Property stocks retreat slows JSE

The JSE closed weaker on Wednesday as property stocks retreated on reports that China may slow down its purchases of US treasuries. Local bond yields rose in reaction as the rand lost ground against the dollar.

Local property stocks, structured as real estate investment trusts (Reits), are linked to the global bond market because yields on issued bonds are benchmarked to global yields. Higher global bond yields will increase the costs of locally listed property firms.

The property index hit a high last week but has since dropped on profittaking. Related interest-rate sensitive sectors, notably banks and retailers, were also negatively affected in riskoff trade, as these sectors hold large offshore investments. Miners supported the market on the day, as commodity prices increased, with gold shares leading the gains, followed by diversified miners.

The all share closed 0.22% lower at 59,979.60 and the blue-chip top 40 lost 0.03%. The property index shed 3.4%, general retailers 1.55%, financials 1.14%, banks 1.03% and food and drug retailers 0.83%. The gold index rose 2.05% and resources 1.36%.

Nepi Rockcastle led the losses in the property sector, closing 7.14% lower at R188.50. Resilient shed 7.32% to R134.40 and Fortress B, 11.2% to R35.91. Nedbank fell 2.32%, to R254.20. Diversified miner Anglo American added 3.13%, to R287.72 and Glencore 1.96%, to R67.65.

The rand weakened along with a softer dollar. The dollar crossed $1.20 to the euro, reversing gains made earlier in the week, before firming to $1.19/€ at the JSE’s close.

The rand hit a weakest intra-day level of R12.5478/$, from R12.3403/$ and was at R12.4249/$ after the JSE’s close.

Earlier, Reuters reported that the removal of President Jacob Zuma as head of state was not being discussed at the ANC’s national executive committee meeting on Wednesday.

The benchmark R186 was last seen at 8.635%, from 8.54%, while the US 10-year treasury was at 2.5865%, from 2.5543%.

The top-40 Alsi futures index closed 0.07% higher at 53‚722 points. The number of contracts traded was 15‚268, from Tuesday’s 18‚496.