JSE could struggle as US considers limiting portfolio flows to China
Concern that the US-China trade war can still escalate could weigh on the JSE on Monday, after news that the US is considering restricting capital flows to China.
Sentiment improved a little on Monday, after a Chinese manufacturing purchasing managers’ index earlier beat market expectations, rising to a 19-month high in September.
Talk of US restrictions had weighed on US equities late on Friday.
Apparently, many options have been discussed including limiting government pension funds and ways to put caps on Chinese companies on US exchanges, National Australia Bank analyst Tapas Strickland said in a note.
“The reports though also revealed fairly sizeable divisions between hawks/doves and the notion of limiting investments into China has been floated previously with the main focus on closing loopholes on US reporting regulations,” Strickland said.
Subsequently the US Treasury stated there are no plans to stop Chinese companies from listing on US exchanges.
Asian markets were mostly weaker on Monday morning, with the Shanghai composite down 0.44% and Japan’s Nikkei 0.77% lower. Hong Kong’s Hang Seng was up 0.52%.
Gold was down 0.3% at $1,492/oz while platinum was flat at $932.38. Brent crude was flat at $61.90 a barrel.
Pressure on the rand continues, with the local currency falling 0.15% to R15.1429/$, a three-week low.
Companies reporting on Monday include Zimbabwe-focused Brainworks, which said earlier in September it expected headline earnings per share to surge as much as 773% in the six months to end-June.
Rex Trueform, the owner of fashion retailer Queenspark, is expected to report that headline earnings per share fell 41.3%-61.3% in the year to end-June.
Locally, balance of trade data for August and private sector credit data for the same month are due later.
Preliminary German inflation data for September, and the final estimate of UK second-quarter GDP are also due.
Source: businesslive.co.za
