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JSE presents bleak picture with no long-term growth for two years
#1
Johannesburg - Share prices on the JSE continued to drift sideways on Monday and the major indices are now at the same levels as in 2015, meaning investors earned no return over the past 24 months except dividends.

Although some of the indices are higher for the year to date, there has been no long-term growth over the past two years, despite a strong run by emerging markets worldwide.

There is also no sign of the market improving anytime soon as the major indices have dropped quite sharply over the previous 30 days. The emerging market run also seems to be nearing an end as there are indications of higher global interest rates.

The pattern continued on Monday morning as major indices mostly moved sideways, with the Resources index lower on the back of a somewhat stronger rand.

By midday the All-share index was 0.19% softer at 51 800 points and the Top 40 index 0.2% down at 45 582 points. The All-share index started the year at 51 020 points, which means the market is less than 2% higher for the year.

The index, which traded as high as 54 549 points in March last year, is however now back at the same level as in February 2015. Over the past 30 days before Monday’s trade the index lost 3.88%.

The Financial index, which is under particular pressure because of political developments which led to the downgrading of South Africa’s foreign credit rating, was virtually unchanged on Monday morning at 40 080 points.

The index is almost 3% softer since the beginning of the year and is now trading at levels last seen in November 2015.

The Industrial index at mid-morning was 0.13% higher at 77 963 and is now more than 7% higher than the 72 495 points at the beginning of the year.

The picture however does not look so good over the long term as the index is now where it was in October 2015. In the short term it lost more than 5.5% over the past 30 days, pulled lower by Naspers which dropped 11.7% over the same period.

Naspers [JSE:NPN], which lost almost 3% over the previous seven days, recovered somewhat on Monday morning and traded 1.67% higher at R2 515.98.

Bidcorp [JSE:BID], which made a strong showing last week and gained almost 9%, was the victim of profit-taking and lost 1.03% to R3215.70. The share is more than 18% higher than 90 days ago.

Sasol [ JSE:SOL], which has been drifting sideways for the past 90 days, traded 0.76% softer on Monday morning at R365.20 and is now more than 11% softer for the year to date.

Banking shares were again among the busiest shares on the JSE, but prices did not move much. Barclays Africa [JSE:BGA] was only 0.28% stronger at R139.68. FirstRand [JSE:FSR] was 0.27% softer at R48.00 and Standard Bank [JSE:SBK] gained onl 0.3% to R144.92. Barclays Africa lost more than 10% over the past 90 days and FirstRand more than 5%

Among the insurers, Sanlam [JSE:SLM] lost 0.14% to R66.30 and Old Mutual [JSE:OML] was 0.55% lower at R32.72.

The rand, which dropped sharply on Friday on news that US non-farm payrolls jumped by 222 000 jobs last month, beating economists’ expectations for a 179 000 gain, recovered nicely on Monday and traded at R13.33 to the dollar.

The local unit, along with Russia’s ruble and Turkey’s lira, saw sharp declines last week, with nervousness rising about higher global interest rates which could lead to an outflow from the local bond market.

The stronger rand is however bad news for resources shares, which earn less in rand for their commodities if the rand is strong. The Resources index lost 1.01% with BHP [JSE:BIL] trading 1.26% lower at R11.29.
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