JSE shares pull back

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

Johannesburg - South African share prices fell for a third straight session on Wednesday, bringing losses so far this week to more than 1 percent on concerns the market has run too hard.

Investors chasing high yields have favoured the South African bourse, which they perceive as a safer haven compared with other emerging markets.

Johannesburg's All-share index has made a chain of lifetime records this year, bringing gains to more than 11 percent.

It is trading at a price-to-earnings ratio of just above 16 times, compared with 6 times for Russia's RTS index .

On Wednesday, the All-share index dropped 0.4 percent to 51,401, while the Top-40 fell 0.5 percent to 46,343.

“Our view at the moment is that the market still looks very stretched. The upside feels like it should be capped,” said Alec Schoeman, head of South African equities at Citi.

Companies with offshore operations such as SABMiller, British American Tobacco and Naspers have been behind most of the rally, he said.

A weaker rand has also underpinned investment into the local market after shedding more than 20 percent in 2013 and 2 percent so far this year.

The equity market's performance belies weak domestic fundamentals, including twin deficits on the budget and current account and sluggish economic growth and consumer demand.

Platinum producers such as Anglo American fell the most in Wednesday's trade.

The world's no. 1 platinum producer shed more than 3 percent to 480.43 rand.

Schoeman said he was bullish on platinum shares because of supply dynamics.

South Africa is the biggest producer of the precious metal used in vehicle manufacture and jewellery.

Trade on the Johannesburg stock exchange was slow, with only 141 million shares exchanging hands compared with last year's daily average of 176 million shares. - Reuters


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