquisitions and settle its share schemes aimed at black investors. Sales rose 12.6% to R47.4bn, slowing from 16.7% growth a year earlier.
Shoprite [JSE:SHP], which closed at a 52-week high of R212.15 on Thursday, at mid-morning was 0.14% down at R211.86. Nampak [JSE:NPK], which gained 15% on Tuesday on solid results, traded only 0.23% higher at R21.90. Mr Price [JSE:MRP] lost 1.71% to R149.78 after it gained more than 4% on Tuesday.
Taste Holdings [JSE:TAS], the company which brought Starbucks to South Africa, traded 1.64% softer at R1.80 after losing 12.68% over the previous seven days. It suffered a loss of R101.1m related to Starbucks, including the spend on marketing, IT systems, employment of a dedicated Starbucks team, and store infrastructure.
