JSE recovers at the opening on banks, but Naspers still looks fragile

The JSE rebounded at the opening on Thursday as Naspers showed tentative signs of recovering from Wednesday’s rout, despite Tencent losing another 3% in Hong Kong trade.

Tencent, of which Naspers owns 31.2%, lost further ground on Thursday after retreating in the previous session following disappointing quarterly results.

The JSE suffered its worst daily percentage fall in 2018 on Wednesday as the local market dropped more than 3%.

After plummeting 8% on Wednesday, Naspers was up 0.33% to R3,070.85 in early trade.

Banks and financials firmed on a tentatively firmer rand, was at R14.4467 to the dollar from R14.5693. The banking index was also supported by relatively upbeat interim numbers from Standard Bank.

The rand lost 3% on Wednesday. Although there has been some recovery since then in overnight trade, levels above R14 still reflected an undervalued rand, analysts said.

Umkhulu analyst Adam Phillips said the Turkish crisis still loomed large over the rand, despite the lira regaining a further 2.4% to 5.7 to the dollar on Thursday morning.

Phillips said there is a continued flight to quality in the form of the dollar. “What concerns me is that the effects of a possible hard Brexit still need to be priced in.”

For the time being, there are little catalysts to reverse the stronger dollar environment as further interest-rate hikes in the US could support the greenback further, Phillips said.

The Dow closed 0.54% lower on Wednesday. Asian markets were weaker on Thursday, with the Hang Seng losing 1.1%.

At 9.28am the all share was 0.64% higher at 56,004.70 points and the top 40 up 0.6%. Banks rose 1.38%, financials 1.29%, platinums 1.18%, property 1%, general retailers 0.87% and resources 0.8%.

Sasol added 1.37% to R519.02. Brent crude was slightly up at $71.04 a barrel.

Gold Fields rose 0.94% to R37.65 and Sibanye-Stillwater 1.86% to R7.66.

Standard Bank added 0.2% to R184.62. The group reported interim headline earnings to end-June rose 5% to R12.6bn. The dividend per share was up 8%.

FirstRand rose 1.91% to R63.39 and Absa 1.78% to R159.80.

Growthpoint rose 1.23% to R26.32, Redefine 1.35% to R10.48 and Nepi Rockcastle 1.36% to R123.32.

Tiger Brands tumbled 8.74% to R299 after announcing its annual earnings to end-September are expected to be between 22% and 37% lower than in 2017.

Sappi slipped 0.37% to R93.80.