Wednesday, October 18, 2017

Zuma Cabinet Reshuffle Makes Modest Ripples on JSE
Oct 18 2017 14:27
David van Rooyen

Johannesburg - President Jacob Zuma’s latest controversial Cabinet reshuffle on Tuesday continued to cause ripples on the JSE on Wednesday morning.

The losses were however modest compared to similar reshuffles in the past, suggesting that the market is taking a breather after the strong run over the past of couple of days which saw the major indices setting new all-time highs.

Zuma’s appointment of David Mahlobo, previous minister of state intelligence, as minister of energy raised concerns that he still wants to push through with the government’s nuclear programme, a move that the country cannot afford.

The news caused the rand to drop sharply on Tuesday and the currency dropped further on Wednesday, but the effect on share prices was more modest.

The rand traded at R13.45 to the dollar on Wednesday, almost 1% weaker than the previous day, but the softer currency did very little for the dual-listed shares which normally rally if the rand is weak.

Analysts say investors might also be moving to the sidelines in anticipation of next week’s medium-term budget. This will give an important indication of how government plans to finance its growing budget deficit, as this could have a big influence on future investment decisions.

All major indices were softer by mid-morning on Wednesday. The All-share index was 0.09% down at 57 883 points at mid-morning, while the Top 40 index traded 0.10% lower at 51 641 points. Both indices lost ground in early trade and then drifted sideways for the rest of the morning.

The Industrial index lost 0.11% in early trade, while the Financial index was 0.08% lower by mid-morning. The Resources index also lost ground and traded 0.11% softer.

Most of the big dual-listed shares on the JSE were moderately softer. Naspers [JSE:NPN] shed 0.52% to R3 249.44 and British American Tobacco [JSE:BTI] was 0.18% lower at R862.97.

Mediclinic [JSE:MEI] lost 1.82% to R112.36, after the group said in a trading statement that the revenue of its businesses in the Middle East dropped 4.% in the first half of the year due to lower volumes. However, it said actions taken are having a positive effect on the business and are laying the foundation for sustainable growth.

Remgro [JSE:REM], Mediclinic’s holding company, was also affected and the share lost 1.94% in morning trade to R223.00.

The exception was Richemont [JSE:CFR] which gained 1.22% to R122.56 after a strong trading report. The group said turnover will be 10% higher for the first half of the year, trading profit 45% up and earnings almost 80% higher than in the first half of the previous year.

Bidvest [JSE:BEI] lost 1.57% to R173.82, but Steinhoff [JSE:SHF] was unchanged at R60.00. Steinhoff’s African subsidiary, Steinhoff Retail Africa [JSE:SRR], continued its strong run and traded 0.80% higher on a new all-time high of R25.20.

Kumba [JSE:KIO] continued its strong run in the resources sector and gained 1.26% to a new 52-week high of R259.12, but most of the commodity giants traded lower. Anglo American [JSE:AGL] lost 0.76% to R258.00 and BHP [JSE:BIL] was 0.05% softer at R250.75. Glencore [JSE:GLN] gained 0.24% to R67.05.

No comments: