Coronavirus fear hits share prices right across the JSE

CAPE TOWN – Motus Holdings, the biggest motor vehicle dealer in the country, saw its share price dip more than 3 percent early on Friday to R83.14, which brought its share price decline to 7.3 percent over a week.

The share price, still much in line with the figure it opened at this year, moved in line with a slide in the JSE All Share Index of 1.21 percent, as local shares tracked weaker Asia markets that fell on concerns about the spread of the coronavirus to other Asian countries, notably South Korea.

Global investment funds had fled into more sheltered US assets, lifting the dollar to three-year highs.

Although the rand was trading flat on Friday, and had fallen in line with other emerging markets last week, the focus for the currency and JSE equities may swing on local factors this week again, following Wednesday’s Budget speech by Finance Minister Tito Mboweni.

China has had more than 76 288 cases of the coronavirus and 2 345 people have died of the disease it causes – known as Covid-19 – most in Hubei province and its capital of Wuhan, where the virus is believed to have emerged in a wildlife market in December.

Also well down was Sasol. Its share price traded at R218.75, 3.27 percent lower than Friday morning, bringing its decline for the week to 8.7 percent.

Sasol today releases half-year results to December 31 and it warned three weeks ago that earnings per share could be between 68 to 78 percent lower over the first half of the 2019 financial year.

A decrease in the rand per barrel price of Brent crude oil, softer global chemical and refining margins and a negative contribution from the Lake Charles Chemicals Project in the US.

Bidvest, generally a sturdy performer on the JSE, fell by more than 5 percent on Friday morning to R189.36, bringing its decline for the week to more than 12 percent.

It followed a trading statement on Thursday, warning that earnings per share will slip between 23 to 28 percent for the six months to December.

Local operations held their own, despite lower volumes, but lower contributions from Adcock Ingram and Comair, and from the vehicle operations impacted earnings.

Also heavily sold down was retailer Massmart, which reports annual results on Wednesday.

Its share price declined up to 2.87 percent to R48.81 Friday morning, bringing it down 10.6 percent lower over a week, and almost 50 percent lower than its 52-week high.

Massmart has warned that trading profit before IFRS 16 is expected to be 73 to 83 percent lower than the prior year trading profit of R2.1 billion.

Sales pressure and volumes from the weak consumer environment, higher stock costs, and increased promotion of foods contributed to the big decline.

Woolworths Holdings’ share price fell up to 2.76 percent to R41.23 on Friday morning, bringing its share price decline for the week to a substantial 21 percent.

The higher end retail on Thursday reported headline earnings per share down by 10.1 percent (excluding IFRS 16), to 180.2 cents per share in the 26 weeks to December 29.

In South Africa, Woolies was impacted by the weak economy and disruptions to trade caused by power outages, unseasonal weather in parts of the country and lower clothing sales.

Motus, Massmart, Bidvest and Woolies sell relatively higher cost items to the local market, and their share price declines last week indicates that investors may be positioning for a poorer outcome for higher income consumers in the Budget, re higher taxes.

At a presentation last week, Absa chief economist Geoff Gable showed how consumers paid Eskom 4.5 times more for almost the same amount of electricity sold in 2019, when compared with 2007, while its debt had risen from R49bn in 2007 to R455bn in 2019.

He said the utility will need to receive higher income in future, which the taxpayer will have to fund.

This week’s Budget might be a tough one for local markets.


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