Johannesburg - A strong performance by Nedbank [JSE:NED] after a set of excellent interim results gave the Financial index on the JSE a firm lift on Tuesday morning, which in turn helped pull the whole market higher.
By midday Nedbank was already trading 5.81% higher on a new 52-week high of R271.9, convincingly smashing the previous high of R261.40.
The reason for the surge was news that the banking group increased its diluted headline earnings per share by 14.1% to 110c per share, while the interim dividend increased by 16.7% to 537c/share.
Nedbank’s strong run also pulled the other banking shares higher, and by midday the Financial index was 1.74% up, making it the best-performing index.
After Monday’s decline in share prices, the Resources and Industrial indices also recovered and by midday the All-share index was 1.09% higher at 52 199 points. The Top 40-index did even better and traded 1.2% stronger at 46 6734 points.
At that stage the Industrial index had gained 0.97% and the Resources index was 1.22% higher, as investors were picking up bargains after Monday’s drop of more than 3%.
Nedbank’s results were impressive on all fronts. The return on equity of the retail and business banking divisions increased from 12.9% to 14.9% (with retail banking very strong) and the net asset value per share was 6.1% higher. This is particularly imposing as the results were achieved in trying economic circumstances.
Nedbank’s share price has been on the move lately, gaining 2.69% over the past seven days before Tuesday morning’s jump. Of the growth of 7.42% over the past year, 7% was achieved over the past 30 days.
Nedbank’s strong run also pulled the other big banking shares higher and the three other members of the big four all traded more than 2% stronger by midday.
Barclays Africa [JSE:BGA] - which announced a 13% increase in its interim dividend last week, but did not get the same favourable reaction from the market as Nedbank - traded 2.11% higher at R188.25.
Standard Bank [JSE:SBK] made a strong run and was 2.64% higher at R155.25. This is a welcome turnaround as the share price had lost 4.48% over the last 30 days.
FirstRand [JSE:FSR] was 2.11% higher at R188.25. This share gained only 2.25% over the past 30 days.
There was interest in the retail sector with Woolworths [JSE:WHL], Clicks [JSE:CLS] and Famous Brands [JSE:FBR] all setting new 52-week highs. Clicks gained only 0.38%, but it was enough to set a new 52-week high of R99.93. The share has edged up steadily over the past few days and gained 7.56% over the past seven days.
Woolworths, which gained only 0.62% over the past 30 days, made a decisive move on Tuesday morning and traded 2.57% up at a new high of R101.28.
Famous Brands gained 13.1% over the past 30 days and 2.28% over the past week before Tuesday morning’s gain of 1.55% to a record of R131.00.
In the industrial sector British American Tobacco [JSE:BTI] continued its record-breaking run of the past few days and was another 1.04% stronger at a new record of R753.84. The share gained 7.5% over the past seven days.
The one stock that did not share in the recovery of the resources sector was Kumba Iron Ore [JSE:KIO], which dropped to below R100 per share on Tuesday morning. It traded at R97.81, which is 4.71% lower.
The share has been quite stable over the past seven days, but lost a staggering 35.58% over the past month and is 71.84% lower than a year ago when it traded at R373.83.