JSE closes firmer on broad-based buying, led by gold
Johannesburg-South Africa (Jan 8) The JSE precious metal mining equities closed firmer on Thursday‚ supported by a broad-based rise in all the major sectors as global markets rebounded from a shaky start to the year.
Global markets received support from indications the US Federal Reserve is in no hurry to hike rates‚ and that the European Central Bank (ECB) will embark on further stimulus measures to stave off deflation in the eurozone.
Earlier in the day Asian markets closed strongly higher‚ with the Nikkei 225 adding 1.67% and the Hang Seng firming 0.65%.
The JSE was supported at the close by a strong Wall Street opening‚ with the Dow Jones industrial average climbing 1.43% by 5.17pm. European markets were also up at the same time‚ with the UK FTSE 100 gaining 2.1% and the Paris CAC 40 rising 3.11%.
Locally‚ new record highs from pharmaceutical group Aspen and global internet group Naspers propelled the all share higher‚ despite these shares already having some of the highest valuations on the market.
The JSE all share closed 1.3% up at 49‚595.44 and the blue-chip top 40 gained 1.36%. Gold was again the best-performing index‚ firming 2.22%‚ followed by platinum‚ up 1.93%. Industrials rose 1.6% with banks adding 1.49%. Financials improved 1.24% with resources gaining 0.34%.
The stronger performance by the JSE confounded some analysts‚ with Cannon Asset Managers chief investment officer Adrian Saville saying equities were fully priced at present valuations and not a compelling investment.
"Using just about any metric — dividend yields‚ cyclically-adjusted price earnings ratios‚ price-sales ratios‚ price-cash flow ratios or price-book ratios — SA ranks towards the bottom of the table relative to global markets‚ making equities a poor investment option."
Mr Saville said 50% of the all share was accounted for by large industrial companies which were on very expensive multiples.
He said large-cap industrial companies were dangerously expensive and resources were cheap‚ in spite of low commodity prices.
"But there are pockets of value to be found‚" Mr Saville said.
Among the stocks presenting value according to Saville, were niche financial group Sasfin, which closed 0.28% down at R52.50. Vehicle part manufacturer Metair was up 1.3% at R32.80, and human resources group Adcorp rose 0.24% to R33.60.
Naspers, trading at a price:earnings of 97, closed 2.26% higher at a record R1,687.22. It has risen 10% since the start of the year. Pharmaceutical giant Aspen, at a p:e of 42, closed 5.61% up at R431, also a record high.
Sasol was again sold lower after finding some support in the previous two sessions, closing 3.79% lower at R388.12.
Rand hedge SABMiller rose 3.1% on foreign buying to R589.75. US shareholders hold 65% of the global beer giant’s shares.
Among gold shares Harmony continued its good run, firming 3.7% to R27.72. AngloGold Ashanti gained 2.38% to R113.68.
Barclays Africa was the star among banking shares, closing 2.58% higher at R186.70, a new record. Nedbank was 1.89% firmer at R250.83.
Retailers were strong performers, with Shoprite up 4.03% to R179.96 and Woolies gaining 1.94% to R79.
Property companies found support from the strong bond market, with market-cap leader Growthpoint gaining 1.24% to R27.75.