The JSE was awash with red in noon trade on Tuesday with a media report of a proposed windfall tax on the resources industry and weaker world markets prompting profit taking in a market that had enjoyed a phenomenal run. The JSE had reached record highs in seven of the nine sessions prior to Tuesday’s retreat.
By 12.07pm, the all-share and all-share industrial indices slipped 1,57% and 1,06% respectively.
Resources tumbled 2,05% and the gold mining index surrendered 1,99%, although the platinum mining index was flat (-0,03%). Financials fell 1,58% and the banks index was 1,94% in the red.
The rand was bid at 7,11 per dollar from 7,08 when the JSE closed on Monday, while gold was quoted at $685,05 a troy ounce from $685,25/oz at the JSE’s last close.
”We have been dragged down by a combination of forces. Firstly, international markers are under quite a bit of pressure which dragged us down quite badly. In addition to this, we had news of a proposed windfall tax on the mining industry, which is the lifeblood of our market,” said Cortex derivatives trader Lavan Gopaul.
He continued that after its very strong run, the JSE had been ripe for profit taking.
Gopaul noted that in China, the Shanghai Composite index was down almost 9% — its biggest single-session fall in almost 10 years. Asian markets were all losing ground, Iran was adamant about pressing ahead with its nuclear programme and European markets were also weaker.
”We’ve got the Asian tigers losing a few teeth,” he commented.
All of these global factors, coupled with the report of a proposed mining tax, had encouraged profit taking in a market that had had a very strong run.
Business Day reported on Monday that the task team set up by Finance Minister Trevor Manuel to investigate a proposed windfall tax on the synthetic fuels industry had recommended a similar mechanism be implemented for other resource companies.
In morning trade, London-listed Anglo American slumped 2,5% or R9,15 to R356,30 and BHP Billiton dropped 2,19% or R3,35 to R149,65.
Petrochemicals group Sasol slid 3,05% or R7,50 to R238.
Exxaro plunged 4,88% or R3,15 to R61,35 and Kumba Iron Ore weakened 2,29% or R3 to R128.
Gold Fields fell 2,94% or R3,90 to R128,60 and AngloGold Ashanti gave up 1,37% or R4,60 to R330,40.
However, while Lonmin lost 2,96% or R13,80 to R453,20 and Impala eased R1,35 to R214,95, AngloPlat added 1,1% or R11,90 to R1 092. AngloPlat shares earlier traded at a record high of R1 100.
Among industrials, Swiss-listed luxury goods group Richemont was down 1,78% or 73 cents at R40,18.
MTN Group was off 2,3% or R2,15 to R91,35 and Telkom lost 1,18% or R2 to R167,50.
Media group Naspers was 2,67% or R5 in the red at R182,50. It announced before the opening that it is seeking to raise $750-million for expansion by way of a private placement to institutional investors of new Naspers N shares.
Although it touched a new high of R146 in early trade, services group Bidvest was 1,72% or R2,50 softer on the day at R142,70.
Fast food group Famous Brands dropped 3,05% or 50 cents to R15,90. It said on Tuesday that it had acquired a 75% stake in Wimpy United Kingdom for £3-million, with a further £2-million to be invested in re-energising the brand. The five million sterling total investment will be funded through a combination of cash reserves and debt finance.
Construction group Murray & Roberts bucked the trend, leaping 3,97% or R2,15 to R56,30. It traded at a record high of R57 after it said that its headline earnings per share (HEPS) for the six months ended December are now expected to show an increase of between 90% and 110% over the 65 cents (excluding the effect of the group’s BEE transaction) recorded in the previous comparable period.
Murray & Roberts had advised on November 30 that its interim HEPS were expected to increase 60% and 80%.
On the financial front, London-listed Old Mutual was 2,02% or 53 cents lower at R25,70. Health and life insurer Discovery slid 2,87% or 89 cents to R30,10.
Nedbank sagged 3,28% or R4,75 to R139,85, Absa weakened 1,75% or R2,50 to R140,50 and Standard Bank shed 1,19% or R1,25 to R103,75.
FirstRand fell 2,47% or 61 cents to R24,06. Before the opening, FirstRand reported a 25% increase in headline earnings per share from 68,7 cents to 85,7 cents per share for the six months ended in December.
Diluted normalised earnings per share reflected a 26% increase — from 78,2 cents to 98,2 cents.
The group declared an interim dividend per share of 39,5 cents, which was a 23% increase on the dividend for the previous comparative half-year.
Short-term insurer Santam, however, jumped 3,09% or R3,03 to R101. Santam on Tuesday reported an increase in headline earnings per share from 1 540 cents to 1 555 cents for the year to the end of December.
The group declared a final dividend per share of 262 cents compared with 227 cents in the previous year, bringing the total dividend for 2006 to 380 cents, which is a 13% increase on 2005.
Santam also said that it intended to make an offer to repurchase up to 10% of its issued ordinary shares from all Santam ordinary shareholders for a cash consideration of R102 per share. – Sapa