WEDNESDAY, 11.00PM:
SHARES on the Johannesburg Stock Exchange took a hammering from futures-related deals on Wednesday, pushing down all major indices.
At the close the all gold index had edged down 2,2 points to 674,3, the industrial index had shed 84,8 points to 7 350,7 — a two-year low — and the financial index was pushed 63,4 points lower to 9 920,4. The all share index ended 61 points down at 6 097,8.
Dealers ascribed the market’s woes to derivatives-related positioning ahead of next week’s December futures close-out. The top 25 industrial companies index (Indi-25) felt the brunt of the negative sentiment from the futures traders and delaers expect it to go even lower. A 74-point difference between the JSE’s Indi-25 index and that of the futures indicates that further selling of the underlying stocks will result in both indices falling, compounding the pressure.
Bonds, meanwhile, ended slightly weaker in thin trade, unable to sustain yields below 14% precipitated by Tuesday’s release of best producer inflation figures in 26 years. At 4pm the benchmark R150 government long bond was quoted at a 14,06% yield, after it traded down to 13,97% late on Tuesday, before ticking up to close at 14,01%. It touched a best level of 14% again on Wednesday morning, while its worst level was 14,075%. The longer-dated R153 was last at a 14,155% yield from 14,09% before, while the Eskom 168 bond was last quoted at 14,19%, unchanged from its Tuesday close.
The rand hit a new low against the dollar on Wednesday morning before recovering slightly. At 4pm the rand traded at a bid-offer rate of R4,8820-8860 to the dollar from Tuesday’s close of R4,8760-90. The local unit traded between bids of R4,8785 and R4,8875 during the day.
The rand fell below last Friday’s record low of R4,8770-8800/dlr on Wednesday morning on strong offshore demand for dollars out of London, prompted by the weak gold price. Gold last traded at $287,40-90/oz from a London morning fix of $285,05-55/oz. The London afternoon gold fix set an 18-year low on Tuesday at $283,25/oz. Dealers said offshore banks tested the R4,89 per dollar level twice before support for the rand surfaced. The R4,90 level is now looking increasingly likely by year end, dealers agreed.
ZIM DOLLAR FALLS The general strike in Zimbabwe on Tuesday in protest at proposed new taxes saw the Zimbabwe dollar slip below 16 to the US dollar, and analysts believe it will remain at that level for the foreseeable future. On Wednesday the Zimbabwe currency fell to Z$17,5 to the US unit after ending at Z$16,5 the previous day. The local stock exchange also fell by 43 points.
PREMIER EARNINGS DROP THE Premier Group’s restructuring of its unlisted food business, which cost over R130-million and 2 000 jobs, had a serious negative effect on the group’s first-half attributable earnings. Chairman and CEO Doug Band said on Wednesday attributable earnings fell 37% to R100,2-million. Band was not prepared to commit himself on prospects for the second half.
13 BANKS WANT GOVT BONDS THIRTEEN financial institutions are bidding to be apppointed primary market makers for SA government bonds. The 13, including three of SA’s ”big four” — Standard, First National and Nedcor — attended a finance department meeting on Tuesday. They have until January 15 to submit their applications, after which the finance department and Reserve Bank will examine their capabilities, check they have the necessary R1-billion in capital, and draw up a code of conduct and reporting procedures. It is anticipated the new system will begin operating at the start of the new fiscal year on April 1