JSE firms as banks and retailers rocket amid Ramaphosa rand rally
Banking stocks, financials and the property index hit record highs on Tuesday, with the rand holding on to Monday’s gains amid continued optimism over ANC president Cyril Ramaphosa.
Financials, banks and retailers surged, the latter two posting their largest daily gains so far this year. Volumes were high, with almost R40bn in trades compared with the daily average of about R20bn.
The ANC election result on Monday has seen the rand rally, but internal battles over the polls continue.
The all share added 0.8% to 58,170.4 points and the top 40 0.47%. Banks gained 8.08%, general retailers 7.4% and financials 4.6%. Gold miners dropped 3.76%, resources 2.59% and platinums 2.47%.
The currency may weaken in the coming weeks as the constraints on the new leader become more apparent, said Capital Economics researchers.
Ratings agency Moody’s released two statements on Tuesday, saying in one of them that the election of Ramaphosa offered the "tentative prospect of a shift in policy". It was, however, unclear whether Ramaphosa would have the political weight in Parliament to implement any such shift, the agency said.
In a separate statement Moody’s also said SA’s rated companies remained resilient, but not immune to corporate downgrades. This was largely thanks to diversification, market dominance and healthy credit profiles.
Steinhoff International, however, weighed on the index, dropping 17.45% to R7. Steinhoff said in an investor presentation on Tuesday it did not know when it would be able to release either its 2016 or 2017 audited results, nor did it yet have a handle on the scale of accounting irregularities.
The company also said its credit facilities were increasingly being suspended or withdrawn by lenders.
Steinhoff Africa Retail lost 11.46% to R17.
PSG added 4.54% to R271.80 and Remgro 4.49% to R236.15.
Sasol lost 6.1% to R400.
Rand hedge Richemont fell 2.16% to R113.81 and British American Tobacco 1.17% to R847.39.
Gold Fields slumped 5.02% to R50.91 and AngloGold Ashanti 2.99% to R116.65.
Cashbuild jumped 7.53% to R465.
Sanlam surged 9.26% to R92.53, Discovery 7.7% to R184.17 and Old Mutual 3.53% to R38.12. Old Mutual said earlier that its UK arm was selling its "single strategy" division to its management for £600m.
Among banks, Barclays Africa jumped 11.52% to R191.26, FirstRand 9.05% to R65.31 and Standard Bank 6.96% to R197.88.
TFG surged 13.92% to R194, Mr Price 9.97% to R250.18, and Truworths 9.5% to R95.76.
Global stocks struggled for direction as investors gauged the prospects of US tax reforms being passed this week, reported Dow Jones Newswires. A German business confidence index had also come in lower than expected earlier.
House Republicans will vote on Tuesday on the sweeping rewrite of the US tax code, which would reduce taxes by $1.5-trillion over 10 years. The Senate is expected to follow later on Tuesday or Wednesday.
Despite mixed markets, South African companies listed in Europe were among those that gained the most on Tuesday, bolstered by Ramaphosa’s victory, the newswire said.
Shortly after the JSE closed, the Dow was off 0.22%, while European markets were mixed. The FTSE 100 was up 0.17%, while the CAC 40 was off 0.26% and the DAX 30 0.21%.
Platinum had gained 0.93% to $915.44 an ounce while gold was flat at $1,261.82. Brent crude had gained 0.46% to $63.64 a barrel.