Stocks take a beating amid growth concerns
JOHANNESBURG – The JSE All Share index fell again yesterday, extending its losing streak from last week over growth concerns amid the international trade tensions in spite of the gold mining index inching up more than 8 percent.
The index declined 2.24 percent to 52 275 points by 11am yesterday, weighed down by the US led sell-off in global equities.
However, the rand continued its strengthening against the US dollar after Moody’s Investors Service deferred its ratings review of South Africa on Friday. By 5pm, the dollar was bid at R14.3678. The All Share Industrial Index fell 2.90 percent to 69 907 points, and financials dropped 1.83 percent to 40 020 points.
The JSE gold mining index climbed 8.29 percent to 1 250 points on the back of the 0.98 percent growth in the bullion price which exchanged hands at $1 229 (R17 801) an ounce at 1pm.
Gold shares rose with Sibanye Stillwater gaining 19.15 percent to trade at R13.13 a share at 1pm, while tailings retreatment company DRD Gold rose 12 percent to R3.89 a share. Harmony Gold was 9.27 percent higher at R30.88 a share.
The platinum price jumped 1.28 percent higher to $852 an ounce, which saw Lonmin, the world’s third biggest platinum producer also, jump 15.32 percent to R11.82 a share, and Royal Bafokeng Platinum jumped 10 percent to trade at R30 a share.
Noah Capital Markets’ mining analyst, Rene Hochreiter, said yesterday that Sibanye was the most-geared share to the platinum price or the rand which strengthened over the last few days.
“Lonmin is just tracking Sibanye as the deal is virtually done between the two. It only needs the Competitions Tribunal to okay the merger and the decision is expected on Thursday,” Hochreiter said. “There’s probably been a leak on the deal and investors are reacting to it or are betting that the tribunal will approve the deal.”
A tribunal hearing into Sibanye’s R5 billion takeover of Lonmin is scheduled in Pretoria on Thursday.
Naspers, which is the biggest company by value on the JSE, declined 3.71 percent to R2 799 a share. Asset management firm Capital & Regional declined 18.33 percent to trade at R7.35 a share, and Europa Metals recorded 25 percent drop to trade at 3 cents a share.
“Today is starting off very badly for emerging markets generally,” John Ashbourne, Africa economist at UK based Capital Economics, said yesterday.
Ashbourne said the decline in the All Share Index was in tandem with falls of 1 to 1.5 percent in China and Taiwan and smaller drops across Asia. Argentina and Turkish equities were the only ones that have made a strong start to the week.
“We think that the recent decline has a lot to do with the US-led sell-off in global equities. This fall has created a difficult environment for cyclical sectors.
“We are anticipating much more weakness in the US stock market between now and the end of next year, given our view that the US economy will slow sharply. And that in turn is likely to drag equities in the rest of the world down again,” Ashbourne said.