JSE opens higher on rosier outlook for emerging markets

The JSE opened firmer on Wednesday following a positive close on the Dow and indications that the recent sell-off in emerging markets was overdone.

Slightly higher-than-expected consumer inflation for July had little initial effect on the market. The consumer price index (CPI) rose 5.1% from an expected 5% and 4.6% in June.

Banks and industrials led at the opening, with Naspers trading in positive territory for most of the week so far. It rose 1.33% to R3,348.38 in early-morning trade.

Franklin Templeton analysts said in a note that rising trade tension, particularly between the US and China, have prompted a cautious investor outlook, affecting emerging markets over the short term.

“However, we believe the market correction was overdone, and a widespread recovery could occur in the second half of the year,” they said.

One of the factors driving emerging markets down has been the stronger dollar. But Franklin Templeton believes fears regarding dollar strength to be overblown.

“While a few countries such as Argentina and Turkey may have skewed overall investor perceptions, we believe that many emerging-market currencies are attractively valued and well-supported after recent downward moves,” they said.

The rand traded at about R14.40 to the dollar at the opening with the euro slightly weaker at $1.1558 after recent strong gains against the greenback.

The Dow closed 0.25% higher on Tuesday. Asian markets trended firmer on Wednesday with the Nikkei 225 rising 0.64% and the Hang Seng 0.69%.

At 10.05am the all share was 0.88% higher at 57,688.80 points and the top 40 rose 0.97%. Banks rose 1.35%, industrials 1.08%, financials and the gold index both 0.92% and general retailers 0.78%.

BHP rose 1.165 to R300.69.

Bidcorp dropped 0.58% to R294.78. The group reported continuing headline earnings per share (HEPS) to end-June rose 9,1%.

FirstRand added 1.95% to R66.47 and Absa 1.13% to R159.93.

Shoprite added 1% to R205.04 after falling earlier on disappointing annual results, which saw the group reporting its first earnings drop in 20 years.

Resilient was 1.61% down at R58.64 after warning it would resort to legal action if the Financial Sector Conduct Authority does not bring its investigation into the group to a closure.

Nepi Rockcastle rose 1.13% to R129.89.

Famous Brands rebounded 1.83% to R102.15.