JSE hovers around the heights of euphoria
All Share index rose nearly 6% last week
The JSE All Share ended Friday lower, but still delivered its best one-week performance in 2018, amid exuberant trade following the election of Cyril Ramaphosa as head of state.
The market found renewed support on Jacob Zuma’s exit, with his leadership having left a disastrous economic legacy, analysts say.
Volumes on Friday reached an extremely high R61-billion‚ from R36-billion on Thursday‚ with a great deal of this passing through the property sector‚ where shares in the Resilient stable were sold off heavily for a third straight session.
Resilient issued a statement on the day‚ saying it had initiated an independent review into the cross-shareholding structure of the group‚ led by former auditor-general Shauket Fakie. Resilient lost 10% on the day‚ and has now relinquished 49% in 2018. The property trust experienced added pressure amid reports that it will soon be shuffled out of the Top 40 index. Fortress B lost 10.78% to R18.20, Nepi Rockcastle 6.08% to R112.23 and Greenbay 2.17% to R1.35.A slight drop in the local currency helped rand hedges‚ notably Anheuser-Busch InBev (up 3%)‚ while Naspers was off 0.18% weaker in choppy trade but gained 13.95% for the week.
The All Share index was dragged down by the continued correction in the property sector on Friday, but ended the week 5.76% higher.
It closed 0.69% lower at 59,122 points on Friday and the Top 40 dropped 0.87%. Property shed 2.6%, food and drug retailers 1.78%, financials 1.18%, banks 1.1% and general retailers 1.04%.
Scandal-plagued Steinhoff shed 1.81% to R5.44, and Shoprite relinquished 2.79% to R253.62.
The yield on the benchmark R186 bond reached its lowest point since August 2015‚ indicating the reduced cost of government borrowing. It was at 8.13% on Friday from Thursday’s 8.22%. The longer-dated R207 was last bid at 6.75% from Thursday’s 6.82%.
The rand‚ which is one of the key drivers of local bonds‚ was at R11.68 to the dollar‚ from R11.61, as the dollar regained some lost ground against the euro. The local currency was still poised, however, to record back-to-back weekly gains, after an eventful few days, which culminated in the swearing-in of Ramaphosa.
Local bonds were firmer with the R186 bid at 8.095%, from 8.22%.
Market focus has now shifted to the all-important budget next week with ratings agency Moody’s set to announce the result of its latest review on SA shortly thereafter. The ratings agency still has SA’s credit rating at investment grade, while S&P Global Ratings and Fitch both lowered it to junk in 2017.
The US 10-year treasury was last seen at 2.85% from 2.90%.Platinum shares received some support from a higher metal price‚ which had risen 0.55% to $1‚006.60 an ounce by the JSE’s close. Platinums gained 0.87% and the gold index 0.59%.
Gold shares lifted as the price of the metal headed for its biggest weekly advance since April 2016 on rising US inflation and the recent slump in the dollar.
European markets were higher‚ while the Dow opened marginally firmer. Oanda analyst Craig Erlam said US equity markets could end the week with a full house of gains‚ following last week’s sharp retreat. The Dow had gained a 4.17% this week by the time it opened on Friday.
“The rebound we’re now seeing reaffirms the belief that economic fundamentals are still strong‚ which should prevent markets [from] deteriorating further‚” Erlam said.