JSE rallies to record high, rand recovers

DESPITE a week of uncertain geopolitical tensions in the US and serious Brexit negotiations, share prices on the JSE had one of its biggest rallies of the year.

The all share index on the JSE reached a new record level at the close on Friday. This, despite tensions around the German investigation against Steinhoff’s alleged inflated financial accounts that had seen the share price tumble 15 percent on Thursday.

On the other hand, Naspers also reached a milestone by trading above the R3 000 and closed Friday afternoon on R3 010. Many analysts now feel that the 50 percent increase in Naspers share price since the beginning of the year was mostly due to its 33 percent stake in Chinese company Tencent. They feel that the rest of the company did not perform as well and that the share price is overvalued.

Some shareholders also feel that the remuneration paid to top executives is not aligned to the performance of the rest of the business, excluding Tencent.

The announcement of the much lower inflation rate of 4.6 percent in July, with expectations that the rate will remain lower than 5 percent for months to come, contributed to retail share prices to have rallied on the back of interest rates that are likely to come down.

Truworths ended the week 6.5 percent higher, Shoprite shot up by 9.6 percent, while Spar gained 4.4 percent and Mr Price traded 6.5 percent higher than the previous Friday.

The all share on the JSE increased by 1 352 points, or 2.4 percent, higher than the previous Friday to close at a record high 56 655.88 points. The index is now 11.8 percent higher since the beginning of the year and 6.9 percent higher than a year ago.

Over the week, the industrial index rose by 2.5 percent, gaining 14.3 percent for the year to date. Financials gained 1.9 percent last week. Resources gained the most over the week and traded 2.8 percent higher. The listed property index, however, had decreased by 2.8 percent on the previous Friday.

The rand continued to recover against the dollar and the pound. On Friday just after the close of the JSE, the rand traded at R13.07 to the dollar, 7c (0.8 percent) stronger than a week ago. Against the, pound the currency had firmed by 12c (0.7 percent), and traded at R16.82. Against the euro, it lost 7c at R15.54.