Business Day

Turkey downgrade weighs on bourse

- MAARTEN MITTNER Markets Writer mittnerm@fm.co.za

THE JSE all share started the week in the red as concern over emerging-market contagion grew after sovereign-debt ratings agency Moody’s downgraded Turkey’s sovereign rating to junk.

Moody’s cited slowing economic growth in Turkey, as well as the rising costs of debt, as the reason for the downgrade to subinvestm­ent grade. Moody’s lowered Turkey’s sovereign rating one level to Ba1, the highest noninvestm­ent grade.

Moody’s had indicated earlier that SA’s flat GDP growth would be a major factor in its ratings review later in 2016.

The all share recorded broadbased losses on the day and closed 1% weaker at 51,479.80. Banks and financials were hard hit, with industrial­s and miners, notably gold, also losing out. Property was the only shining light on the day, with the index gaining 0.65%.

The all share has had a weak month so far, having fallen nearly 3% in September as the stronger rand dragged down rand hedges and industrial­s.

Industrial­s have retreated 4.4% in September. Retailers have lost 3% after losing 11% in August. The property index is 1.3% lower in September after shedding 5% in August.

Naspers’s share price was also lower on Monday, closing 1.13% off its Friday number as the global internet and gamedownlo­ading company struggles to hold on to recent highs.

Naspers firmed to an all-time high of R2,553.59 on September 5, but it lost 4.3% last week. Naspers is 8% higher for 2016, but the share’s performanc­e is seemingly no longer coupled to its Chinese Tencent investment, which still trades at or near record levels.

Leading European markets were also weaker on Monday, despite some positive news out of Germany where the September IFO business climate indicator surprised on the upside, increasing 3.2 points to 109.5, which is its highest reading since May 2014.

BP Bernstein Stockbroke­rs’s Vasili Girasis said renewed concerns about Deutsche Bank had caused jitters in European markets, with the Dax losing 1.8% in late afternoon trade.

Deutsche shares were at a new low, having dropped 6% on Monday.

Amid market scepticism, Deutsche Bank sought to reassure investors on Monday that it did not need a government bailout and had no plans for a capital increase.

“Deutsche Bank’s share price has dropped 50% so far this year, and any government bail-out or financial support measures were bound to have negative consequenc­es for European markets,” Girasis said.

Further weakness in global equity markets was ascribed to uncertaint­y about where interest rates in the world’s dominant economies are heading.

Global markets are attempting to decipher the future trajectory of interest-rate movements following decisions last week by the US Federal Reserve and the Bank of Japan to keep rates on hold.

Although the price of Brent crude jumped 3.5% to $47.61 a barrel in late trade on Monday, the weaker trend in oil prices weighed on energy stocks on the Dow on Friday, causing the index to close 0.71% lower.

It opened 0.57% lower on Monday, and has lost 0.76% so far this year.

Technology shares in the US also fell out of favour amid renewed scepticism about the growth prospects of Apple and Facebook. Their share prices lost more than 1.5% on Friday.

The rand firmed to R13.66 a dollar in the late afternoon from a previous R13.72 a dollar.

Newspapers in English

Newspapers from South Africa