SARAH BULLEN, Johannesburg | Monday 5.00pm.
THE Johannesburg Stock Exchange took a breather on Monday after its spectacular come-back last week to close just off its opening figures.
Good news is that the market managed to hold on to most of its gains, with the all share index losing only 0,67% — largely as a result of a bit of profit taking. Heavy profit taking dropped the Alsi-40 — a futures contract based on the heavyweight shares — by just under 2%. Financial stock managed to hold ground, ending in positive territory with the index gaining 0,52%, while industrial stock ended flat — shedding a marginal 0,35%.
No strong direction came from international markets, with a fairly mixed bag from the East with Japan’s Nikkei Dow gaining ground and Hong Kong’s Hang Seng slipping. Dealers said that providing a strong undertone to the day was the repo rate which fell for the fourth successive day to 21,25 from 21,34%. Further positive sentiment, especially boosting financial stock, was the announcement on Friday that the “big four” banks have lowered their prime lending rates by 1%.
ING Barings chief economist Kristina Quattek said that the global trend to monetary easing might well translate into a faster-than-expected reduction in South African interest rates Some economists, however, are warning investors not to make the mistake of viewing the recent spurt in sentiment as indicative of a fundamental revival in economic conditions. Said Citadel Investment Services Louis Fourie: “The results of the fallout in the East and pressure on local spending are still firmly on track to do the necessary damage to company profits. The ’emergency’ interest rate cut in the United States late last week accentuates the terminal urgency of the matter.” Local share prices, he said, still have to “sweat out this reality”.
The rand picked up around 5c to the dollar to R5,67 by 4.30pm while the R150 ended almost flat at a 16,01% yield.