Local technology and telecommunications share prices were on the path to recovery at the beginning of the week. However, renewed fears of a global recession and a dramatic drop in the value of the rand forced investors to act with more caution.
Most of the downward movement of the shares can be attributed to the general market sentiment, says Irnest Kaplan, MD of Kaplan Equity Analysts. “The international doom and gloom, which seems to be leading to recession in the US and Europe, will have a more pronounced affect on the local market.”
He says in times of trouble, investors want to look more towards secure or safer options. He says investors are looking for companies that will be around when the recession cloud lifts. “Companies that are dealing in the public sector are better positioned to weather the storm.”
The rand has taken a hammering, although it did show a slight recovery since the bourse opened this morning.
At the time of publication, it was trading at R17.22 to the pound, R10.15 to the US dollar and R13.43 to the euro. The dramatic and quick changes in the value of the rand yesterday mean these figures are at best an estimation of the current value.
Bleak days for telecoms
For the first time in years, MTN's share value is below the R100 mark. Yesterday's close saw the company down 5.43%, to R97.79, and its first trade today brought it down again to R97.49. MTN has dropped 14.9% since late August. The company's share value since June has been the mirror image of the rand-dollar exchange.
Telkom saw a brief, but solid, recovery yesterday, with an increase of 2.46%, bringing it to R114.75. However, its announcement yesterday that it will hold off on restructuring plans may have spooked investors, who offered at last trade yesterday 75c less for the share. The company's share price has been down 15% since August.
Blue Label also faced something of a battle to hold investor interest. The company has seen lower volumes being traded over the last few weeks and yesterday closed down 11.11%. It has taken a 32.31% knock since August.
Also down today on the exchange is Allied Technologies, with a low bid of R44.01. Its share value tumbled yesterday by 3.74%, to R44.05. However, it seems to be the most secure overall, with the lowest drop since August, at 6.17%.
Vox Telecom had a low bid today at 90c, down from yesterday's close at 93c. However, Vox seems to have gained on shareholder security since it was heavily affected by its association with Dealstream. Vox closed up yesterday at 8.14%.
Uncertain about tech
While telecoms stocks are down across the board, technology shareholders are less consistent in their trades.
Most of the medium-sized market capitalisation businesses are seeing lower offers and higher volumes. However, small cap businesses like Dialogue seem slightly more secure. The company closed up 3% yesterday, at R3.10.
Business Connexion, Datatec, Datacentrix and GijimaAst all closed lower, with Datatec taking the hardest hit, down 14.16%, to R19.40. Dimension Data also closed down yesterday; however, the share opened this morning almost 4% up, at R5.30.
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