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No respite for banking sector as JSE demise continues

Johannesburg - The demise in banking shares on the JSE continued on Wednesday morning with the share prices of three of the four big banks in South Africa trading at new 52-week lows at midday.
 
Standard Bank [JSE:SBK], FirstRand [JSE:FSR] and Barclays Africa [JSE:BGA] all lost in the region of 7% over the past seven days as the rand weakened against a rampant dollar which is currently at a 13-year high. The dollar is supported by expectations of a hike in US interest rates later this month.
 
The Banking index has now broken through important support levels and at midday was another 1.47% lower at 6 74 points.
 
The lacklustre performance of the banking sector was typical of Wednesday morning’s trade with all the major indices down, except for modest advances for the Resources and Gold indices.
 
By midday the All-share index was another 0.35% lower at 51 354 points and the Top 40 index 0.29% softer at 46 161 points. The Financial index lost 0.45% and the Industrial index was 0.42% down.
 
Imara SP Reid said in its daily Market Snapshot on Wednesday that the overall technical picture for shares continues to be dominated by an important near-term inflection point for the Top 40 index, with crucial support at around 46 000 points.
 
Relatively high volumes in the spot and futures market telegraph a high level of activity as market participants of bullish disposition and those who are slightly more bearish take on the market at current levels.

Over the next few sessions sufficient economic data will materialise to offer a slightly more concrete outcome to the slight inconsistency of the past few sessions.
 
Banking shares started the year strongly and the Banking index reached a 52-week high of 8 576 points in April this year, but since then share prices have consistently been heading south. Wednesday's 6 744 points at noon is almost 20% lower than the level in April.
 
Investors are also nervous about the review of South Africa’s credit rating later this week. A possible downgrade could mean that banks have to pay more funding.

A bank cannot have a better rating than the sovereign rating which means that any downgrade for South Africa will affect banks, regardless of their own financial and capital position.
 
By midday Standard Bank was 0.76% lower on a new low of R126.03, after closing on a low of R127.00 on Tuesday. FirstRand, which closed on a low of R47.00, traded another 0.41% down to R46.10.

Standard Bank lost 7.58% over the past seven days before Wednesday’s trade and 16.99% over the past 90 days while FirstRand was 6.14% lower over seven days and 13.64% over 90 days.
 
Barclays Africa traded at a low of R157 after losing 0.4% on Wednesday morning. The share is 6.14% softer over seven days and 16.17% down over 90 days.
 
The only one of the big four banks to improve on Wednesday was Nedbank [JSE:NED], which gained only 0.11% to R208.18. Nedbank also lost 17.18% over the past 90 days and is not far off its 52-week low of R206.00.
 
A feature of trade on the JSE is how many well-known companies are trading at new 52-week lows. Netcare [JSE:NTC] only lost 10% over the past 90 days before Thursday, but that was enough to reach a new low. The share lost 3.71% in morning trade to yet another low at R34.51.
 
Zeder [JSE:ZED], which is totally dependent on the drought-stricken agricultural sector, was 0.79% lower at R6.29. Tsogo Sun [JSE:TSH] lost 1.49% to R22.48.
 
The Imperial group [JSE:IPL], which lost 16% over the last month, traded another 2.42% lower to reach a new low of R145.40.
 
Super Group [JSE:SPG], which is active in the same markets as Imperial, is however on a new high after improving by 17% over the past month.

On Wednesday the share price gained another 2.61% to R38.19.



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Rand - Dollar
18.93
+0.0%
Rand - Pound
23.89
+0.0%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
+0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
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