Korean peninsula tensions weigh on JSE

STOCKS pulled away from record highs yesterday as rising tensions on the Korean peninsula drove investors to limit risks and shift to safe havens.

But the rand firmed, recovering ground following a slide to a onemonth low after President Jacob Zuma survived a no-confidence vote. It remained vulnerable to weak economic fundamentals and political uncertainty.

On the bourse, the JSE all share index declined 0.5 percent to 55 700.64 points, shedding 696 points from a record high of 56 396 points hit on Monday, while the Top40 index dropped 0.54 percent to 49 303.27 points.

“Generally a softer trend, which is following overseas markets. People are being a little bit more cautious really, they are not rushing into buying stocks,” Cratos Capital equities trader, Greg Davies, said.

North Korea’s apparently rapid progress in developing nuclear weapons and missiles capable of reaching the US mainland has fuelled tensions that erupted into a war of words between Washington and Pyongyang this week, unnerving regional powers and global investors.

In currency markets, the rand was bid at R13.3531 to the dollar at 5pm, 12.11c firmer than at the same time on Wednesday.

Traders said weaknesses in recent weeks had pushed the rand into an oversold territory.

“But it is still vulnerable, the backdrop is still negative and it is unlikely that this a turning point,” said ETM’s economist, Halen Bothma.

South Africa’s annual factory output dropped 2.3 percent in June, while mining production slipped 0.8 percent, official data showed yesterday.