/ 7 February 2008

Platinum-share rally fails to prop up JSE

Platinum-mining stocks continued to shine brightly on the JSE by midday on Thursday, but even this dose of positive news failed to keep the bourse in the black as a slow European market weighed.

By noon, the broader all-share index had slipped 0,02% into the red. Banks dropped 1,07% and financials gave up 0,47%, while industrials pulled back 0,83%. The gold-mining index edged up 0,02%, resources gained 0,69% and the platinum-mining index rallied 5%.

The rand was bid at 7,68 to the United States dollar from 7,66 when the JSE closed on Wednesday, while gold was quoted at $909,55 a troy ounce from $901,50/oz at the JSE’s last close.

“The JSE started off on a positive note and it remained that way until the European open. As European markets looked like they would open lower, the JSE followed them down, but then had a brief rally,” said a local trader.

However, he added that by noon the JSE had dropped slightly into the negative.

“The top-40 stocks that have been holding up this market have been specifically platinum counters that are up on a record platinum price,” he said.

On Thursday, the platinum price hit a new record high of $1 855 an ounce. By midday, the white metal was trading at its new record level.

On the JSE, Anglo Platinum rallied R51,99, or 4,68%, to R1 162,99 and Impala Platinum strengthened R15, or 5,51%, to R287.

“The gold price is also moving in tandem with the record platinum price, but the weaker rand has been the talk of the town,” added the equities trader.

He said that if the market had to look at the rand as a share price for South Africa, it was not giving a good picture of the country. “This is because of all the uncertainty over power cuts, the political issues and the economy as a whole,” he said.

“Also, the market is still grappling with BHP Billiton being slightly down, and I think the story about its higher bid for Rio Tinto is far from over,” he said.

On Wednesday, resource group BHP Billion said that it had increased its offer made late last year from three-for-one to 3,4 BHP Billiton shares per Rio Tinto share.

But, just after the JSE closed on Wednesday, Rio Tinto said it has “unanimously” rejected BHP Billiton’s pre-conditional offer as not being in the best interests of shareholders, after it had earlier said that it would “carefully” consider the offer.

Rio Tinto chairperson Paul Skinner said: “BHP Billiton’s offers, while improved, still fail to recognise the underlying value of Rio Tinto’s quality assets and prospects. Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio Tinto.”

“The fact that Rio rejected the offer doesn’t have any play, because it’s still all up to the shareholders to decide. I think the shareholders are hanging in for more — they just want a sweeter deal,” explained the trader.

On the JSE on Thursday, BHP Billiton’s share price was down R5, or 2,19%, to R223.

“But the feature for today [Thursday] is obviously the record platinum price and the vulnerable rand,” he said.

The trader added that if market players had to exclude the platinum-mining index from the JSE, the bourse would be sharply lower.

Among other stocks on the JSE, Anglo American was R6,81, or 1,59%, higher at R436 but Sasol shed R3 to R342.

Gold miner AngloGold Ashanti lost R3 to R301, but Harmony firmed R1,77, or 2,39%, to R75,77.

AngloGold Ashanti on Thursday reported a 5% decline in gold production in the quarter ended December to 1,37-million ounces, principally as a result of the safety interventions in South Africa and the operational difficulties experienced at Geita gold mine in Tanzania.

The group reported a headline loss per share of 165 cents for the December quarter, from a loss of 111 cents the previous quarter, while the full year headline loss amounted to 230 cents from a 30 cents loss the year before.

A final dividend of 53 South African cents, or seven US cents per share, was declared, resulting in total dividend of 143 South African cents or 20 US cents per share for the year.

On the industrial front, brewer SABMiller dipped R1,57 to R165,43 and luxury goods group Richemont fell 70 cents, or 1,63%, to R42,30.

Among financials and banks, RMB Holdings gave up 12 cents to R26,16, Nedbank weakened R1,49, or 1,41%, to R104 but Sasfin recovered R1, or 2,5%, to R41. — I-Net Bridge