Oversold Richemont leads charge on JSE
JSE-LISTED shares of Richemont led South African stocks higher on Friday as investors overlooked disappointing first-half results by the luxury goods maker, focusing instead on value in a stock seen as oversold.
Richemont, which is also listed in Switzerland, reported a biggerthan-expected fall in profits on currency hedging losses, news that initially drove a fall of more than 4% in its share price. But it ended the session 7% higher, making it the top blue-chip performer.
“Yes, the results are bad, but the share price has already come down quite a lot over the last couple of weeks and it seems to have already been discounted for the bad news,” said Ferdi Heyneke, a portfolio manager at Afrifocus Securities.
The StarMine valuation model, which uses a blend of analysts’ forecasts and its own tools, estimates Richemont’s earnings growth rate is likely to compound at 9% over the next five years, nearly twice what the current share price implies.
A weaker rand, which earlier in the day hit five-week lows before paring its losses against the dollar, also helped the rally by Swissbased Richemont as it boosts foreign currency-denominated dividends for local investors.
The domestic currency’s latest stumble pushed local platinum and gold producers higher as it lifts the rand price of their metal.
Platinum producer Lonmin blazed this uphill trail, shooting 7% higher ahead of the release tomorrow of its annual results, making it the biggest gainer on the All Share index. Bullion producer Gold Fields zoomed 6.35% higher, while bigger rival AngloGold Ashanti rose 4.7%.
The benchmark Top 40 index ended 1.15% up at 44 815, while the wider All Share index added 0.99% to 50 079.
US stocks were mainly flat, but still near record highs after the October US payroll report came in weaker than expected, even as it pointed to economic resilience despite slowing global demand.
Employers added 214 000 jobs last month, below the 231 000 expected in a Reuters poll of economists, while August and September’s gains were revised higher. The unemployment rate fell to 5.8% from 5.9%.
At 4.04pm GMT, the Dow Jones industrial average had fallen 0.05% to 17 546.13, the S&P 500 had gained 0.04% to 2 032 and the Nasdaq Composite had dropped 0.32% to 4 623.52.
European shares lost ground as pessimism over economic growth and loan demand in Europe hit bank stocks, while the mixed US jobs data did little to buoy investor sentiment. The pan-European FTSEurofirst 300 index was down 0.6% at 1517 GMT and looked set to post a weekly loss.
Spot gold was up 1.1% at $1 153.20/oz at 1435 GMT, while US gold futures for December delivery were up $10.40/oz at $1 153.00. Silver was down 1.3% at $15.57/oz, spot palladium was up 2.1% at $762.50/oz and spot platinum was 0.9% higher at $1 197.90/oz. —