MARKET WRAP: JSE drops as telecoms stocks take a knock
Markets await third-quarter GDP figures on Tuesday after expansion of 3.2% in the previous quarter
The JSE closed lower on Monday, tracking European markets, while locally telecoms stocks fell after the Competition Commission said mobile operators could be prosecuted if they kept overcharging for data.
The commission’s data-services market inquiry said in its report issued on Monday that MTN and Vodacom’s data prices do not cater for poor South Africans.
MTN closed 6.4% lower at R86.46, after reaching a nine-month low in intraday trade. Vodacom fell 5% to R115.07.
“The strategy in SA for the two dominant operators has been to maintain the high pricing levels of 30-day prepaid data bundles, despite headline price reductions by challenger networks,” the commission reported.
Other listed telecoms companies were not spared. Telkom fell 4.18% to R44.93 and Cell C investor Blue Label 6.48% to R3.03.
President Donald Trump said on Monday the US would restore tariffs on steel and aluminium imports from Brazil and Argentina. Trump accused the two countries of “presiding over a massive devaluation of their currencies, which is not good for our farmers”.
Asian stocks closed higher after positive manufacturing data from China lifted global market sentiment earlier on Monday. China’s Caixin purchasing managers’ index (PMI) rose at its fastest pace in nearly three years in November.
“Investors are taking any signs of an end to the economic gloom, especially in China, as a reason to buy shares that benefit from stronger growth,” said London Capital Group head of research Jasper Lawler.
“Not many economists expect this data to signal the start of a V-shaped recovery. The idea for now is that the economic performance needs to level out before it has any chance to recover meaningfully in 2020,” Lawler said.
Locally, the Absa PMI fell to 47.7 points in November from 48.1 in October, data showed on Monday. Four of the five PMI sub-components fell in November.
Earlier, the Shanghai Composite added 0.13%, Hong Kong’s Hang Seng 0.37% and Japan’s Nikkei 225 1.01%.
Shortly after the JSE closed, the Dow was down 0.58% to 27,889.94 points. In Europe, the FTSE 100 had lost 0.52%, France’s CAC 40 1.36% and Germany’s DAX 1.43%.
At 6.38pm, the rand had firmed 0.62% to R14.5582/$, 0.08% to R16.137/€ and 0.44% to R18.8288/£. The euro was 0.54% firmer at $1.1083.
The R2030 government bond was firmer, with the yield falling 1.5 basis points to 9.23%. Bond yields move inversely to their prices.
Gold was flat at $1,463.57/oz and platinum added 0.43% to $902.34. Brent crude gained 0.77% to $61.20 a barrel.
The JSE all share fell 0.97% to 54,814.1 points and the top 40 0.99%. Industrials were down 1.88% and banks 1.08%.
Vukile Property Fund said on Monday it expects distribution growth of up to 5% in the year to end-March. Its interim dividend increased 3.5% to 80.84c in the six months to end-September. Its share price gained 2.49% to R20.19.
Hyprop fell 3.53% to R56.86. The property company said on Monday it expects distributable income per share to fall 10%-13% in the year to end-June 2020. The company said it plans to increase trading density at its SA malls after the average monthly foot count per square metre fell 2.4% in October. Its share price fell more than 30% in 2019, after a similar loss in 2018.
On Tuesday, markets will be watching third-quarter GDP figures after the second quarter’s 3.2% expansion.