JSE starts week on firm footing as record-high Naspers boosts market

The JSE closed firmer on Monday in broad-based gains, but mainly driven by Naspers, as the market heavyweight reached a new high from its previous best level, in May.

Naspers is the third-largest company on the JSE by market cap.

Naspers reached a record R2,873.93 in intraday-trade after its Chinese Tencent investment, of which it owns about a third, rocketed in Hong Kong trade. Chinese authorities last week announced a clampdown on WhatsApp’s activities in the country, thereby boosting Tencent’s messaging app WeChat.

Tencent effectively operates in a closed market. Naspers has gained 42% so far this year and closed 1.92% higher at R2,860.

Vodacom and Capitec also both hit new records. Banks and retailers found support from a slightly weaker rand to the dollar, but the local currency still held up at levels below R13 to the dollar following last week’s surprise interest-rate cut by the Reserve Bank.

“The cut and persistence of the governor’s dovish tone highlighted that now might be a good time to consider increasing exposure to interest-rate sensitive stocks locally,” said FNB Securities research head Chantal Marx.

Interest-rate sensitive stock include clothing, furniture, vehicle retail, and travel and leisure stocks.

“Usually when the Bank cuts rates consumers receive some relief in terms of debt repayments and may have a little more to spend on discretionary goods which will be boosted by lower inflation as well,” Marx said.

By contrast, platinum shares were partly affected by Anglo American Platinum’s first-half results, released earlier. The world’s largest platinum miner swung into an after-tax loss of R1.3bn in the six months to June, from a profit of R1.5bn in the year-earlier period.

Also in the spotlight was cement producer PPC, whose shares slumped as much as 10% following the resignation of its CEO Darryll Castle, less than three years into the job.

Globally markets were eyeing Wednesday’s US Federal Reserve meeting. No change in rates is expected but the tone of the policy statement, as well as any further information on the Fed’s planned reduction of its balance sheet, will be closely watched.

Concern that emerging markets may be negatively affected by US rate increases have abated with analysts at Capital Economics saying Fed policy had less of an influence on capital inflows into emerging markets than was commonly assumed.

“While emerging-market central banks will keep one eye on the Fed, monetary policy decisions in emerging economies are likely to be driven more by domestic rather than external developments,” said Capital Economics analyst Neil Shearing.

Shearing said in most cases that pointed to policy being loosened, even as the US tightens.

The Dow Jones was 0.25% lower at the JSE’s close with European markets mixed. The FTSE 100 had shed 1.15% on the stronger pound while the CAC 40 added 0.43%.

Brent crude rose 1.47% to $48.52 a barrel after Saudi Arabia confirmed its continued adherence to production cuts in accordance with the agreement reached by oil cartel Opec members.

The all share closed 0.38% higher at 54,368.60 points and the blue-chip top 40 added 0.54%. General retailers rose 0.84%, industrials 0.71%, property 0.53% and banks 0.45%. Platinums shed 2.45% and food and drug retailers 0.65%.

Anglo American Platinum lost 1.94% to R305.47, Impala Platinum 4.34% to R35.26 and Lonmin 0.66% to R15.04.

After losing 3.73% on Monday, ArcelorMittal was up 0.61% to R4.94. It warned last week its headline loss per share for the six months to end-June would be up to three times higher than that of the previous comparable period.

FirstRand added 0.75% to R52.14, Barclays Africa 0.48% to R147.41 and Standard Bank 0.47% to R159.95. Capitec closed 0.33% lower at R845.53.

Woolworths added 2.14% to R63.84, Mr Price 1.41% to R179.50 and Shoprite 0.24% to R200.30.

Truworths shed 0.28% to R77.29, after reporting earlier that it expected its diluted headline earnings per share for the year ended July 2 to decrease by up to 3%.

Group Five was down 3.34% to R19.10 after announcing an expected loss for the half-year. It also replaced eight of its board members on the day.

PPC was 9% lower at R4.45.

Newly formed property group NEPI Rockcastle closed flat at R177. The company was formed by the merger of Rockcastle and New Europe Property Investments.

Resilient added 1.12% to R130.44 and Redefine 0.46% to R10.85.

Vodacom rose 1.44% to R183.10 and MTN 1.06% to R125.64.

Kaap Agri shed 2.48% to R58.50 and Zeder 3.05% to R6.67.

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