JSE likely to slide on ‘Quitaly’ fears

The JSE is set to continue Tuesday’s slide, judging from Asian markets trading ahead of the local bourse’s opening on Wednesday morning.

Mainland China’s Shenzhen composite index was down 1.9% and the Shanghai composite index was down 1.8% as Asian markets took their cue from Italy where the Milan Borsa index fell 2.65%.

Italian banks suffered from fears the country is heading for its version of the UK’s Brexit — a move whose proposed names include “Quitaly” and “Outaly”. The share price of Banco BPM fell nearly 7%, Banca Generali fell 6%, and BPER Banca fell 5%.

The rand, which slid with the euro on Tuesday from R12.44 to R12.70 per dollar, was trading at R12.67 per dollar at 6:30am.

The rand was at R14.62 per euro and R16.79 per pound.

Hong Kong’s Hang Seng index was down 1.4%, with Tencent contributing a 1.3% drop to H$396.80. This indicates its 31% owner Naspers, which closed 3.65% lower at R3,088.21 on Tuesday, is in for another bad day.

Wednesday is a busy day on the JSE results front, with Spar, Nampak, Finbond, Huge Group and junior miners Chrometco and Tawana diarised for financial statements.

Spar is scheduled to release its interim results for the six months to end-March on Wednesday.

The retailer has not issued a trading statement as would be required if its earnings differed by more thank 20.

Spar said in a sales update for the 17 weeks to January 27 its overall sales grew 7% from the matching 17 weeks in the prior year.

Its Swiss subsidiary continued to struggle, with a sales decline of 5.6% measured in rand and 3.9% in francs.

But its Irish business grew sales 11.1% in rands and 4.7% in euros.

Group sales in SA increased by 7.9% for the 17 week period, boosted by its acquisition of a pharmacy chain.

“On a like-for-like basis, the South African group sales increased by 6.4%, reflecting the continued weak consumer spend. The core Spar business reported sales growth of 5.7% with same-store sales increasing 4.1%. Internally measured price inflation of about 2.2% decreased substantially from the previous period largely driven by commodity price deflation,” Spar’s sales update said.

“Liquor sales remained strong with growth exceeding 11.1% in an extremely competitive retail sector. The Build It business reported surprisingly strong results with

sales growth of 7.2%.”

Nampak is scheduled to release its interim results for the six months to end-March on Wednesday.

The packaging group has not released earnings guidance, but said in an operating update for the five months to end-February that its glass division would contribute a loss, and it was looking for a buyer for its glass business.

It also warned shareholder it faced a new entrant in the beverage can market.

Finbond said in a trading update on May 21 it expected headline earnings per share (HEPS) for the year to end-February to grow as much as 89%.

Huge Group said it expected to report HEPS grew up to 85% for the year to end-February.

Miners Chrometco and Tawana may also release results on Wednesday.