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Johannesburg - Financial shares continued their strong run on the JSE on Friday, helping to push the overall market further into record territory.
The market also received support from the weaker rand, which continued to drift lower on concerns about the South African economy's prospects.
The All-share index, which closed on a new all-time for the first time since April 2015 on Monday, reached yet another high on Friday and was above 56 000 for the first time at one stage. This means it moved almost 2% higher into record territory this week.
Over the same period the rand weakened by 3% against the greenback, on concerns about the economy and the risk of credit ratings downgrades. The unit traded at R13.35 to the dollar on Friday, more than 1% softer than the previous close. The rand weakened despite the fact that the dollar is currently trading at a two-and-a-half year low on political uncertainty in the US.
A weak rand is particularly good for dual-listed shares as well as resources companies, which earn most of their income in foreign currencies.
By mid-morning the All-share index was 0.50% higher at 55 962 points, while the Top 40 index traded 0.46% up on a new record of 49 472 points. The Industrial index gained 0.45%, while the Resources index was 0.49% firmer.
Financial shares were also strong performers, with the Financial index gaining 0.55%. Financial shares are catching up with the rest of the market, after being hit hard earlier in the year by credit rating downgrades after the sacking of Pravin Gordhan as minister of finance.
Analysts warn however that financial shares will be under pressure again if rating agency Moody’s announces more downgrades next Friday, when it publishes its latest review of South Africa’s ratings.
The Financial index was led higher by Standard Bank [JSE:SBK], which traded 0.82% higher at R167.29. The share gained more than 18% over the past 30 days and is more than 4% higher over the previous 90 days, meaning that losses after Gorhan’s sacking have been recovered.
The same can however not be said of some of the other banks. Before Friday’s trade Nedbank [JSE:NED] was still 15.82% lower over the previous 90 days, while Barclays Africa [JSE:BGA} was still 8.74% lower over the same period.
These two made big gains today. Nedbank added 3.52% to R229.03 and Barclays Africa traded 2.32% up to R148.00. Both banking groups, which have big exposure in the rest of Africa, announced a drop in earnings this week. Nedbank also said it reduced its headcount by over 500 people over the past year.
FirstRand [JSE:FSR] traded 0.62% higher at R53.42. The share gained 11.35% over the previous 30 days but is only 1.22% stronger over the past 90 days.
The top industrial shares traded modestly higher. Naspers [JSE:NPN] gained 0.31% to R2 833.83 and British American Tobacco [JSE:BTI] was 1.38% stronger at R885.59. Sasol [JSE:SOL] was 0.79% higher at R406.67 and Richemont [JSE:CFR] added 0.04% to R116.70.
Investors are still not happy with MTN’s [JSE:MTN] results and the share lost 0.95% to R116.00. It shed almost 8% over the previous seven days despite the news that the company returned to profitability in the first half of the year, after its losses the previous year due to fines paid to the Nigerian authorities.
The market reacted positively to the news that Sibanye Gold [JSE:SGN] will fire up to 7 400 people at unprofitable mines. The share was 2.91% higher at R18.40 at mid-morning. Impala Platinum [JSE:IMP] was 3.06% higher at R39.11.
