JSE in for tough day as Tencent falls
There were red screens across the board from Asia on Friday with the JSE in for a tough day as Tencent, which influences the JSE via Naspers and Prosus, dropped again.
The Hang Seng in Hong Kong was down 2.32%, the Shanghai composite in mainland China 0.83% and the Nikkei in Japan 0.52%. Year to date, the Hang Seng is down more than one-third (35.25%), the Shanghai composite close to one-fifth (18.56%) and the Nikkei 7.14%.
Tencent retreated 4.88% and has more than halved (55.31%) in 2022.
The Hang Seng tracked US markets overnight while fears persist that mainland China is willing to keep on sacrificing economic growth as it zero-Covid policy remains in place and President Xi Jinping tightens his grip on power after he was elected for a historic third term.
The IMF has cut Asia’s GDP growth forecasts to 4% in 2022 and 4.3% in 2023, citing the war in Ukraine, higher interest rates worldwide and China’s slowdown.
The markets in Japan were partly weighed down by what happened on Wall Street on Thursday and new inflation data which showed that it rose sharply in October. CPI rose 3.5% year on year versus 2.8% in September. The Bank of Japan (BoJ) on Friday also kept its interest rate unchanged on Friday.
“The core inflation rate excluding fresh food also hit 3.4%, the highest level since 1989,” the Asia-Pacific head of research Robert Carnell and senior economist Min Joo Kang at the ING Group said in a note. “The BoJ takes a different view than the ECB. If inflation is not driven by demand-side factors, they will not change the easy policy stance and it seems like they believe this will maintain their credibility.”
In local market news, the JSE closed little changed on Thursday after data showed the US economy grew at a faster-than-expected pace in the third quarter and the European Central Bank raised its benchmark interest rate for a third time this year.
The JSE all share was little changed at 67,123 points, but the top 40 eased 0.16%. Retailers were up 3.47%, SA listed property 2.41%, food producers 1.98% and precious metals 0.42%. Industrial metals and resources eased 1.79% and 0.62%, respectively.
US GDP expanded by an annualised 2.6% in the third quarter, higher than the market consensus estimate of 2.3%, ending two straight quarters of declining output and easing concerns about a recession in the world’s biggest economy.
“The USD Q3 GDP beat expectations, but details underwhelm with the data release not eliciting a material market reaction,” National Australia Bank currency strategist Rodrigo Catril said in a note. “Most of the growth in GDP was due to a huge swing in net foreign trade, contributing 2.8%, while domestic final demand rose only 0.5%. That compares with an average of almost 2.6% over the five years before the pandemic.”
The Dow Jones ended 0.61% higher on Thursday, while the S&P 500 closed 0.61% lower and the Nasdaq declined by 1.63%. The Nasdaq has lost 31.83% so far this year, the S&P 500 more than one-fifth (20.62%) and the Dow Jones 12.44%.
The rand strengthened against the dollar, trading at R17.92. The rand has depreciated by 10.80% against the greenback so far this year.
In commodities, the price of gold was up 0.10% and platinum 0.45%, while Brent crude was down 0.51%. Gold traded at $1,664.03/oz, platinum at $961.80 and Brent crude at $94.18 a barrel.
In corporate news, Impala Platinum (Implats) will release its production report for its first quarter on Friday. In terms of property, Grit Real Estate and Industrials Reit will also publish results.
Source: businesslive.co.za
