Financial shares bear brunt as Cabinet reshuffle rumours hit JSE

(Gianluigi Guercia, AFP)
(Gianluigi Guercia, AFP)

Johannesburg - The rand continued its slide on Monday on rumours of a possible Cabinet reshuffle, and as usual financial shares were the hardest hit on the JSE.

By mid-morning the Financial index, which dropped sharply on Friday on a weaker rand, was 1.47% lower as the rand continued its slide. The rand was trading at R13.58 to the dollar after reaching a low of R13.63. Earlier last week the local unit was as strong as R13.24, and analysts expect it to strengthen even further.

The rest of the market was also lower, in line with world markets which lost ground after immigration curbs introduced by US President Donald Trump heightened concerns about the impact of the new administration's policies on trade and the economy.

The rand started its slide on Friday after headlines that President Jacob Zuma told the ANC’s  National Executive Committee that any ministers who defy him will be fired.

READ: Zuma may fire disobedient ministers to tighten grip on power

There were also reports on the weekend that Brian Molefe is set to be nominated as a member of Parliament by the ANC in the North West, possibly paving the way for his appointment as minister of finance following a cabinet reshuffle next week.

Molefe has shown that he is capable of running big organisations with large balance sheets, but the previous public protector's report into state capture raised serious questions about his relationship with the Guptas, and how this translated into decisions he made at Transnet and Eskom.  

Analysts are also worried about the timing of a Cabinet reshuffle, particularly if Finance Minister Pravin Gordhan is to be replaced, as the State of the Nation address is only two weeks away and the budget speech less than a month.

The rand not only lost ground to the dollar, but was also 1.15% softer against the pound and 1.87% against the euro.

READ: Rand fragile as political risk returns

By mid-morning the All-share index was 0.49% lower at 52 715 points, while the Top 40 index was 0.51% down at 45 912 points.

With all the European markets also lower on global political uncertainty due to Trump’s policies, the dual-listed shares on the JSE traded mostly lower and the Resources index was 0.19% softer.

The Financial index gave up most of its gains this year in just two days and at mid-morning was just 1.8% higher for the year at 14 482 points.

FirstRand [JSE:FSR] was again the busiest share on the JSE in terms of volume and more than 4.6 million shares, three times more than any other share, were traded for R232m. The share price lost 1.29% to R49.75. FirstRand traded at a 52-week high of R54.17 as recently as the beginning of the month, and is now more than 8% lower.

Standard Bank [JSE:SBK] was 2.27% softer at R142.31 and is now more than 5% down on the 52-week high of R155.33 reached last month.

Nedbank [JSE:NED] was only 0.76% lower at R231.087 and Barclays Africa [JSE:BGA], which lost more than 5% last week, traded a modest 0.36% up at R156.56.

Among the insurers the dual-listed Old Mutual [JSE:OML] lost 1.70% to R35.27 and Sanlam [JSE:SLM] shed 0.98% to R65.50.

In the industrial sector, Naspers [JSE:NPN] was 0.62% higher at R2143.40 and British American Tobacco [JSE:BTI] lost 0.31% to R830.33.

Sasol [JSE:SOL], which announced on Friday that it expected headline earnings per share for the six-month period to be between 34% and 44% lower than the previous corresponding period, lost only 0.14% to R403.43.

Anglo American [JSE:AGL] shed 0.21% to R229.90 and BHP Billiton [JSE:BIL] lost 0.95% to R244.38.

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