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Stock losses accelerate as China lets yuan tumble

Aug 05 2019 17:58
*Musa Makoni

Global stocks including those on the JSE plummeted on Monday as the Chinese currency fell to a three-year low against the greenback.

Speculation remains rife that this is a counter measure to the additional tariffs that were imposed by Donald Trump on $300bn worth of Chinese imports. Emerging market currencies and stocks sank on the back of this development, while Treasury bond yields rose as investors fled to safe-haven assets.

Earlier in Asian markets trading, the Hang Seng took a heavy knock as it fell 2.85% while the Shanghai Composite Index lost 1.91%. In Japan the Nikkei fell 1.74%. Most of the major indices in Europe weakened by more than 1.5% on the day while significant losses were also recorded at the open of US equity markets.

The rand had another weak trading session as it narrowly came within breach of R15/$ as it peaked at a session high of R14.95/$. The local currency rebounded marginally before it was recorded trading 0.85% weaker at R14.90/$ at 17:00.

Intu Properties [JSE:ITU] which took a nose-dive last week on the back of weaker earnings, started this trading week on the backfoot as it fell 6.79% to end the day at R7.14. Index heavyweight Naspers [JSE:NPN] also came under significant pressure after its Hang Seng listed Tencent Holdings closed 4.27% lower on Monday. This resulted in Naspers falling 4.58% to end the day at R3350.00.

Aspen Pharmacare [JSE:APN] lost further ground as it slipped 5.41% to close at R84.08, while KAP Industrial Holdings [JSE:KAP] lost 6.35% to end the day at R4.72. Diversified mining giant Anglo American [JSE:AGL] fell 2.24% to close at R329.79, while its sector peer BHP Group [JSE:BHP] lost 1.37% to close at R325.85.

Other blue-chip stocks which recorded significant losses on the day included Richemont [JSE:CFR] which dropped 4.55% to close at R117.56, Discovery [JSE:DSY] which fell 4.16% to close at R127.00, and British American Tobacco [JSE:BTI] which closed at R541.46 after falling 3.22%.

Gains were primarily capped to a handful of gold and platinum miners primarily due to higher metal commodity prices. Gold Fields [JSE:GFI] rose 8.14% to close at R85.55, Harmony Gold [JSE:HAR] surged 6.4% to close at R41.37, while AngloGold Ashanti [JSE:ANG] closed at R299.01 after gaining 5.85%.

Platinum miner Impala Platinum [JSE:IMP] added 0.99% to end the day at R75.27, while Anglo American Platinum [JSE:AMS] climbed 2.57% to close at R807.74. Brait [JSE:BAT] had a minor reprieve which saw the stock advance 4.09% to close at R13.75.

JSE winners and losers, August 5

At 17:00, palladium was up 1.24% to trade at $1427.45/Oz, platinum had rose 1.23% to trade at $855.00/Oz, and gold was 1.76% higher at $1466.39/Oz.

With the demand outlook looking shaky due to the Sino-US trade war, brent crude slipped further in today’s session. It was recorded trading 2.26% weaker at $60.49/barrel just after the JSE close.

*Musa Makoni is a trading specialist at Purple Group

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