After starting firmer on Monday, the JSE Securities Exchange (JSE) turned around during the course of the morning session and was in negative territory at midday. The gold-mining index, which was down 2,8%, was the main culprit.
An equities trader said the strong rand was weighing on dual-listed stocks, but that volumes had been fairly thin.
By noon, the all-share and all-share industrial indices has shed 0,26% and 0,46% respectively. Financials were off 0,20% and the banks index was 0,19% softer. Resources were down 0,12% and the gold-mining index retreated 2,8%. However, the platinum-mining index was up 0,75%.
The rand was last quoted at R6,07 per dollar from R6,03 when the JSE closed on Friday, but had traded at an intraday best level of near R6,02 earlier in the session.
“We are off our lows, as the rand has ticked back up again,” said the trader.
Gold was quoted at $433,13 a troy ounce from $435,05/oz at the JSE’s last close.
The main corporate news on Monday was the renewal of the Absa/Barclays cautionary announcement and Harmony Gold’s March quarter results.
In the resources sector, London-listed Anglo American was up 29 cents to R136,30 and BHP Billiton was 15 cents better at R77,35.
Petrochemicals group Sasol strengthened 20 cents to R143,90, but pulp and paper group Sappi was off 30 cents to R68,90.
Luxury goods group Richemont fell 18 cents to R18,94, but global brewer SABMiller advanced 35 cents to R94,10.
Banking group Absa was up 158 cents, or 2,08%, to R77,59 amid continued speculation that an announcement on the Barclays Absa deal is imminent.
Absa and Barclays renewed their cautionary notice on Monday morning, saying the two have been engaged in extensive discussions regarding the terms of a possible transaction.
The parties have also had a series of meetings with large shareholders, during which the possibility of a partial offer to acquire 60% of Absa shares at a price of R79 plus a final dividend for the year ended March 31 2005, estimated at the time to be approximately R1,80, was discussed.
Barclays and Absa have also estimated that, should a transaction proceed, it is expected that the combination would produce significant synergies by accelerating the strategic objectives of both parties, improving Absa’s pre-tax profits by approximately R1,4-billion a year four years after completion (after incurring implementation costs of approximately R1,8-billion over the first three years).
Barclays and Absa are considering feedback from Absa shareholders and will now determine whether a transaction would receive the requisite support from shareholders on terms acceptable to Barclays, at which stage Barclays will revert to the regulatory authorities for final consideration, the cautionary notice advised.
Shareholders were advised that should an offer be made, it may or may not be at a premium to the prevailing market price.
Speculation mounted last week that an announcement on the proposed deal was likely to be forthcoming this week.
The deal has to be approved by Minister of Finance Trevor Manuel, who has had talks with the two parties and asked them to report back to him on certain matters. These are thought to include the prospect of retrenchments.
Approval of the deal at this stage seems like a foregone conclusion, according to some analysts, but what the markets will be watching with keen interest will be the size of the deal.
However, press reports on Monday suggested that the formal offer will not materialise on Monday since minority shareholders are believed still to be holding out for a higher price.
“I have seen some demand for Absa and Sanlam on the announcement,” said a trader.
Elsewhere in the sector, Nedcor was off 40 cents to R72,60 and Standard Bank was off 70 cents to R60,80. Sanlam was 10 cents firmer at R11,60.
Among gold shares, AngloGold Ashanti tumbled 350 cents to R203,50 and Gold Fields was down 270 cents, or 4,09%, to R63,30.
Harmony was off 131 cents, or 3,01%, to R42,20. The gold-miner on Monday morning reported a headline loss of 107 cents for its March 2005 quarter, compared with a loss of 88 cents in the December 2004 quarter.
The group also reported a basic loss per share for the March 2005 quarter of 432 cents, from 80 cents in the December 2004 quarter.
Harmony was the first of the gold majors to report this week, with Gold Fields due to report on Thursday and AngloGold Ashanti on Friday.
Platinum counters were mostly firmer, with AngloPlat up 200 cents to R250 and Impala Platinum up 400 cents to R508. — I-Net Bridge