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Johannesburg - It's been a long time since conditions have been this favourable for emerging markets, but it seems that this time around the JSE will miss the boat.
With Asian markets outside Japan at their highest levels since 2008 on Wednesday morning, one would have thought that South African shares would also benefit from the inflow of foreign money, but instead the two major indices on the JSE were unchanged by midday.
The All-share index traded at 51 723 points and the Top 40 index at 46 479 points.
The other major indices also moved only marginally, with the Industrial index slightly down and financials and resources marginally higher.
The market seems to be nervous about the current state of the South African economy, which was confirmed by Tuesday’s very poor growth figures for the second quarter.
Some commentaries said that the market, which improved by half a percentage point on Tuesday, shrugged off the poor growth figures. However, it could also be a case of the market being supported by foreign investors seeking high yields who prevented share prices from being much lower.
The strong interest in emerging markets came from feverish speculation of further policy stimulus in the eurozone, which drove bond yields to all-time lows.
The speculation was started by European Central Bank President Mario Draghi's call for more action on both the monetary and fiscal fronts, which led the markets to believe that fresh steps could come as soon as next week when the central bank's governing council meets.
Expectations are that the next stimulus in the eurozone could include broad-based asset purchases, which will make a lot of cash available for investments in markets with higher interest rates.
On Wall Street the Standard and Poor’s index closed above 2 000 for the first time on the perception that the American economy is gaining traction.
The technical research team of Imara SP Reid said in its daily market snapshot on Wednesday morning that the S&P 500 has broken a technical resistance and the weekly chart indicates that the overall trend for US markets remains largely unchallenged.
South Africa’s poor growth, caused mainly by a drop in mining and manufacturing, will not only have an effect on earnings of companies, some of which are trading at high price to earnings ratios, but can have a devastating effect on the state's ability to recover enough tax to meet its budget.
Tax hike fears
That raises the fear that 2015 will see an increase in taxes such as capital gains tax and dividend taxes, which can have a detrimental effect on the market.
There is however according to Imara SP Reid technical support for the Top 40 index.
On Wednesday morning the Industrial index was only 0.07% lower as it struggled to break through the important resistance level of 60 560 points. Imara SP Reid said a break beyond this level with high volume support would suggest additional advances are on the cards.
Most of the big shares in the industrial index were lower on Wednesday morning. British American Tobacco [JSE:BTI] lost 0.70% to R620.77, while SABMiller [JSE:SAB] lost 0.49% to R584.44. Richemont [JSE:CFR] was also 0.31% weaker at R102.97.
Naspers [JSE:NPN] also opened lower but recovered somewhat by midday on Wednesday and traded only 0.09% higher at R1 406.22. Naspers is supported by the rise of the Asian markets where internet giant Tencent, in which Naspers has a stake of 34%, is a star performer.
It was announced in China that privately-held Dalian Wanda Group is set to launch a five billion yuan ($813m) e-commerce joint venture with Tencent Holdings and Baidu.
Wanda is a commercial property, luxury hotel and film conglomerate controlled by Wang Jianlin, China's wealthiest billionaire, with a net worth of $16bn according to Forbes.
- Fin24
With Asian markets outside Japan at their highest levels since 2008 on Wednesday morning, one would have thought that South African shares would also benefit from the inflow of foreign money, but instead the two major indices on the JSE were unchanged by midday.
The All-share index traded at 51 723 points and the Top 40 index at 46 479 points.
The other major indices also moved only marginally, with the Industrial index slightly down and financials and resources marginally higher.
The market seems to be nervous about the current state of the South African economy, which was confirmed by Tuesday’s very poor growth figures for the second quarter.
Some commentaries said that the market, which improved by half a percentage point on Tuesday, shrugged off the poor growth figures. However, it could also be a case of the market being supported by foreign investors seeking high yields who prevented share prices from being much lower.
The strong interest in emerging markets came from feverish speculation of further policy stimulus in the eurozone, which drove bond yields to all-time lows.
The speculation was started by European Central Bank President Mario Draghi's call for more action on both the monetary and fiscal fronts, which led the markets to believe that fresh steps could come as soon as next week when the central bank's governing council meets.
Expectations are that the next stimulus in the eurozone could include broad-based asset purchases, which will make a lot of cash available for investments in markets with higher interest rates.
On Wall Street the Standard and Poor’s index closed above 2 000 for the first time on the perception that the American economy is gaining traction.
The technical research team of Imara SP Reid said in its daily market snapshot on Wednesday morning that the S&P 500 has broken a technical resistance and the weekly chart indicates that the overall trend for US markets remains largely unchallenged.
South Africa’s poor growth, caused mainly by a drop in mining and manufacturing, will not only have an effect on earnings of companies, some of which are trading at high price to earnings ratios, but can have a devastating effect on the state's ability to recover enough tax to meet its budget.
Tax hike fears
That raises the fear that 2015 will see an increase in taxes such as capital gains tax and dividend taxes, which can have a detrimental effect on the market.
There is however according to Imara SP Reid technical support for the Top 40 index.
On Wednesday morning the Industrial index was only 0.07% lower as it struggled to break through the important resistance level of 60 560 points. Imara SP Reid said a break beyond this level with high volume support would suggest additional advances are on the cards.
Most of the big shares in the industrial index were lower on Wednesday morning. British American Tobacco [JSE:BTI] lost 0.70% to R620.77, while SABMiller [JSE:SAB] lost 0.49% to R584.44. Richemont [JSE:CFR] was also 0.31% weaker at R102.97.
Naspers [JSE:NPN] also opened lower but recovered somewhat by midday on Wednesday and traded only 0.09% higher at R1 406.22. Naspers is supported by the rise of the Asian markets where internet giant Tencent, in which Naspers has a stake of 34%, is a star performer.
It was announced in China that privately-held Dalian Wanda Group is set to launch a five billion yuan ($813m) e-commerce joint venture with Tencent Holdings and Baidu.
Wanda is a commercial property, luxury hotel and film conglomerate controlled by Wang Jianlin, China's wealthiest billionaire, with a net worth of $16bn according to Forbes.
- Fin24
