JSE turns lower on weak business confidence and Moody’s announcement
The JSE was weaker at midday on Wednesday as business confidence data continued to paint a dire picture of the economy, and after Moody’s assigned a negative outlook to South African insurers, in line with a similar earlier announcement on South African banks.
After plunging from 40 to 29 in the second quarter, the Rand Merchant Bank Bureau for Economic Research business confidence index rose by six points to a still low 35 in the third quarter. Almost seven out of 10 respondents remained unsatisfied with business conditions — a troubling outcome to say the least, RMB said.
Moody’s said it had assigned its negative outlook on deteriorating profitability and asset risk for SA’s insurance sector as insurers’ creditworthiness would likely remain under some pressure over the next 12 to 18 months due to subdued economic conditions.
The rand was weaker as political issues dampened sentiment, notably the court ruling declaring the 2015 ANC conference in KwaZulu-Natal unlawful. Analysts have indicated political tension is likely to increase ahead of the ANC’s December conference, putting pressure on the economy.
The rand weakened to R13.1397 to the dollar in late morning trade from R13.0091.
"Policy uncertainties and low GDP growth are making South African corporates more cautious in terms of domestic investment and expansion, limiting their ability to improve their credit quality over the next 12 to 18 months," says Moody’s senior analyst, Dion Bate.
Global factors were also working against further gains on the JSE after the administration of US President Donald Trump issued new threats to China, as it seeks to rein in North Korea’s nuclear and missile programmes.
Asian markets closed mixed with the Nikkei 225 gaining 0.45% and the Hang Seng dropping 0.28%. The FTSE 100 was last seen down 0.46%, while the DAX 30 had risen 0.04%.
At 12.08pm, the all share was 0.30% lower at 56,195.20 points and the blue-chip top 40 0.35%. General retailers had shed 0.95%, banks 0.90%, industrials 0.34% and financials 0.28%. Gold had gained 1.87%, and food and drug retailers 0.60%.
Anglo American was 0.96% lower at R237.55.
In gold shares Sibanye-Stillwater rose 2.89% to R19.55, Gold Fields 2.2% to R58.53 and AngloGold Ashanti 1.25% to R128.40.
Lonmin was 1.65% lower at R13.71.
Standard Bank dropped 2.08% to R159. It announced on Tuesday that Ben Kruger was stepping down as joint CEO, leaving Sim Tshabalala flying solo. Nedbank dropped 0.61% to R202.76.
Luxury goods group Richemont was down 0.50% to R119.70, after earlier reporting that sales for the five months to end-August rose 12% from a year earlier.
Insurer MMI Holdings lost 1.86% to R18.99 and Liberty Holdings 0.63% to R106.04.
Retailer Woolworths dropped 2.91% to R59.42.
UK property group Capital & Counties gained 1.84% to R46.96.
Naspers was down 0.50% to R2,969.98.