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Johannesburg - The JSE opened markedly lower on Monday, tracking global markets as the Greek contagion hits emerging market stocks.
The All-share index gave up 1.43% to 51 226 points, with internet giant Naspers [JSE:NPN] the biggest drag.
Naspers, which has about 12% weighting in the Industrial index, was among the biggest losers, giving up 4.5% to R1 825 [at 10:20 on Monday] as Hong Kong-listed Tencent, in which Naspers has a 34% stake, slumped 9.5%.
The Industrial index was down 1.5% at 66 096 points.
However, Naspers is not down because of the situation in Greece. "Naspers' share price is down largely because to the situation in China and also the big drop in Tencent price.
"Naspers has zero exposure to Greece. Tencent won’t be affected by the Greek crisis – they have no exposure to Greece," said Brett Birkenstock of Overberg Asset Management.
He said South Africa and other emerging markets - currencies, shares and all asset prices - have dropped with the situation surrounding Greece and its potential exit from the eurozone. This has to do with the risk-on / risk-off approach investors have to the emerging markets and defensive holdings (i.e. the US dollar).
"Should the uncertainty and eventual exit of Greece occur, emerging market prices will drop further (temporarily) and once the situation has clarity we will most likely see a recovery (to a certain extent) of the currency and asset prices.
"Let me stress that yesterday’s vote in the referendum does not mean Greece will certainly leave the eurozone, it has just increased the likelihood of such an event," Birkenstock added.
Mining stocks Northam Platinum (-1.17%) [JSE:NHM] and Assore (-4.13%) [JSE:ASR] added to the JSE's pain as at 10:20.
Assore, miner and exporter of manganese, iron and chrome, also have zero exposure to the Greek crisis.
"It is an excellent company, but it has been performing badly because of weak iron prices," said Birkenstock.
The Greeks voted an overwhelming “no” to the austerity measures suggested by Greece’s creditors in a blitz referendum on Sunday. The vote now raises concerns that Greece may fall deeper into turmoil while it tries to prevent a financial system collapse.
"With the onus now on the Greek government to make the next move, the emergency summit of European leaders takes place tomorrow," Shireen Darmalingam, macroeconomic analyst at Standard Bank, said in a research note on Monday.
“Focus will be on how the Greek government plans to stabilise the country. The Greek government has said all along that it wants to remain a member of EMU [Economic and Monetary Union],” said Darmalingam.
Bloomberg reported on Monday that emerging-market stocks fell the most in two years and currencies tumbled on concern that Greece’s rejection of austerity will spur its exit from the euro area, damping demand for riskier assets.
The MSCI Emerging Markets Index lost 2.5% to 940.52 at 06:35 in Hong Kong, wiping out this year’s advance.
A gauge of Hong Kong-traded Chinese companies plunged 5% and South Korean shares headed for the steepest loss since 2012.
The rand also felt the brunt, giving up almost 0.5% to trade at R12.36/$ at 09:59.
"The rand is likely to remain under pressure today; tactically we would continue to approach the currency from the short side against the dollar. Support for the USDZAR is at 12.3500, 12.2800/2500, 12.2100 and 12.1350; resistance is at 12.4050, 12.4800, 12.6500 and 12.800," according to Standard Bank.
