JSE all share weakens on contained global selloff over Greece

The JSE closed weaker on Monday as global markets retreated in a contained selloff on the continuing Greek debt crisis.

High volatility levels‚ general investor nervousness and technical factors continue to drive markets lower‚ with banks and industrials‚ notably Naspers‚ leading the losers. Only the gold and resource indices posted gains on the day.

Barclays Research said in a note a selloff characterised global trading on the day‚ but was reasonably contained as the market digested the unexpected news of the Greek referendum on July 5.

"European equities were mostly lower‚ but the euro was holding up reasonably well."

The Greek government has declared a bank holiday until July 6‚ following the surprise move by Prime Minister Alexis Tsipras to call a referendum on the terms of Greece’s bail-out package and the European

Central Bank’s (ECB’s) decision not to increase emergency liquidity assistance to Greece.

Asian markets ended lower and the Dow Jones opened 0.75% weaker. By the JSE’s close the FTSE 100 had lost 1.47%‚ the Paris CAC 40 3.17% and the German DAX 30 2.9%.

At 5pm the all share closed 1.27% lower at 51‚999.9 and the blue-chip top 40 was down 1.4%. Industrials dropped 1.53% and financials closed down 1.38%. Banks shed 1.29% and platinums were down by 1.5%.

General retailers lost 1.16% and property shed 0.51% on foreign selling.

The gold index lifted 2.95% and resources ended the day up a marginal 0.09%.

Counterpoint Asset Management analyst Sarah Golding said Greece had now become the focus of global markets. Since December Greek banks had suffered deposit outflows of more than €35bn.

"Markets are expected to remain volatile leading up to the referendum."

The remainder of the eurozone seemed to be faring reasonably well‚ but concerns over China had increased after the People’s Bank of China cut lending and deposit rates by 25 basis points‚ she said.

"This sudden move by the Chinese government suggests a serious concern over the stock market."

The Shanghai index has dropped 21% since its June 12 peak.

Under the circumstances‚ the JSE had performed quite well‚ with industrials and financials supporting the all share last week‚ in stark contrast with resources‚ Ms Golding said.

Analysts were at a loss to pinpoint reasons for Naspers’ sharp drop of 4.71% to R1‚839.96. The market heavyweight was due to release annual results earlier in the day‚ but later said it would only release them after the market had closed.

In a previous trading update Naspers said earnings growth was expected to be about 25%. Although weaker than expected‚ it still reflects steady growth and was probably not the reason for the sharp drop.

The most plausible reason may be the sharp drop in Chinese equity markets as Naspers holds 34% of Chinese internet group Tencent.

Among the global miners‚ BHP Billiton supported the market‚ firming 0.3% to R252.16‚ but associate company South32 retreated 5.05% to R16.37.

Steel producer ArcelorMittal shed 3.95% to R12.90.

Among banks Capitec was down 1.81% to R482.99 and FirstRand lost 1.43% to R52.52.

General retailer Spar went against the trend in the sector‚ firming 1.34% to R184.23. The Foschini Group shed 3.43% to R158.96.

Steinhoff closed 2.99% lower at R74.62.

In the telecoms sector MTN added 0.43% to R225.97‚ while Telkom fell 2.02% to R61.50.

Spur dropped 5.33% to R35.50.

Among asset managers Coronation lost 3.27% to R80.70.

Alexander Forbes‚ trading at what the market considers to be pricey levels‚ shed 2.59% to R8.28. Peregrine Holdings ended the day 1.98% off at R31.15 after recently reaching record levels.

RDM News Wire.