[2008-09-25]  Assurance by Manuel stems JSE decline
STOCKS ended sharply weaker on Tuesday in line with overseas markets, but were off their earlier lows as Finance Minister Trevor Manuel moved swiftly to calm fears about his resignation.

Manuel, one of the 11 ministers and three deputy ministers that resigned this week following President Thabo Mbeki’s decision to step down under pressure at the weekend, said: “If tomorrow or the next day I am asked to take a fresh oath of office, I would be more than happy to do that this week".

Initial reports of Manuel’s resignation sent the JSE tumbling more than 4%, with Cortex trader Lavan Gopaul saying: “It shows that the market does not want Manuel to leave."

Gopaul said the news that Manuel was willing to serve in a new cabinet calmed the markets, with the losses attributed more to continued weaknesses in overseas markets as fear of failures by financial companies continued to dog investors worldwide.

“International investors are preoccupied with the whole subprime crisis. Had it not been for that, they would have used the news of Manuel’s resignation to assault the JSE," said Gopaul.

The JSE’s all share ended 3,75% lower, weighed by a 5,70% drop in banks and a 4,76% tumble in financials. Industrials weakened 3,43%. Resources were down 3,62%, while the platinum mining index fell 5,80%. But the gold mining index was up 3,47%.

On the JSE, Anglo American (AGL) was down R17,61, or 5,14%, to R324,98 while rival BHP Billiton (BIL) fell R1,20 to R216,44.

Sasol (SOL) gave up R16,51, or 4,59%, to R342,99.

Among gold miners, AngloGold (ANG) was up R7, or 3,50%, to R207, Gold Fields (GFI) added R1,55, or 2,06%, to R76,75 while Harmony (HAR) was up R3,79, or 4,75%, to R83,50.

Among platinum miners, Anglo Platinum (AMS) shed R71, or 7,92%, to R826 and Impala Platinum (IMP) lost R8, or 4,32%, to R177.

Among other miners, African Rainbow (ARI) lost R4, or 2,15%, to R182 and Kumba Iron Ore (KIO) gave up 20c to R203,85.

Financial services group Old Mutual (OML lost 24c, or 1,85%, to R12,76 and Sanlam (SLM) was down 94c or 5,22%, to R17,06.

Among banks, Standard Bank (SBK) fell R4,80, or 5,20%, to R87,50, Nedbank (NED) tumbled R7,80, or 7,46%, to R96,80 and FirstRand (FSR) slumped R1,20 or 6,88%, to R16,25.

Among industrials, Barloworld (BAW) lost 215c, or 3,50%, to R59,25, Remgro (REM) gave up R3,03, or 1,61%, to R184,96 while Imperial (IPL) shed R1,79, or 2,90 %, to R60,01.

Meanwhile, near-dated futures ended deep in the red on Tuesday.

But traders said the losses were more the consequence of weaker world markets than of the domestic political drama, especially after the ruling African National Congress indicated that six of the cabinet ministers who resigned, including the finance minister, Trevor Manuel, were prepared to serve in a new cabinet to be appointed by the new president.

The near-dated Alsi contract ended a whopping 790 points, or 3,25%, lower at 23550.

A total of 51923 Alsi contracts changed hands, compared with 43620 on Monday, a Safex official said.

The chairman of the Namibia Stock Exchange, Peter Koep, said he had learnt of the South African cabinet resignations with shock and that the reaction of the markets would be felt in Namibia’s economy, which is closely associated with that of SA.

But Martin Mwinga, CEO of Rand Merchant Bank Asset Managers in Namibia, said the resignations of Mbeki and senior ministers would have only a short-term effect on Namibian markets. I-Net Bridge

Mwinga said as long as the political fall-out within the ANC does not translate into cynical violence, the markets should correct themselves themselves. "I assume that the resignations will have no major political consequences and very soon those who resigned will be replaced with other capable South Africans," he said. Leake Hangala, director for business and corporate strategy at Namibian company Cell One, said he believes in the richness of the South African collective talent and that it would be able to steer the transition properly.

Hangala said business would want to see any "transition managed properly and predictably so that it does not have a major impact on the performance of the economy". He warned politicians to evaluate the impact of their decisions so that their actions do not reverberate beyond the political confines, such as the financial markets. In South Africa, economists criticised the ANC for handling the transition to a new presidency badly. Mwinga called on ANC president Jacob Zuma to provide certainty in the country by spelling out a clear policy direction soon so that the markets can correct themselves. It all depends on Zuma to calm the nervous markets, Mwinga said. The reaction of the markets, according to Mwinga, is mainly driven by the fear and panic of foreign investors. He particularly referred to the government bonds market where foreign investors hold around 16% of the stock, the paper added.
Source: Copyright © 2005 BDFM Publishers (Pty) Ltd.