Brexit strikes again with financials‚ banks and retailers biggest casualties
The JSE closed sharply lower for a second consecutive session on Monday as the global fallout from Brexit (Britain’s exit from the EU) vote continues.
Global market jitters after Friday’s rout increased on Monday after a German government spokesperson said there would be no informal discussions between the UK and the EU before the British government had invoked formal divorce proceedings by making the Article 50 request.
The more hard-line approach from Germany means guidelines on an exit agreement could drag on longer than expected after UK prime minister David Cameron indicated Article 50 would only be invoked by his successor in September‚ when he leaves the job as prime minister.
SP Angel said in a note the EU comments demanding an immediate “notification of exit” indicated that certain politicians preferred the UK out of Europe.
“This indicated that certain nation states may be manipulating the environment toward excluding the UK from the European common market as quickly as possible as they see the UK as a major competitor‚” SP Angel said.
Investors continued to pile into safe-haven government debt in the US and Europe on Monday following the UK’s vote‚ sending the yield on the benchmark US 10-year note to a near-record low and the yield on the 10-year UK bond below 1% for the first time‚ Dow Jones Newswires reported.
At the JSE’s close the yield on the 10-year US bond was 5.5% lower at 1.4715%.
Gold remained another firm safe-haven favourite with the spot gold price having firmed 0.66% to $1‚323.68 a fine ounce in early evening trade.
The JSE all share closed 3.08% lower at 50‚086.70 points and the blue-chip top 40 dropped 3.13%. Financials shed 4.63% and banks ended the day 4.28% weaker. Industrials dropped 2.94% and South African listed property lost 2.78%. Resources shed 1.75%. General retailers were the biggest losers as the index lost 5.3%.
The gold index rose 3.6%.
Counterpoint Asset Management analyst Sarah Golding said Brexit has caused chaos in global markets. Altogether $2.5-trillion has been wiped from global equity values on Friday.
“Going forward‚ the political and economic uncertainty should dictate market movements for the near-term‚ with risk-off trades dominating and safe-haven assets benefiting‚” she said.
Golding said central banks were likely to limit the volatility in financial and currency markets.
“However‚ political uncertainty would probably not end soon as a second independence vote looms in Scotland‚” Golding said.
Anglo American ended the day 5.79% lower at R127.86 and Glencore was down 4.39% to R27.66.
Imperial Holdings slumped 6.62% to R136.53 and Bidvest relinquished 5.41% to R131.01.
Among gold stocks AngloGold Ashanti leapt 5.55% to R269.66 and DRD Gold was 3.09% higher at R8.35.
Investec plc plummeted 8.58% to R85.48. It is now down 22.3% so far this year.
Barclays Africa led the losses among the bigger banks‚ closing 4.73% lower at R139.16‚ Standard Bank shed 4.40% to R120.50 and FirstRand lost 4.04% to R42.55.
Capitec dropped 4.21% to R555.60.
Among financials Old Mutual was off 5.21% to R36.40 and Discovery was 4.72% lower at R113.75.
The Foschini Group shed 10.92% to R126 and Mr Price dropped 5.09% to R192.01.
Steinhoff was 8.69% lower at R77.75.
Among property stocks with exposure to the UK market Capital & Counties was down 13.57% to R55.10 and Intu lost 8.93% to R52.50. Intu has shed 29% so far this year.
Telkom ended the day 8.53% lower at R62.20.
Naspers was down 2.96% to R2‚101 after releasing annual results on Friday after the market closed. Consolidated revenue for the year to end March fell 10% to $5.9bn.
Brait shed 9.46% to R134.90.
- TMG Digital/BDlive
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