JSE closes lower as all share follows weaker global markets

December 20, 2015, 7:24am

By Maarten Mittner, Business Day Live
Picture: MICHAEL ETTERSHANK

THE JSE ended the week on a negative note, following global markets down with platinum and industrial shares the worst hit.

Platinums pulled back on a stronger rand, shrugging off a firmer platinum price. Banks experienced profit taking on the recovery earlier in the week, and industrials were pulled down by Naspers.

Global markets were generally weaker as investors adapted to the reality of higher US interest rates. The Fed increased the Fed funds rate to 0.5% from 0.25% on Wednesday.

At the JSE’s close the FTSE 100 was 0.55% lower and the Paris CAC 40 had lost 0.89%. The German Dax was down 1.06%. The Dow Jones industrial average closed 1.43% weaker on Thursday, and was down 0.78% at the JSE’s close on Friday.

Despite the drop in US stocks "our equity strategists do not think the Fed’s hiking cycle would derail stock markets", analysts at Barclays Research said.

"We look for the effective Fed funds rate to settle at about 33 basis points, with key commodity prices, notably oil, copper and precious metals continuing to soften," Barclays said.

At 5pm the all share closed 1.99% down at 48,717.30 points. The blue-chip top 40 index fell 2.11%.

Platinums were 5.33% lower, industrials lost 2.32% and banks were 1.86% off. Financials shed 1.75%, while the gold index added 2.02% and resources firmed 0.28%.

Nedbank Capital strategic research head Mohammed Nalla said 2015 turned out to be an "annus horribilis" for local markets.

"Despite a seemingly good start to the year, SA assets began to lag international markets as global and domestic headwinds culminated in the perfect storm."

The all share ended the week a marginal 1.35% up, after retreating 2.47% in the week to last Friday. For the year so far it is 2.12% in the red and, if present trends continue, could end the year in negative territory for the first time since 2011.

Mr Nalla said in aggregate most asset classes lagged in 2015 against a globally strong dollar which remained the prize asset.

He said 2016 would likely see the trend of emerging market underperformance resume and the dollar, notwithstanding short term corrections, remain structurally stronger.

"Emerging markets will continue to grapple with domestic issues and absent structural reforms will point to headwinds and value destruction," he said.

Among individual shares Glencore shed 4.31% to R18.19. Moody’s downgraded Glencore’s ratings to Baa3 from Baa2 on the day. The outlook on the ratings is stable.

Sasol was 2.86% weaker at R377.45.

Steel producer ArcelorMittal ended the day 9.38% weaker at R2.90.

Troubled platinum producer Lonmin was up 8,243% on paper, at R13.35. However, its 100-for-one share consolidation saw its market capitalisation fall about 16% to about R4bn on the day.

The platinum mining group’s shares closed at 16c on Thursday, meaning 100 shares would have been worth R16 each on Friday if they had not fallen. After Friday morning’s consolidation, the share price traded in a range of between R12 and R14.80, meaning it lost about 8% to 33% of the pre-consolidation price.

Among banks FirstRand dropped 2.06% to R42.26 and Standard Bank closed 2.03% weaker at R112.67.

Old Mutual was 2.05% lower at R38.74.

Retailer Woolies was down 2.56% at R96.74.

Among property stocks Growthpoint was 3.38% weaker at R22.30.

MTN closed 2.78% lower at R134.36. Africa’s biggest mobile services provider confirmed on Thursday that it planned to contest a R59bn fine imposed by the Nigerian Communications Commission.

In a Sens announcement on Friday, MTN said that it had instructed its lawyers to proceed with court action while it would also continue to engage with the Nigerian authorities to try to ensure an amicable solution.

Naspers was 3.01% lower at R2,067.