JSE heads lower on China risks

The JSE followed global markets lower on Monday as caution persisted ahead of several central bank meetings this week, while risks associated with China weighed on sentiment.

Growing investor anxiety about China’s real-estate crackdown rippled through markets, as the threat of further regulatory intervention in that country grows. Hong-Kong’s Hang Seng fell 3.3% as fears about Evergrande mounted, dragging down other property stocks. Markets in Shanghai and Japan were closed.

The JSE’s all-share fell more than 2% - its biggest one-day drop in four weeks - with losses for virtually all the major indices.

With much of Asia closed for a holiday, there was a sell-off in real estate shares in Hong Kong, said Oanda senior market analyst Craig Erlam. “One Shanghai-based developer, Sinic Holdings Group, saw its share price almost wiped out in two hours before trading in the stock was suspended.”

CNBC reported earlier that China’s top regulators were said to have defended their market-roiling regulatory curbs on various industries in a meeting with Wall Street executives, while reassuring them the stricter rules were not aimed at stifling technology firms or the private sector.

The JSE all share fell 2.24% to 61,453.42 points and the top 40 2.4%.

Industrial metals and mining dropped 3.42%, resources 2.42%, industrials 2.32%, listed property 1.94%, banks 1.91%, financials 1.83% and retailers 1.35%.

At 5.30pm, the Dow Jones Industrial Average had fallen 1.54% to 34,050.66 points. In Europe, the FTSE 100 had lost 0.88%, France’s CAC 40 1.73% and Germany’s DAX 2.26%.

The US Federal Reserve’s highly anticipated September meeting is due this week. Fed chair Jerome Powell will hold a media conference on Wednesday at the conclusion of the two-day meeting.

Investors are awaiting insights about the Fed’s moves towards tapering of its easy monetary policy.

Locally, the SA Reserve Bank will announce its interest rate decision on Thursday. Many expect the Bank will leave the key repo rate unchanged at 3.5%.

At 5.30pm, the rand was little changed at R14.7601/$ and R17.3199/€ and rose 0.47% to R20.1847/£. The euro was flat at $1.1735.

Gold was 0.5% firmer at $1,763.15/oz, while platinum fell 2.05% to $921.73/oz. Brent crude lost 1.53% to $74.44 a barrel.