/ 2 September 2008

JSE in the red, but industrials find favour

South African stocks were weaker at midday on Tuesday, weighed by falls in resources and miners amid lower commodities prices. However, industrial stocks were firmer as players started finding value in the sector.

At noon, the all-share index was 1,18% weaker. Resources fell 3,31%, while the gold and platinum mining indices gave up 2,05% and 2,44% respectively. Industrials were up 1,03%, but financials weakened 0,33% and banks surrendered 1,30%.

The rand was bid at 7,82 to the US dollar from 7,74 when the JSE closed on Monday, while gold was quoted at $805,83 a troy ounce from $818,05/oz
at the JSE’s last close.

Platinum was last at $1 395/oz — down $45/oz from its previous close. Brent crude futures were at $106,29 per barrel from a previous close of $109,41.

Resources continued weaker during the morning session, under pressure from the firmer dollar, lower oil prices and weaker metals prices.

However, industrials, which for the most part of this year have languished while resources and the rest of the market rallied, were a bright spot in an otherwise gloomy-looking JSE on Tuesday.

“Industrials are starting to offer a lot of value. Look at the likes of Wilson Bayley and other construction stocks, which have reported strong results. These stocks were all hammered earlier in the year and now they are starting to show value, and their earnings are on the positive side,” said a local equities trader.

“Investors are starting to look for value and they are finding it in industrials,” the trader added.

On the JSE, resource giant Anglo American was off R17,99, or 4,62%, to R371 and BHP Billiton lost R8,15, or 3,6%, to R217,99. Sasol was down R9,34, or 2,33%, to R391,18.

Among gold miners, AngloGold Ashanti weakened R4, or 2,02%, to R194 and Harmony edged down R1,34, or 2,14%, to R61,27 and Gold Fields shed R1,38, or 2,1%, to R64,22.

Platinum miner Anglo Platinum was down R22, or 2,43%, to R883 and Impala Platinum lost R5,50, or 2,7%, to R198,50.

Lonmin was off 50 cents to R475,51. Earlier it reiterated that it continues to believe that the unsolicited proposed offer by Xstrata on August 6 fundamentally undervalues Lonmin’s unique assets, resources and reserves.

“It is not in the interests of Lonmin’s shareholders, and the board will continue to oppose it vigorously,” it said in a statement.

Among industrials, SABMiller was up R3,75, or 2,28%, to R168 and Richemont collected 90 cents, or 2%, to R46,20. PPC advanced 45 cents, or 1,38%, to R33,05.

MTN was up R2,68, or 2,37%, at R115,69.

Supermarket group Shoprite Holdings was steady at R46. Earlier it reported a 54,1% increase in diluted headline earnings per share to 298,6 cents for the year ended June 2008 from 193,8 cents a year ago.

A final dividend of 106 cents per share was declared, up 60,6% from the previous year’s 66 cents. The total dividend for the year amounted to 155 cents — up
53,5% from a year ago.

Among construction stocks, Wilson Bayly Holmes-Ovcon was up a further 2,79%, or R4,01, at R147,51, following its 4,74% jump on Monday.

On Monday the group reported higher-than-expected earnings as it more than doubled its full year diluted headline EPS and beat analysts’ consensus forecast, reflecting the local construction boom ahead of the 2010 World Cup. Diluted headline EPS soared to 1 259,4 cents from 512,1 cents a year ago, significantly above an I-Net Bridge consensus forecast from seven brokerage houses of 792 cents.

Elsewhere in the sector, Group Five was up R1,38, or 2,46%, at R57,38 and Murray & Roberts collected R1, or 1%, to R101.

Among banks and financials, Nedbank was down 79 cents at R103,71, while Standard Bank shed R1,19 , or 1,33%, to R88,52.

Old Mutual was up 27 cents, or 1,96%, at R14,04. – I-Net Bridge