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JSE treads water as KPMG saga takes its toll

Sep 19 2017 13:02
David van Vuuren

(Gianluigi Guercia, AFP)

Company Data

Sanlam Limited [JSE:SLM]

Last traded 82
Change 0
% Change 0
Cumulative volume 1363835
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

VODACOM GROUP LIMITED [JSE:VOD]

Last traded 133
Change -1
% Change -1
Cumulative volume 478496
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

MTN GROUP LIMITED [JSE:MTN]

Last traded 100
Change -1
% Change -1
Cumulative volume 3465566
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - A short rally in share prices on Monday afternoon, spurred by a sharp drop in the value of the rand, came to a halt on Tuesday morning.

Although the rand dropped further to its lowest level since early August this year, it did not support the local share market which is treading water, looking for some direction amid a quagmire of political uncertainty.

The war of words between KPMG and the South African Revenue Service (SARS) over KPMG’s investigation into a so-called rogue unit spooked the market, after SARS threatened to sue KPMG for slander following the audit firm's recall of the findings in its "rogue unit" report.

The rand’s drop to R13.33 to the dollar was further exacerbated by a stronger dollar, which traded at the highest level in eight weeks on the back of higher US bond yields as the market seems more relaxed about the North Korean crisis.

All major indices were lower by mid-morning on Tuesday, including those which are normally supported by a weaker rand. The Resources index was 0.51% down and the Gold index dropped 2.28%, despite the fact that mining companies earn more in rand if the currency is weak.

The Industrial index, which includes big dual-listed companies which earn a major share of their income in foreign currencies, slipped 0.29% and the Financial index dropped 0.57%.

As a result, the All-share index was 0.41% softer at 55 819 points, while the Top 40 index dropped 0.41% to 49 535 points.

Some of the biggest share price movements were spurred by corporate action. Sibanye’s [JSE:SGL] share price was more than 9% down in early trade, after the company announced it will sell bonds worth $450m (more than R6bn) which will be converted into stock to refinance a loan.

The share price tumbled, as the conversion of bonds into shares will sharply dilute the market value of these shares. By mid-morning the stock was still more than 7.5% lower at R16.20, with more than 8 million shares traded.

Impala Platinum [JSE:IMP], which dropped sharply last week on news that it suffered a loss in the previous year due to some write-offs connected with empowerment transactions, traded 0.87% softer at R32.91. The share price shed more than 3% in early trade at R31.89 on news that the company will soon lay off more than 2 500 workers.

Steinhoff [JSE:SHF] was in the news again over a dispute with a former joint venture partner. The Enterprise Chamber of the Amsterdam Court of Appeal will decide on Thursday on a petition from former partners for a review of Steinhoff results for the year until November 2016.

Steinhoff’s share price was 0.94% softer at mid-morning after CEO Markus Jooste said he is confident that the petition will be dismissed.

Vodacom [JSE:VOD] and MTN [JSE:MTN], the two biggest mobile operators in South Africa, were both down in hectic trade. Zambia announced that it will issue a new mobile licence to force current operators in the country, including MTN, to bring prices down.

MTN lost 0.56% to R120.15 and Vodacom was 1.06% softer at R159.33. Vodacom shed 13.2% over the past 30 days after its parent company Vodaphone said it will reduce its share holding in Vodacom to increase the free float on the JSE.

Discovery [JSE:DSY], which jumped more than 3% on Monday on the back of a 10% profit increase, fell victim to profit-taking and at mid-morning was 0.73% softer at R144.93. Sanlam [JSE:SLM], which also had a strong run on Monday, was 1.66% lower at R67.38.

Among the banks FirstRand [JSE:FSR] lost 1.65% to R53.66 and Standard Bank [JSE:SBK] was 0.89% softer at R159.68.

Naspers [JSE:NPN] hardly moved and gained only 0.19% to R2 961.51, after Tencent’s record-breaking run on the Hong Kong Stock Exchange came to an end. Tencent traded 0.52% softer at HK$344.20.

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