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Johannesburg - Resources shares were again the big losers on the JSE on Thursday as the dust has not settled over the controversial proposed Mining Charter announced last week.
Although it seems clear that the new proposals will not be implemented soon as the proposed charter will be tied up in court for a long time to come, the uncertainty about the consequences of such measures has made a huge dent in investor confidence, particularly relating to mining interests.
Although the Gold index recovered strongly on Thursday on bargain hunting after huge losses recently, the resources sector continued on its downward slide and at mid-morning was 1.39% lower. The sector is now more than 3% softer over the past seven days, more than 8% down over the past 30 days and more than 13% lower over the previous 90 days.
Credit rating agency Moody’s added fuel to the fire on Thursday by warning that the charter will be negative for the industry. Moody’s said new regulations seeking to accelerate black ownership in South Africa’s mining industry would deter investment, raise costs and diminish cash flow generation.
Sombre mood on markets
The sombre mood in financial markets also pulled the rest of the market lower, with the All-share index losing 0.70% to 1 007 points, while the Top 40 index was at that stage 0.82% softer at 44 844 points. The All-share index has now lost more than 5% over the past 30 days.
The Industrial index traded 0.62% lower and the Financial index shed 0.70%. The Gold index, which lost more than 8% over the previous seven days, was 2.12% higher, supported by a slightly stronger gold price which gained 0.68% to $1 252.00 per ounce.
The rand recovered to R12.99 to the dollar ahead of a Constitutional Court ruling on whether a vote in a motion of no confidence against President Jacob Zuma could be held by a secret ballot. The stronger rand also put a damper on dual-listed shares.
The major dual-listed commodity conglomerates are currently the biggest losers in the resources sector, with Anglo American [JSE:AGL], BHP [JSE:BIL] and Glencore [JSE:GLN] all trading more than 2% lower on Thursday.
Anglo American, which is regarded by Moody’s as one of the mining shares which will be most affected by the proposed charter, lost 2.03% to R158.92. The share shed almost 8% over the previous seven days and is now more than 27% softer than 90 days ago.
BHP was 2.11% softer at R296.06 and Glencore lost 2.58% to R45.63. It is hard to believe that less than six months ago a share like Anglo American traded at a 52-week high of R235.14, while BHP was at a high of R229.42.
Local mining conglomerate African Rainbow Minerals [JSE: ARI] dropped to a new 52-week low and traded 1.97% softer at R71.50. The share was almost 4% lower in early trade.
Moody’s also warned that AngloGold Ashanti [JSE:ANG], Gold Fields [JSE:GFI], Sibanye Gold [JSE:SGL] and South32 [JSE:S32] would be the most negatively affected miners if the revised Mining Charter were implemented.
The gold shares in this group were however all stronger, in line with the rest of the sector. AngloGold Ashanti traded 2.56% firmer at R136.00, Gold Fields was 2.01% higher at R46.21 and Sibanye gained 2.25 to R16.30. The share is however still 41.53% softer over the past month. South32 lost 1.2% to R24.80.
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