JSE closes weaker on banks as Naspers fails to hold on to Tencent gains
The JSE closed weaker on Thursday after a comeback by platinum and general mining stocks failed to lift the overall market, amid a weak performance from Naspers.
Banks fell sharply as US bond yields continue to rise, increasing the cost of debt.
Naspers found little follow-up support following a sterling performance in the previous session, and after Chinese internet company Tencent rocketed in Hong Kong on an upbeat trading update.
Rand hedges were generally higher on a weaker local currency, with miners rising on a higher oil price. At the JSE’s close, Brent crude was hovering at $79.97 a barrel after hitting the $80 milestone earlier.
The rand was at R12.5506 at the JSE’s close from R12.4428.
A flat opening on the Dow failed to ignite the local market, despite European markets edging higher for most of the session.
A stronger rand tends to support local banking and financial shares, while a weaker rand boosts the bigger companies with offshore exposure. This was why local investors benefited from a softer currency recently, said Sanlam retail distribution head Gielie de Swardt.
He pointed out that the rand weakened 5.1% against the dollar and 3.4% against the euro in April. "This gave returns a bit of a boost in rand terms."
Offshore investors also benefited with the MSCI world index and the MSCI emerging-markets index rewarding offshore investors with dollar returns of 13.22% and 21.74%, respectively.
"Part of these gains were negated by the rand appreciating 6.86% against the dollar over the past year," De Swardt said.
Higher dollar returns also tend to entice foreign investors to invest in the local market. But so far this year, interest has been limited amid global risk-off sentiment as the US Federal Reserve intends hiking rates further, causing the dollar to firm and US bond yields to rise.
Locally, the good news continued, which should boost those stocks with a local focus, De Swardt said. These included the International Monetary Fund (IMF) raising its forecast for the country’s GDP growth in 2018 and inflation slowing on a year-on-year basis.
The all share closed 0.75% lower at 58,184.30 points and the top 40 lost 0.83%. Banks dropped 3.18%, food and drug retailers 2.01%, financials 1.65%, general retailers 1.1% and industrials 1%.
Anglo American rose 1.08% to R320.61. Richemont gained 1.44% to R123.55. Impala Platinum added 3.82% to R20.40.
Investec Plc gained 1.31% to R97.24 after reporting that annual profits in 2018 rose 5.6% to £701m. Standard Bank tumbled 3.66% to R203.02.
Shoprite was down 1.78% to R235.52.
Naspers lost 1.72% to R3,203.99.
Famous Brands dived 3.29% to R103. It said in a trading update that headline earnings per share (HEPS) for the year to end-March were expected to fall by between 5% and 24%.
The top 40 Alsi futures index fell 0.62% to 52,090 points. The number of contracts traded was 14,950 from Wednesday’s 25,127.