The JSE started the week in the doldrums as it tracked a global stock market rout hit by an escalating liquidity crisis at Chinese property developer Evergrande and a collapse in iron ore prices.
Bloomberg reports angst about the world’s most-indebted developer sparked the biggest selloff in Hong Kong property stocks in more than a year, dragging down everything from banks to Ping An Insurance Group. This anxiety spilled over to the JSE, with property counters Capital & Regional (-8.92%), Accelerate Property (-6.09%), Growthpoint (-3.70%) and Capco (-2.94%) all falling.
Iron ore’s slump to below $100 a ton amid China’s intensified restrictions on industrial activity in some provinces has sent miners that produce the mineral plummeting, with heavyweight Anglo American and its subsidiary Kumba Iron Ore losing 5.56% and 4.01% respectively, while BHP gave up 1.67% and Exxaro 2.85%.
Iron ore prices, which traded 8.3% lower at $93.25 a ton earlier in London, are down for a ninth day, heading for their longest run of losses since 2015, reports Bloomberg.
A drop in Brent Crude towards $70 a barrel weighed on Sasol (-2.5%).
The Chinese contagion also hit tech stocks with local behemoths Naspers (-3.18%) and Prosus (-1.71%), which have exposure to Tencent, also feeling the heat.
Discovery (-6.02%) suffered a double whammy from its exposure to Ping An and after Rand Merchant Investment Holdings (RMI) unveiled plans to unbundle its stakes in the health insurer and Momentum Metropolitan (-3.21%). On the upside RMI gained as much as 18% before paring gains to end the day 14.57% firmer on the plan that includes it tapping shareholders for R6.5bn.
Sanlam and Old Mutual gave up 3.00% and 4.88% respectively.
The risk of China didn’t spare the currency markets, with fears of potential default by Evergrande and caution ahead of several central bank meetings, including South Africa this week, pushed investors towards the safety of the dollar. Threatening to break above R14.85 to the US dollar, the currency somewhat consolidated around the R14.80-level and was last changing hands at R14.82/$.
“Fears of the possible default by Chinese property developer Evergrande have continued to filter through the market. We have also seen the US dollar on the advance as markets are treading lightly for risky assets,” comments TreasuryONE.
“However, we have seen the rand running hard for the last couple of days and should the volatility in the market subside; we could see the rand clawing back some of its losses,” says the forex trading house.
Even Bitcoin got swept up in the selloff, with the cryptocurrency plunging as much as 11%.
Although trading below $1,800/oz, gold is the only commodity in the green today, giving life to gold counters, with Harmony adding 2.21% and Gold Fields 4.15%.
Indicators as at 17:00
Currencies
USDZAR 14.7898
EURUSD 1.1724
EURZAR 17.3344
GBPUSD 1.3671
GBPZAR 20.2131
AUDZAR 10.7224
CADZAR 11.5376
CNYZAR 2.2863
ZARJPY 7.4015
CHFZAR 15.9308
USDAOA 615.77
Bonds and equities
R186 7.50%
US 10 Year 1.33%
JSE -2.24%
FTSE -0.92%
S&P 500 -0.29%
Commodities
Gold $1 764.86
Plat $918.18
Plad $1 944.87
Rhod $12 590.00
Irid $4 990.00
Ruth $673.00
Copp $9 145.40
Brent $74.65
Iron Ore 62.5% $123.00
Coal API4 $161.50
Gold ZAR R26 089.57
Plat ZAR R13 573.27
Indicators brought to you by TreasuryONE
