LIT­TLE TO CELEBRATE FOR SHARES AND THE RAND

Financial Mail - Investors Monthly - - Analysis - Maarten Mittner

ay was a neg­a­tive month for the JSE as the All Share In­dex lost 4% and some hefty cor­rec­tions were recorded among the big caps.

The all share ex­pe­ri­enced nine con­sec­u­tive days of losses to­wards the end of the month as Greek jit­ters and un­cer­tainty about when US rates would be hiked took a toll on sen­ti­ment.

There was lit­tle sup­port for stocks from the lo­cal econ­omy, plagued by low GDP growth and power sup­ply prob­lems. The in­dex is still up for the year, but the pull­back is not ex­pected to be re­versed soon. An­a­lysts ex­pect the US Fed­eral Re­serve to im­ple­ment the first rate hike in Septem­ber, and higher in­ter­est rates have his­tor­i­cally been neg­a­tive for eq­ui­ties.

It is dis­con­cert­ing that the JSE was weaker in May de­spite global mar­kets still gen­er­ally per­form­ing well. With a large for­eign share­hold­ing in the big caps, the JSE usu­ally fol­lows global mar­ket trends. The Dow Jones in­dus­trial av­er­age was up 0,95% in May and the FTSE 100 ended the month marginally higher by 0,34%.

JSE small caps did best in May, los­ing only 0,7%, com­pared with 4% in the top 40 and 4,7% among the mid caps. The prop­erty sec­tor took a knock, los­ing 5,9% in the month.

Sa­sol was among the big monthly losers, fall­ing 10,91% as the Brent crude price seem­ingly reached a peak at the time of around $65/bar­rel. In the telecom­mu­ni­ca­tions sec­tor MTN dropped 9,95% and Vo­da­com 9,89%. Min­ing stocks were the big­gest monthly ca­su­al­ties as the dol­lar con­tin­ued to strengthen — a firmer green­back is tra­di­tion­ally the en­emy of com­modi­ties.

Big cor­rec­tions in­cluded An­gloGold Ashanti, which lost 12,7%, and An­glo Amer­i­can Plat­inum, which shed 11,6%.

Even BHP Bil­li­ton, the global min­ing group that has sported pos­i­tive growth of 19% for the year so far, fell 3,47%.

An­glo Amer­i­can was 4,47% off in the month and is 11,5% down on the year so far.

It was another dis­mal month for the rand, which de­pre­ci­ated 2% against the green­back. The lo­cal cur­rency has lost 6% against the dol­lar in the year and looks in­creas­ingly vul­ner­a­ble. The ram­pant dol­lar gained more than 9% against the euro in May.

Lo­cal bonds were also on the back foot, with the bench­mark R186 weak­en­ing by 20 ba­sis points as Ger­man bond yields ex­pe­ri­enced a sell-off.

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