JSE firmer on the back of financial and industrial stocks

May 08 2017 18:09
Martin Harris, Trading desk at EasyEquities

Cape Town – The local bourse closed firmer on Monday as financials and industrials traded higher.  Gold stocks capped gains on the JSE, as the price of gold remains weak following the outcome of French presidential election. 

Emmanuel Macron is set to become the youngest president in French history after winning 66% of Sunday's runoff vote vs. National Front leader Marine Le Pen. European equity markets were expecting the outcome and initially traded higher on Monday, but slipped on profit taking, with the French CAC trading 0.92% down after the close of the JSE. The Euro softened in a similar fashion against the dollar, retreating 0.65% from the $1.10 high to $1.092 per euro.

As part of his election manifesto, Macron pledged a generic political agenda; to reform France's labour market, unify the country's pension plans and reduce the budget deficit.

The JSE All Share closed 0.22% up, followed by the blue-chip Top 40 which closed 0.14 firmer.  The positive result was led by financials climbing 0.90% with banks gaining 1.02%, and Industrials 0.32%.  Resources were 0.86% lower, while gold stocks were the worst affected and traded 1.49% lower.

The rand weakened 1.36% to the dollar, and traded at R13.59 against the greenback at the close of the market.

READ: Murray & Roberts cautions shareholders

Murray & Roberts released a trading statement on Monday outlining that the company expects basic earnings per share for the year ended 30 June 2017, to be more than 20% lower than the EPS reported for the previous period. 

German private equity firm, ATON, received a special mention in the statement, as the company now own close to 30% of Murray & Roberts, making them a majority shareholder. The intentions of ATON remain unclear; however, the large stake of M&R is aligned with their portfolio of mining and construction related investments. 

The size of the acquisition is of interest, since ATON is a steady acquirer of Murray & Roberts and is getting close to the 35% threshold whereby they would be required to make a formal offer.

The Companies Act, 2008 provides that an acquisition by any person/company of 35% or more of a company’s voting securities triggers an obligation of the acquirer to make an offer to acquire all the company’s remaining voting securities. If the minority shareholders decline the offer, then the acquirer may keep adding to the holding and no mandatory offer is subsequently triggered. Previous “creep provisions” of the Securities Regulation Code were repealed.

An example of this in action is Bidvest: When it built up to a 35% holding in Adcock Ingram it made a general offer to all other shareholders in Adcock Ingram to acquire up to 100%. This was not accepted by Adcock shareholders in its entirety and so Bidvest subsequently purchased some more shares, taking it above the 35% threshold and today Bidvest holds approximately 38%.

Brent Crude oil remained weak, slipping 0.75% to $48.63/bbl after the open of the day.  OPEC will meet May 25 to decide whether to extend supply cuts through the second half of the year.

*This report is from the Trading Desk at EasyEquities, Fin24's latest content partner on equities and market moves.

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