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South African stocks down, Mediclinic sheds nearly 2pc

South African stocks down, Mediclinic sheds nearly 2pcJOHANNESBURG: South African stocks ended lower on Tuesday with Mediclinic International leading the decline, while gold stocks recovered from their previous day’s heavy losses as the price of gold steadied.

South Africa’s largest private hospital group Mediclinic was the worst performer among the bourse’s blue chips, falling 1.96 percent to end at 106.45 rand after announcing the dates on which it will issue 111.1 million new shares. Mediclinic said last month will use the proceeds of the rights issue to buy a stake in Britain’s Spire Healthcare from South African investment house Remgro Ltd.

The 8.6 billion rand deal will mean as much as 70 percent of Mediclinic’s profit would come from outside its home market.

“Investors will like the 70 percent offshore component, it’s a true rand hedge.

If the outlook for the rand gets weaker, this will give investors a lot of comfort that there will be foreign earnings,” Greg Katzenellenbogen, a director at Sanlam Private Wealth said.

Bullion stocks bucked the trend, with Gold Fields gaining 5.25 percent to 36.15 rand, while Sibanye Gold was up 2.57 percent on 17.95 rand as the gold price steadied on Tuesday after plunging in recent sessions.

Shares in Kumba Iron Ore stabilised after falling more than 4 percent as the company suspended its half year dividend due to plunging profits.

Kumba, a subsidiary of Anglo American ended trade at 0.19 percent up on 122.80 rand, despite reporting headline earnings per share were down 61 percent and warning that low iron ore prices could scupper its annual dividend as well.

“Kumba is doing quite a lot of cost-cutting and there might be some restructuring coming on the horizon.

That could be the reason to start looking at the stock once again,” said Nolan Macnamara, a trader at Nedbank Wealth in Johannesburg.

The JSE Top-40 index closed down 0.28 percent at 47,256.32 points and the broader All-Share index dipped 0.16 percent to 52,901.42.

Trading volumes in the market as a whole were lively with nearly 205 million shares changing hands, well above last year’s daily average of 183 million.

Copyright Reuters, 2015

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