Resources make strong gains as weak rand supports JSE

Johnnesburg - The JSE again moved against the global trend on Friday, as a weaker rand supported share prices while global markets are down for various reasons.

The weaker rand was the result of concern about prospects for the South African economy as well continued uncertainty about the future of Pravin Gordhan as minister of finance, but this did not seem to bother the JSE as it no longer is a reflection of the South African economy.

The major companies which represent the biggest part of the JSE’s market capitalisation, most of which are also listed in Europe, earn most of their income abroad and are therefore less affected by local economic conditions.

Global markets were lower after North Korea conducted its fifth and most powerful nuclear test yet on Friday, heightening geopolitical tensions in Asia. The news came at a stage when stocks were already lower on uncertainty over the prospect of further monetary easing, after the European Central Bank decided to keep monetary policy unchanged.

By mid-morning the All-share index traded 0.41% higher at 54 468 points, with the Top 40 index 0.44% stronger at 46 793 points. The Resources index made strong gains, rising 1.70% on the back of a weaker dollar and more indications that the Chinese economy is stabilising - good news for commodities demand.

The Industrial index, which includes most of the dual-listed shares, was 0.23% higher despite lower European markets, supported by the rand which weakened almost 2% to R14.26 on Friday as doubts over Finance Minister Pravin Gordhan’s tenure again resurfaced.

Gordhan questioned the motives of a police investigation into his role in setting up a surveillance unit at the tax service at two separate events on Thursday.

The latest data on manufacturing and mining growth also disappointed, which dampened hopes that South Africa could avoid a credit downgrade to junk at year-end.

Mediclinic [JSE:MDC] was one the top performers among the dual-listed shares. It gained 2.79% to R186.48 after announcing that significant progress has been made on integrating the businesses of Mediclinic International Limited and Al Noor Hospitals Group, which created a leading private healthcare provider in the Middle East.

The company, which lost more than 8% over the previous seven days, said a combined Mediclinic Middle East management team was established in March 2016 and a strategic and operational review of the business was completed in early June 2016.

Netcare [JSE:NTC], the other major South African hospital group, which has substantial operations in the United Kingdom, traded 0.24% lower at R33.49.

Aspen [JSE:APN], which at one stage was more than 10% lower on the back of disappointing results, lost 1.85% to R334.51. Sasol [JSE:SOL] was however 1.48% higher at R368.29 due to the recent recovery in the oil price.

Steinhoff [JSE:SHF] was 0.12% firmer at R85.16. The group announced strong results earlier this week and expanded its activities even further by the acquisition of Tekkie Town, which fits in well with the Pepkor model.

The major resources shares traded substantially higher. Anglo American [JSE:AGL] was 2.94% stronger at R163.77 and BHP Billiton [JSE:BIL] gained 2.42% to R193.55. Glencore [JSE:GLN] traded 1.41% up at R35.28.

Lonmin [JSE:LON], which gained more than 5% over the previous seven days, improved by 5.07% to R41.00.

The Financial index, which is hammered by concerns about the South African economy, lost 0.21% by mid-morning on Friday. First Rand [JSE:FSR] traded 0.76% softer at R46.84, despite strong results on Wednesday, and Standard Bank [JSE:SBK] was 0.81% lower at R139.76.