The JSE looks set to start in a risk-off environment on Monday morning, with investors still fearing potential contagion effects from a collapse of Chinese property giant Evergrande.

Trade in Evergrande shares was halted in Hong Kong on Monday morning, prompting doubts about its future, given that it has dollar-denominated bond payments due on Monday.

There still remains very little visibility from the Chinese government over Evergrande’s fate, though a slow, steady dismantling of the company appears to be the favoured course right now, said Oanda senior market analyst Jeffrey Halley in a note.

Payment on Evergrande’s $260m payment only has a five-day grace period, though the group has recently missed bond payments, with longer grace periods.

The sheer size of the group, which is choking on a $300bn debt pile, has raised concerns of damage to the Chinese economy as a whole, as well as an effect on broader debt markets.

In more positive news, US markets were boosted on Friday by news that drugmaker Merck’s oral Covid-19 treatment has shown excellent results in trials, cutting the risk of hospitalisation or deaths of the recently infected by half.

In morning trade on Monday the Hang Seng was down 2.25% and Japan’s Nikkei 1.37%.

Tencent, which can influence the direction of the JSE through the Naspers stable, fell 0.99%.

Gold was flat at $1,760.31/$, while platinum was little changed at $971.62. Brent crude was 0.86% higher at $78.99 a barrel.

The rand weakened 0.31% to R14.91/$, breaking past the psychologically important R15/$ level on Friday, when it recovered 1.34%.

The local economic calendar is bare on Monday, and the corporate economic calendar is sparse.

Shareholders of Ascendis Health are due to vote on a recapitalisation plan later, and if approved it would take it from a company generating R8bn in revenue to one generating only about R2bn from solely SA businesses.

Lenders have the group over a barrel after it failed to sell assets off fast enough to reduce a debt pile racked up in an international acquisition spree.



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