JSE faces mixed markets on Friday amid potential collapse of China property firm

Mixed Asian markets and a higher Tencent offer the prospect of some recovery for the JSE on Friday morning, as investors digest the potential collapse of a Chinese property giant, the threat of further regulatory intervention in that country, and geopolitical tension.

On Friday morning markets were considering the potential collapse of Chinese property giant Evergrande, which has a $300bn ($4-trillion) debt burden, and has faced months of declining property sales.

The Hang Seng had initially traded lower, as the market struggled to ascertain the full impact from Evergrande’s collapse and possible contagion effects, said National Australia Bank analyst Rodrigo Catril in a note.

This is the latest development to put pressure on equities this week, with Chinese authorities having turned their attention to casinos, with officials in the gambling hub of Macau announcing a review the industry is regulated, including the appointment of government representatives to “supervise” operators.

Markets have also grappled with geopolitical tension, including missile tests on the Korean peninsula, while news the Australians will be helped out with getting nuclear-powered submarines has drawn criticism from China. It has also been criticised by France, which had a submarine deal with Australia.

The JSE slipped 1.6% on Thursday, with miners faring worst.

In morning trade on Friday the Hang Seng was up 0.39% and Japan’s Nikkei 0.53%, while the Shanghai Composite had given back 0.59%.

Tencent, which influences the JSE via the Naspers stable, had gained 2.22%.

Gold was up 0.35% to $1,758.42/oz while platinum had risen 1.28% to $942.96. Brent crude was 0.16% down at $75.48 a barrel.

The rand was flat at R14.58/$, having weakened about 40c this week.

There is little on the local economic or corporate calendar on Friday, though Imperial Logistics shareholders are set to vote on a buyout offer of about R12bn from Dubai Ports World. At least one top-five shareholder, with 7.5%, has come out against it, saying though it is a good deal it underestimates the group’s potential. Imperial has said most of the shareholders it has talked to had indicated they were not averse to it.

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