Gold proves to be a safe haven in a painful week of decline
GOLD's $12 jump to $285/oz was the highlight of another painful week on the JSE.
The all-gold index picked up 22% to 917 points in spite of the rand strengthening to about 620c and its impact on gold earnings; a dollar rise counts for more.
Gold Fields led the way, adding 38% to R31, and the warrants moved from 40c to 98c - a 145% rise. Anglogold gained 17% to R252, Kalgold 19% to 220c, Durban Deep 24% to R13.50 and Harmony 31% to R25.15.
Sentiment on gold turned positive rather suddenly. A fortnight ago it was at a 19-year low; today it is the safe haven during dollar weakness. Platinum shares also thrived: Amplats picked up 7% to R88, potential takeover target Northam 9% to 370c and Implats 20% to R71.
Underwriters felt the pain of the market's slide, being called on to take up 85% of Genbel's rights offer at R28 and 77% of Litho's at 410c as their share prices dropped below the take-up price. Genbel closed at R17 and Litho at 250c.
Several proposed listings have also been shelved, Nedbank Investment Bank, Faritec, Digicor and NetActive among them.
New listing Wentech, issued at 50c, traded as high as 170c before easing 10c, but IST, pitched at 220c, closed at 160c.
There were only 15 cautionary announcements this week and one withdrawal - about half the rate of corporate finance activity prior to the market's drop.
News of a possible transfer of SA Breweries' domicile to Britain had a short-term positive effect on the share price, but it closed R2 weaker at R88.10.
While there were cries that fundamentals had gone out of the window, it was principally the high-flyers, especially in the financial and information technology sectors, that took the biggest wallops. Datatec, R130 in July, shed another R24 to R52, Outsource 970c to R17.30 from R80 last month and Primedia lost another 495c to R16.85.
Fedsure, R95 in February, was hard hit, shedding 39% to R26.70. The market already thought Fedsure had overpaid for Norwich, now it is certain. The other bidder Aflife shed only 150c to R39.50 this week. Liberty Life regained 9% to R83.90, with more than R2 to come in dividend.
McCarthy was crushed on a heavy loss, giving up 140c or 58% to 100c; it was more than R21 early in 1996. A profit warning from Macadam led to a 400c drop in the price to 300c.
But not even good results were rewarded. Take Comair, a good company that lifted earnings by 245% only to be greeted with a 4c fall to 116c. But Murray & Roberts, cum 34c dividend after a big turnaround, added 13% to 495c on perceived value.
The futures closeout falls later this month, and there is some optimism that short positions in index stocks will have to be filled, possibly resulting in at least a stabilisation of the market and maybe even an uptick.
The all-share index finished the week at 4 827 - 3% lower than a week ago and only shored up by the gold board on Friday.
Julie Walker Top of page