JSE starts week on a high as rand weakens

The JSE all share hit a fourth successive record high on Monday as rand hedges rallied on the weaker domestic currency in line with the pattern established last week.

The all share closed 0.52% higher at 57,530,10, breaching the 57,500 level for the first time after hitting 57,000 on Thursday. Naspers closed 0.81% higher at R3,190.44, a new record, while British American Tobacco climbed 2.31%, to R873.39 and Anheuser-Busch InBev 1.89%, to R1,695.

Newly listed shares sparkled on the day, with Steinhoff Africa Retail up 1.7%, to R23.90 and tertiary education company Stadio rising 19.19%, to R7.39.

Volumes were low at R14bn as some US markets were closed for the Columbus Day holiday. Because it is a federal holiday and not celebrated in some states, the Dow traded and was flat at the JSE’s close.

Resources and gold stocks gained to the upside, with industrials not far behind, as the rand touched R13.8629/$. The worst rand level so far this year, of R13.9483/$, was hit on April 10.

“The indirect impact of the weaker rand is that the JSE generally benefits since most of the earnings come from outside SA,” said Old Mutual Multi-Managers analyst Izak Odendaal.

The rand-hedge component traditionally comes from global groups such as Richemont and British American Tobacco, which have secondary listings on the JSE.

“But companies with a domestic focus were increasingly expanding abroad in search of growth,” he said.

Gold stocks got an added boost from a higher gold price on mounting speculation that North Korea is to conduct a missile and/or nuclear test soon.

The rand appears to be heading for its weakest level for the year so far and lost 0.60% on the day despite the dollar being held in check against the euro, trading unchanged at $1.1732 for most of the day.

Factors for this included indications that the separatist movement in Spain’s Catalonia region was faltering after a strong reaction from the Spanish government, saying that any illegal moves towards unilateral independence would not be tolerated, thereby reversing the slide in the euro.

Several large corporations have decided to move their headquarters out of Catalonia to mitigate risks associated with the possibility of Catalan independence.

A big demonstration — of 350,000 people, according to police, and 950,000, according to organisers — was staged in Barcelona on Sunday in support of unity.

“These events make a unilateral declaration of independence marginally less likely,” said Barclays Research analysts.