JSE faces Asian market pressure amid Chinese property jitters
US markets were buoyant overnight, but concern about the indebtedness of Chinese property developers is weighing on sentiment
The JSE looks set to open to weaker Asian markets on Wednesday morning, despite new records for major US bourses on Tuesday, with investors still jittery over debt problems in China’s property industry.
The debt problems have become a global threat, with Modern Land on Monday becoming the fourth developer in China to default on an overseas debt obligation. Bloomberg reported that Chinese borrowers have defaulted on about $9bn (R133bn) of offshore bonds in 2021, a record, with the real estate industry accounting for one-third of that amount.
Evergrande is the country’s second-biggest property developer and is saddled with debts of about $300bn, including $20bn in international bonds, with more payments due later this week.
The property sector accounts for about 29% of China’s GDP, while the country is the world’s largest consumer of base metals, taking up about 10% of SA’s total exports.
Overnight, the US Dow Jones index and S&P 500 closed at record highs, and markets there have been lifted by a series of earnings reports that have beaten expectations, including reports from Microsoft and Alphabet on Tuesday.
In morning trade the Hang Seng had slipped 1.48% and the Shanghai Composite 0.92%, while Japan’s Nikkei had given back 0.6%.
Tencent, which can influence the JSE via the Naspers stable, had fallen 3.15%.
Gold was 0.19% weaker at $1,789.25/oz while platinum had given back 0.42% to $1,025. Brent crude was 0.21% down at $85.94 a barrel.
The rand was flat at R14.84/$, having lost almost 1% on Tuesday.
Famous Brands, the owner of Steers and Wimpy, is due to report a return to profits in its six months to end-August later, though it said in a recent trading update it had felt the effects of continued trading restrictions and civil unrest in SA in July. The company took a R1.3bn writedown charge for the struggling Gourmet Burger Kitchen in the UK in the year-earlier period.