JSE stocks fall as Richemont wilts

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The JSE board in Sandton in Johannesburg. Photo: Leon Nicholas.

South African stocks sank on Monday after gaining in the previous two sessions, pulled down by blue-chip heavyweights such as luxury goods company Richemont, which reported disappointing sales figures.

The benchmark JSE Top-40 index fell 0.44 percent to 35,567.13 while the broader All-share index shed the same percentage to end at 39,989.57.

Both indices have hit record highs this year and remain within striking distance of these peaks.

Technical factors have also weighed on the market. Both indices have been correcting the past week after they spent several days in overbought territory, according to some indicators used by chartists.

Richemont was the biggest Top-40 loser of the day. Its Johannesburg-listed shares tanked over 6 percent after it said sales growth had ground to a halt in the Asia-Pacific region, rekindling fears about a market which has been the driving force of luxury sales in recent years.

Some analysts said while investors were likely to be spooked by Richemont's lower-than-expected sales, the maker of Montblanc pens was perhaps being overly prudent.

“I would be wary of throwing the baby out with the bath water. I think some of the sales were postponed from December given the timing of the Chinese new year, which starts in February vs January in 2012,” said Jon Cox, analyst at Kepler Capital Markets.

On the domestic front, retailers have been losing ground this month as perceptions set in that the sector's valuation is not justified by its earnings or outlook.

Local retailers which lost ground on Monday included Massmart, majority owned by global giant Wal-Mart Inc Stores. Massmart shed 0.94 percent to 181.74 rand while Shoprite lost 1.64 percent to 180.00 rand.

Some 163 companies declined in the session, another 123 gained and 60 traded unchanged, as a modest 134 million shares changed hands. - Reuters


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