The JSE Securities Exchange (JSE) was in the red in noon trade on Monday, led down by gold miner Harmony as the market reacted to its proposed takeover of rival Gold Fields — which led the market’s upside. Excluding activity in these two stocks, volumes were extremely light.
At 12.05pm, the all-share index was 0,51% weaker. The financial and banks indices had fallen 0,75% and 0,7% respectively. Resources had retreated 0,98%, the gold-mining index was off 0,56% and the platinum-mining index was 0,28% softer. The all-share industrial index was 0,17% in the black.
The rand was quoted at R6,40 per dollar from R6,45 when the JSE closed on Friday, while gold was quoted at $418,85 an ounce from $419/oz at the JSE’s last close.
“Excluding Gold Fields and Harmony, the market is very quiet. That is where most of the money is going through,” a dealer said. “We are also seeing quite good business in Telkom — its trading update this morning was quite positive.”
He added that the Harmony-Gold Fields story was detracting attention from the rest of the market, which was drifting lower. Weaker world markets and a stronger rand were both weighing on the market overall.
In morning trade, Harmony dived 7,54% or R6,30 to R77,20, but Gold Fields gained 4,23% or R3,98 to R98.
Harmony on Monday launched a bid for Gold Fields, in terms of which it is offering 1,275 Harmony shares for each Gold Fields share and for each Gold Fields ADS. The offer values Gold Fields at R52,9-billion or $8,1-billion based on the closing price of R84,41 per Harmony share on the JSE on October 14. and represents a premium of approximately 29% on the closing price.
“I think it is a bit like David taking a slingshot at Goliath,” another dealer said. “It is going to be tough for Harmony to persuade Gold Fields shareholders, particularly because a significant proportion of them are offshore. Broad opinion is that the takeover might not go through, but it is still early days.”
He added that Harmony shares had been sold off on Monday morning because of the deal’s potential dilutionary effect.
AngloGold Ashanti shed 1,46% or R3,50 to R235,50.
On the rest of the resources market, London-listed Anglo American lost 1,08% or R1,60 to R146,20 and BHP Billiton was 60 cents softer at R66,40.
Petrochemicals group Sasol surrendered 1,09% or R1,40 to R127,20 and Impala Platinum slid 1% or five rand to R496.
On the industrial market, Spar, which unbundled from Tiger Brands, rocketed 12,97% or R2,40 to R20,90 from its listing price of R18,50. It earlier traded as high as R22,49.
The dealer said that some people had put Spar’s fair value at between R22 and R23, so the rally was not unexpected.
Tiger Brands was down 1,13% or 94 cents at R82,56.
Telecoms group Telkom leaped 4,76% or R3,70 to R81,50 after it said in a trading update that it expects an increase of between 60% and 80% in basic earnings per share and 50% to 70% in headline earnings per share for the six-month period ending September 30 2004 from the comparable period in 2003.
Cellular network operator MTN Group gained 1,42% or 45 cents to R32,25 and media group Naspers climbed 34 cents to R54,40.
Swiss-listed luxury goods group Richemont eased seven cents to R17,93 and London-listed brewer SABMiller weakened 1,13% or one rand to R87,80.
Pulp and paper producer Sappi was 86 cents softer at R89,75.
AVI, which had a strong run last week on news that its was to unbundle and list Consol, tumbled 2,15% or 48 cents to R21,80.
On the financial front, FirstRand fell 1,85% or 22 cents to R11,70.
London-listed Old Mutual plunged 2,48% or 33 cents to R12,95 and Sanlam dipped nine cents to R10,75.
Real-estate company Liberty International plc was 69 cents in the red at R95,30.
Banking group Nedcor notched up 45 cents to R62,85 and Absa added 25 cents to R65,25. — I-Net Bridge