On Tuesday, the rand continued to be under pressure in reaction to higher US interest rates and that was as usual good news for the big dual-listed shares on the JSE, which earn most of their income abroad in foreign currencies.
These shares are cheaper when the rand is weaker and makes them more attractive for foreign investors.
The rand traded 0,50% weaker on Tuesday morning at R14,15 to the dollar after positive comments by Janet Yellen, chair of the US Federal Reserve, on the US job market strengthened expectations of further interest hikes.
By mid-morning the All-share index was 0,37% higher at 50 036 points, while the Top 40 index traded 0,46% stronger at 43 532 points. The industrial index, which includes most of the big dual-listed shares, was the best performer, gaining 0,59%. The financial index, which made a strong run on Monday, was only 0,21% stronger.
Resources shares were initially lower after Monday’s losses as commodity prices are pulling back from recent highs on profit taking, but traded 0,24% stronger by midmorning. The gold index lost 2,74% as investors are taking a breather after Monday’s strong run. Investors are seeking bargains in an oversold sector.
Higher interest rates in the US could lead to an outflow of money from emerging markets back to the US where the risks are perceived to be less and that pushed the dollar to the highest level in fourteen years against a basket of six major currencies.
A strong dollar and weak rand are, however, good news for the dual-listed shares on the JSE, which represent a major portion of the local market’s capitalisation. Tuesday was no exception, although gains were in most cases quite modest.
Naspers, the biggest share on the JSE, traded only 0,75% stronger on R1 977,60, while Richemont gained 1,38% to R92,76. MTN, which earned a major part of its income in the rest of Africa and the Middle East, was midmorning 0,46% higher on R122,49.
The share price of Steinhoff is still under pressure after the group announced a transaction with Shoprite. Shoprite will take over all of Steinhoff’s African interests in exchange for shares in Shoprite.
Steinhoff’s share price is, however, 5,5% lower over the previous seven days as there are very little information available about the pricing of the transaction. On Tuesday the share price lost another 0,41% to R69,71.
Shoprite traded 1,16% softer at R170,80. Anglo American was mid-morning 0,67% higher at R195,50.
Sibanye, the gold producer that wants to buy Stillwater, an American integrated platinum and palladium producer that has two active mines, for R30bn, was 4,01% lower at R22,01.
Old Mutual, which pushed the financial index higher on Monday after it gained almost 4% in early trade, was mid-morning on Tuesday only 0,15% higher on R34,35. The company announced last week it is offering shares in its asset management company as part of the process to split the company up into four different business units.