SA Stocks Inch Lower, Platinum Miners Struggle
South African stocks ended lower on Wednesday, with platinum miner Lonmin hitting a nine-year low after labour unrest in the sector showed no sign of letting up and mining companies struggling to find support as China’s appetite for metals wanes.
Resource sector losses were stemmed by a rise in industrial companies while luxury goods firm Richemont gained nearly 2 percent after saying sales over the five-month period to August grew by 13 percent at constant exchange rates.
The Top-40 index fell 0.28 percent to 30,797.76 while the broader All-share index gave up 0.33 percent to 35,045.55.
Investors offloaded their holdings in miners on concerns that the violent four-week strike at Lonmin’s Marikana mine would extend beyond the platinum industry.
“Resources and mining shares are just going one way, down, because of these strikes and uncertainty around China,” said Rigardt Maartens, a portfolio manager at PSG Securities in Johannesburg.
The world’s largest consumer of metals and minerals indicated this week it is in no rush to stoke its rapid growth that had helped power a commodities boom.
“Due to the volatility and uncertainty, nobody really wants to touch the resources,” Maartens said.
Lonmin shares fell almost 5 percent in Johannesburg to 71.70 rand with striking workers threatening to bring the company to its knees if their demands for monthly base pay of 12,500 rand were not met.
Rivals Anglo American Platinum dropped 1.5 percent to 399.09 rand and Impala Platinum dipped 0.6 percent to 125.60 rand. Implats confirmed it has received fresh wage demands from workers.
Gold miners bucked the trend with all three of the top producers ending higher.
AngloGold Ashanti and Gold Fields both gained 2.9 percent. Gold Fields said that 12,000 strikers at its KDC mine agreed to return to duty after the leadership of the National Union of Mineworkers intervened.
Johannesburg-listed shares of Richemont rose over 1.7 percent to 52.71 rand. The maker of IWC watches and Cartier jewellery expects its half-year operating profit to rise by as much as 40 percent.
“There is no local market for shares with high price-to-earnings ratios but foreign investors, attracted by good yields, are piling into these stocks,” said Thys van Zyl at Thebe Stock Broking.
Trade was thin, with 151 million shares changing hands on the exchange during the session, compared with last year’s daily average of 255 million shares.
Decliners outnumbered advancers, 153 to 103.