Gold miners surged for the second straight session, as risk aversion bolstered the price of bullion. Traders say South African stocks could see further selling, as some valuations remain high after a strong run earlier this year.
“I still think the downside risk on a lot of other stocks is still relatively high, despite the sell-off that we’ve seen,” said Nic Norman-Smith of Lentus Asset Management.
The benchmark Top-40 index fell 1.3% to 29 212.42. For the week, it fell 2.9%, its biggest weekly drop since November.
The broad All-share index dropped on the day 1.2% to 33 148.39
While investors were looking ahead to the market debut of Facebook, traders said it was likely to have little impact on the local market.
Resource firms, with the exception of gold miners, were the hardest hit by the global flight from risk.
African Rainbow Minerals, a diversified miner with coal and base metal assets, tumbled 4% to 167.80 rand.
Assore, a miner of base minerals, slid 3.4% to 260 rand.
Ratings
Banks were also hit on the flight from riskier assets, with FirstRand, South Africa’s second-largest banking group by value, tumbling 3.9% to 25 rand.
Nedbank, South Africa’s fourth-largest lender, slid 3.2% to 165.50 rand.
Investors were unnerved by a ratings downgrade of 16 Spanish banks by Moody’s Investors Service and an unexpected contraction in U.S. regional factory activity reported on Thursday.
Sentiment has soured to such an extent that an opinion poll showing Greeks are returning to establishment parties which support the country’s bailout had little impact.
Gold miners were among the only gainers, with AngloGold Ashanti jumping 6.3% to 285.93 rand.
Gold rose more than 1% on Friday, building on the previous session’s hefty gains, as a recovery in the euro prompted fresh buying of the precious metal after prices slid to five-month lows earlier this week.
A total of 214-million shares changed hands, compared with last year’s daily volume of 255-million shares. Decliners outnumbered advancers by a ratio of two to one. – Reuters