JSE closes lower as miners retreat and banks surge on undervalue viewpoint

THE JSE closed weaker yesterday as the all-share failed to hold on to gains made in early trade.

Resources retreated following the publication of Chinese data, which showed that industrial production grew at an annualised pace of 6.1% last month, and below expectations.

Growth in retail sales at 10% a year was lower than the 10.7% recorded in September.

However, South Africa’s banking shares rose sharply in line with US banking stocks, and were further supported by a perception that our banks had been undervalued.

General retailers and property stocks were also firmer, after last week’s hammering in reaction to the unexpected victory by Donald Trump in the US presidential race.

The US S&P 500 banking index climbed 10% in three days after the US vote, with analysts still seeing value at an average price-earnings ratio of about 11. The banking index is trading at a ratio of 10.5 times.

At 5pm, the JSE all-share index was 0.61% lower at 49 430.2 and the blue-chip Top 40 0.87%.

The gold index added 3.65% and general retailers 2.66%. Banks rose 2.60% and property 1.52%.

Financials lifted 1.44% but resources shed 3.77%. Platinums dropped 0.43%. Overall, the domestic market is still seeking direction on what the expected economic policies of a Trump administration will entail.

Sasol dipped 0.51% at R358 as a stronger rand reversed early gains.

Retailers showed signs of a recovery, with Truworths up 5.09% to R66.24, Shoprite 2.09% to R183.20 and Mr Price 3.08%.