Shares tread water amid uncertainty

MOST of the banking stocks were flat on the JSE on Friday, no doubt awaiting the decisions by S&P Global Ratings and Moody’s Investor Services.

Capitec Bank was flat for most part of the day, only 0.09 percent down, while Standard Bank shed 1.75 percent in the late afternoon.

The expected decision did not harm the banking stocks as four out of five were trading only slightly in negative territory.

FirstRand was down the most at one stage, shedding 2.05 percent, but the stock recovered, and was down only 1.2 percent late in the day.

Nedbank was down by only 0.12 percent, while Barclays Africa was the only bank trading in positive territory, up by 0.43 percent in the afternoon.

Could we attribute the stocks’ behaviour to the expected ratings agencies’ decision?

Ashburton Investments fund manager Rahima Cassim said while risk had been priced in, the market was not assuming that both ratings agencies would downgrade South Africa.

“Having said that, we are awaiting decisions from both, and uncertainty around the risk does exist, which is possibly being reflected in the share price movements,” she said.

Cassim added that a positive decision for the country would not mean that South Africa had avoided uncertainty, as the ANC’s elective conference next month would have a bearing on sentiment.

“A positive outcome would only defer the uncertainty to a later date. Market sentiment is that ratings agencies could make adjustments to the credit ratings post the December electoral conference. That is then the key catalyst for an eventual positive or negative outcome, deferred into next year,” Cassim said.

In April, Fitch downgraded South Africa to junk status after President Jacob Zuma reshuffled his cabinet.