Some fly and some fall in stock market's trampoline test
Question: What goes down, down, up, down and up in the space of five days? Answer: The JSE all-share index and the sentiment surrounding it.
Brokers expressed bewilderment at the ups and downs. Reports were of buying orders pouring in on Wednesday, when the market recouped half the previous day's dip, and again on Friday when futures-related basket trading of index stocks pulled the JSE firmer.
Contrary to conventional wisdom, the blue-chip index stocks were the least safe place in which to have money during the crunch: they were the first and the hardest hit.
As an example, index stock Investec fell from R196 to R158 before recovering to R187. But non-index pyramid Inhold, which should trade at parity, moved only from R194 to R165 and back to R182.50 - far less deviation.
Market movements took their toll on several proposed corporate deals. Unhappily for Super Group, its share dropped to 989c - about 11c short of the R10 at which a R500-million rights issue has been pitched. Gensec announced the suspension of merger talks with NSA until some normality returned.
Netcare's rights offer of 75 shares per 100 at 175c was only 70% subscribed as the price on the market dropped to as low as 115c before improving to 140c.
Chubb was one of the few shares to show a big gain this week on the back of a scheme of arrangement to buy out the minority at R16.10. Chubb was down from R14 a week ago to R11.90 on Wednesday before rushing to R15.40 on the announcement. In March 1996 Chubb was trading at R39.
Still in the engineering sector, more fine results from Afrox made it one of the few companies to hold its own at R13.
Specialised Outsourcing made a strong debut in the Financial Services sector after an issue of shares at 150c. It opened at 200c, and climbed to 300c between Wednesday and Friday, closing at 295c. Other new listings were somewhat overlooked.
Del Monte sold its Italian Camomile and tea businesses Montania and Te Ati for R180million plus the value of the stock, and warned of more negotiations, but the shares declined to react much. Parent Amic has had a tough time since peaking at R213 as recently as August. It came down to R118 midweek before rallying to R144. Among its interests AECI has announced difficulties, pulp and paper prices are still poor and Columbus Stainless Steel needs a cash call from shareholders of which Amic is indirectly one.
Cape Star, Adonis, Stantronic, Shocraft and Litho all alerted the market to their negotiations in the rather vain hope it would have some positive influence. As one dealer notes: bad news knocks a company but good news has little effect in this kind of environment.
CNA Gallo is to be renamed Millennium Entertainment Group Africa and will trade as Mega from tomorrow. It shed a net 30c on the week to 450c.