MARKET WRAP: JSE follows firmer European markets despite headwinds at home
The local bourse recovered some of Friday's sharp losses, but the threat of junk status continues to ensure foreigners are shying away from local equities
The JSE started the new week on a positive note, snapping a three-session losing streak, as the rand recovered some of last week's losses.
Local issues, including a report released at the weekend regarding expropriation without compensation, as well as a victory by public enterprises minister Pravin Gordhan against the public protector in court, were largely side issues on the day, analysts said.
The rand was firmer, recovering from its worst week against the dollar since February, after Fitch Ratings cut its outlook on SA’s debt to negative on Friday following the announcement of an additional R59bn in support for Eskom over the next two financial years.
Moody’s Investors Service hinted strongly earlier in the week that it could no longer remain silent on SA’s deteriorating debt picture, saying Eskom's bailout was “credit negative”.
Tepid local growth and the prospect of SA facing further credit-ratings downgrades continues to weigh upon local markets, with Bloomberg reporting that foreigners had offloaded R68.3bn of SA equities and debt so far in 2019 - the most for JSE records dating back to 1998.
Even so, it did not seem the JSE was offering much value at the moment, and the local bourse was still likely to experience a correction after gains in 2019, FNB portfolio manager Kabelo Tshola said.
“Local politics is playing a role, but the ratings issue is weighing heavily on investors' minds,” Tshola said.
Global market focus is on the resumption of US-China trade talks, as well on the US Federal Reserve policy announcement on Thursday, when the Fed is expected to cut interest rates 25 basis points. Market expectations are for a further two cuts over the next nine months, London Capital Group senior market analyst Ipek Ozkardeskaya said in a note.
The all share firmed 0.81% to 58,034.8 points and the top 40 rose 0.88%. Platinums added 2.94% and banks 1.15%. Property stocks fell 0.58%.
As the JSE closed the rand was 0.31% firmer at R14.218/$.
The Dow had added 0.19% to 27,192.45 points, while in Europe, the FTSE 100 had jumped 2.04%, the CAC 40 was flat and the DAX 30 had added 0.12%.
Gold was flat at $1,419.28/oz while platinum had added 1.39% to $876.20. Brent crude was 0.24% higher at $63.44 a barrel.
Small-cap financial services company Efficient Group gained 3.82% to R4.35. It said earlier it might delist from the JSE after a private-equity group made an offer to buy out minority shareholders.
Liberty Two Degrees fell 1.81% to R7.05. It said earlier that net property income in the six months to end-June rose 24.2% to R338.8m thanks to recent acquisitions, which helped it grow its portfolio value to R10.2bn.
Hammerson slumped 6.25% to R44.82. It said earlier rental income from flagship UK properties fell 6.8% on a like-for-like basis in the six-months to end-June.
Sun International fell 0.94% to R47.30. It said earlier it will pay R536m to increase its stake in Sibaya Casino in KwaZulu-Natal from 64.8% to 87.2%.