LITTLE TO CELEBRATE FOR SHARES AND THE RAND
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.