JSE tumbles as Chinese data disappoints

Web_photo_JSE_15102014

The stock market indicator board is pictured in the lobby of the Johannesburg Stock Exchange (JSE) in Sandton, Johannesburg, South Africa, 14 January 2013.

The stock market indicator board is pictured in the lobby of the Johannesburg Stock Exchange (JSE) in Sandton, Johannesburg, South Africa, 14 January 2013.

Web_photo_JSE_15102014

The stock market indicator board is pictured in the lobby of the Johannesburg Stock Exchange (JSE) in Sandton, Johannesburg, South Africa, 14 January 2013.

The stock market indicator board is pictured in the lobby of the Johannesburg Stock Exchange (JSE) in Sandton, Johannesburg, South Africa, 14 January 2013.

JOHANNESBURG - The JSE opened sharply lower on Monday in one of the weakest openings this year after disappointing Chinese data indicated more stimulus will be necessary to boost economic growth.
 
The Chinese central bank cut interests rate in November‚ but manufacturing data released on Monday showed the Chinese manufacturing sector could be on the brink of a contraction.
 
The official Chinese manufacturing purchasing managers index (PMI) came in at 50.3 points in November from 50.8 in October‚ while the HSBC manufacturing PMI was recorded at 50 points‚ the level that separates the sector from growth or contraction.
 
Asian markets were mixed. The Nikkei 225 was up 0.75%‚ but the Hang Seng index lost 2.48%. US markets closed flat on Friday.
 
At 9.24am the JSE all share was 3.68% down at 48‚074.17 and the blue-chip top 40 fell 4.11%. Resources were down 7.97%‚ gold counters lost 6.58%‚ platinums dropped 5.18% and banks shed 3.06%. Industrials lost 2.74% and financials were down 2.36%.
 
Imara SP Reid said in an early morning that note Chinese markets encountered some technical resilience‚ although they weakened on the manufacturing data. Technically‚ US indices remained well supported.
 
“On balance‚ the available short-term picture argues for a slight value retracement.”
 
While optimism on the state of the US economy‚ technical factors and fund flows into US risk trade assets continued to drive trade‚ there were “inconsistencies in the overall global trading backdrop”‚ Imara said.
 
The more than 10% drop in the Brent crude oil price on Friday‚ had a negative effect on Sasol (SOL)‚ with the global oil producer losing 11.46% to R409 in the early morning. At 10.01am the Brent crude oil price was down a further 1.11% to $67.77 a barrel.
 
The falling oil price has had a knock-on affect on other resources companies‚ as lower Chinese growth is expected to reduce demand for commodities. At 9.24am Anglo American (AGL) was down 7.84% to R210.89. Diversified global miner BHP Billiton (BIL) lost 6.90% to R244.01.
 
Specific commodity shares also suffered heavily‚ with coal producer Exxaro (EXX) losing 9.04% to R101.29 and iron ore producer Kumba Iron Ore (KIO) down 6.39% to R241.25. ArcelorMittal (ACL) shed 6.42% to R25.50.
 
AngloGold Ashanti (ANG) led gold shares lower‚ losing 7.71% to R91.17.
 
Impala Platinum (IMP) was down 7.91% at R74.29.
 
Naspers (NPN) lost 5.70% to R1‚352.26. It has a large exposure to the Chinese market through its 34% holding in diversified internet company Tencent.
 
Nedbank (NED) dropped 4.10% to R233.01. Standard Bank (SBK)‚ which had exposure to the Chinese market through loss-making aluminium trades‚ was down 3.48% at R131.46.
 
Sugar producer Illovo (ILV) was 1.45% lower at R26.59 after reporting interim headline earnings per share were down 10%.
 
Steinhoff (SHF) was down 1.08% to R57.57‚ with Brait (BAT) losing 2.08% to R70.50. Weekend reports indicated Steinhoff might not have fully adhered to regulatory requirements before the Pepkor buyout as a cautionary announcement was not released before the deal was announced.