JSE stocks ease as Gold Fields sinks on write down

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IOL image JSE interior view INDEPENDENT MEDIA The JSE is seen in this file photo: Leon Nicholas.

Johannesburg - South African stocks ended in the red on Thursday, giving up some of the previous session's strong gains, with Gold Fields blazing the downhill trail as it took a $672 million write-down because of the steep fall in the bullion price.

Gold Fields' shares fell 5.2 percent to 40.93 rand after it posted a slight quarterly rise in normalised earnings as production rose but investors focused on the impairment.

But the bullion producer could see a rebound on Friday as some analysts said the market overreacted.

“Like any other mining company they have had to impair some of their operations but all of the mines will have impairments,” said David Davis, mining investment analyst at SBG Securities. “But it doesn't affect the cash flow or normalised earnings. I think it's overdone.”

Gold Fields' fall helped pull Johannesburg's Gold Mining Index down 1.31 percent, despite bullion's spot price hovering near three-month highs.

The Top-40 index shed 0.28 percent to 41,730.09 while the All-share lost 0.37 percent to 46,251.77.

On the Top-40, upmarket retailer Woolworths was the biggest decliner, dropping 3.9 percent to 58.97 rand, despite posting a 17 percent growth in first half profit as worries remain about sluggish economic growth and its impact on consumer spending.

“In the past few weeks we've had an interest rate hike, unemployment data that was still very high, and the central bank governor saying the outlook for the economy remained weak,” said Christie Viljoen of NKC Independent Economists.

“This all feeds into weak consumer sentiment which would in turn would weigh on the outlook for retail sales and profits.”

Decliners topped advancers 195 to 101 with 56 issues unchanged, according to preliminary bourse data. Around 220 million shares changed hands. - Reuters

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