Johannesburg - BHP Billiton [JSE:BIL], which sold a major part of its assets to the new company South32, led the JSE's Resources Index lower on Tuesday morning.
The share price, which is now almost 10% lower since Monday May 11, was also sharply lower in Sydney and London as the valuation of the company is adjusted to its smaller asset base.
By midday on Tuesday BHP Billiton was 4.42% lower at R260.99. Due to its weight in the resources sector, the index also lost ground and was 3.16% lower. More than 1 million shares in BHP Billiton were sold for R273m.
The Resources Index drop was enough to pull the All-share index 0.16% lower at 54 323 points while the Top 40-index traded 0.20% softer at 48 166 points. The Gold Index also lost 2.86% but the Financial Index was 0.74% higher and the Industrial Index gained a modest 0.25%.
BHP Billiton sold all former alumina, aluminium, manganese, nickel, silver and some South African coal assets to South32. All BHP Billiton’s South African assets are also now in the new company.
The purpose is to make BHP Billiton a more streamlined company which concentrates on its core assets of iron ore, oil and gas, copper and coal, but the group still has nine assets worth about $2.8bn it is battling to find buyers for.
South32 made a subdued start on the markets on Monday but the share rose on its second day of trade as brokers, including RBC Capital Markets and the Macquarie Group, started their coverage of the new company with outperform recommendations.
South32 surged as much as 10% in London and traded later 7.4% higher at 116 pence after jumping 14% in Sydney, where the company has its primary listing. By midday the share was 6.3% higher on the JSE and traded at R21.50.
The share was also one of the busiest on the JSE with 11 million shares trading for R247m.
Some of the other big resources shares, which rose sharply on Monday, gave up those gains on Tuesday morning. Analysts said however that such volatility can be expected as resources are trying to consolidate.
Anglo American [JSE:AGL] lost 2.93% to R194.79 and Kumba [JSE:KIO] was 3.28% lower at R156.41. Glencore [JSE:GLN] traded 2.97% weaker at R53.66.
Among the gold shares Anglogold Ashanti [JSE:ANG] lost 3.26% to R126.02 and Harmony [JSE:HAR] was 4.45% weaker at R18.25. Harmony lost more than 9% over the past seven days.
Vodacom [JSE:VOD] lost more ground on Tuesday after Monday’s disappointing results. At midday on Tuesday the share price was 1.36% lower at R141, earlier trading as low as R138.74. More than 2 million shares were sold for R287.7m.
Richemont [JSE:CFR] gained 1.2% to R109.41 and is now more than 10% higher over the past 30 days.
South Africa’s biggest cement maker PPC [JSE:PPC] reported a 38% decline in half-year profit on Tuesday, but the share price increased by 6.62% to R18.84.
The company said it was hurt by slack demand at its mainstay home market, but investors reacted positively to its expansion programme in Africa, where it is building plants to generate 40% of sales outside its home market by 2017.
Reunert [JSE:RLO] was 1.54% higher at R64.50. The company said its headline earnings per share for the six months increased by 11% to 264.8c.
Coronation Fund Managers [JSE:CML] benefited from the surge in financial shares. The share price gained 0.56% to R90 despite a drop of 10% in diluted headline earnings per share for the first half of the year.
Among the other financial shares, Sanlam [JSE:SLM] traded 1.88% higher at R74.60 and FirstRand [JSE:FSR] gained 0.42% to R55.00.