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Johannesburg - Share prices on the JSE were higher again on Friday after the Zuma-factor sent the rand tumbling.
The softer rand, which traded as low as R14.33 to a dollar by mid-morning in early trade, again supported the prices of the dual-listed shares which earn more in rand for their foreign earnings if the currency is weak.
Softer international markets, which lost momentum on fears that President Donald Trump’s plans for drastic tax cuts in the US will be delayed, however, put a cap on the JSE’s gains.
The rand’s demise was started on Thursday afternoon by comments by President Jacob Zuma which raised concerns about higher spending on education, which would put added strain on the country’s already stretched public finances.
Zuma said in Parliament on Thursday that he would make an announcement on higher education soon. A currency trader said the market had taken the comments as a sign that free tertiary education would be introduced.
The resources index was the big winner on Friday again, gaining 1.59% by mid-morning to a new 52 week high 39 157 points, as mining companies’ earnings are linked directly to the rand/dollar exchange rate as most commodities are priced in dollar. The commodity giants were all trading higher, but were still below the 52 week highs set earlier in the week before a correction set in.
The industrial index, which also included big dual-listed shares, was only 0.13% higher. The main listings of most of these are in Europe, where the main pan-European index, the STOXX 600-index, suffered its biggest one-day loss since the end of June on Thursday.
The result was that the All-Share index traded 0.30% higher at 60 042 points by mid-morning and the Top 40-index gained 0.39% to 53 721 points, still below the all time highs set earlier in the week before profit taking started.
The weaker rand was as usual bad news for financial shares with the financial index trading 0.35% lower.
Global markets, and in particular Wall Street and Asian markets, lost ground on Friday on uncertainty about US tax reforms after Senate Republicans unveiled a plan that differed from the House of Representatives’ version in several key areas, including a delay in the timing of a corporate tax cut
Others said a correction in share markets was due after a strong rally worldwide, although the prospects for solid global economic growth should support stocks on the long run.
Amongst the top industrial shares Naspers [JSE:NPN] gained 0.97% to R3 599.41 on the back of a weaker rand rand, although Tencent traded lower in Hong Kong. Richemont [JSE:CFR] lost 0.29% to R127.81 but British American Tobacco [JSE:BTI] traded 1.04% stronger to R336.98.
Sasol [JSE:SOL] reached a new 52 week high on Friday after the share price gained another 1.96% to R443.50. Sasol’s income from synthetic fuel is linked to the oil price, which was course on Friday to log its fifth straight week of gains on hopes of supply cuts by major exporters as well as continuing concern about political developments in Saudi Arabia.
Sasol’s share price also benefits from a weaker rand and has crept up slowly over the past few weeks. Before today’s trade, the price was already 17% higher than over the previous thirty days, but was only 6% higher for the year to date.
Steinhoff’s [JSE:SNH] woes continued and the share lost another 3.23% to R56.60 and the share is now almost 18% lower over the past ninety days. The group was in the spotlight this week that it did not report major deals worth more than $1bn to the authorities, but the group denied it.
Steinhoff was again the busiest share on the JSE with more than 5.3 million shares being traded for almost R308m.
Telkom [JSE:TKG] lost a massive 7.47% to R49.92 as investors were disappointed in its interim results. Investors were also spooked by comments by the company that corporate businesses defer their spend on information, communication and technology (ICT) as a result of an uncertain political, economic and policy environment.
The group recorded a profit after tax of R1 659m (September 2016: R1 760m) and a 1.9% decrease on EBITDA of R5 201m (September 2016: R5 301m), resulting in a 7.4% decrease in headline earnings per share.
Anglo American [JSE:AGL] was mid-morning 2.57% higher at R270.51 and BHP Billiton [JSE:BTI] gained 1.27% to R270.56.
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