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South African stocks fall on risk-off trade as Chinese shares dive

South African stocks fall on risk-off trade as Chinese shares diveJOHANNESBURG: South African stocks fell on Monday after Chinese shares tumbled more than 8 percent, their biggest one-day drop since 2007, sending broader emerging market assets down in risk-off trade.

While the market has been fixated on a near-term rise of US interest rates, traders said Monday’s sell-off was on the back of China’s volatile stock market, rekindling concerns over the economic health of the Asian behemoth.

“A move of this nature again is a clear sign that people are trying to get out of the market and look into safe guarding their assets or whatever is left of them,” said Paul Chakaduka, a trader at Global Trader.

Leading the decliners, Group Five tumbled 12.70 percent to 22 rand after it said it expects full-year headline earnings to be between 45 percent and 53 percent low, while Lonmin Plc fell by 9.47 percent to 10.80 rand.

Aluminium products maker Hulamin Ltd fell 4.48 percent to 5.97 rand after reporting a 34 percent drop in first-half operating profit.

Gold stocks showed improvement, with Harmony Gold jumping 8.88 percent to 13 rand, Gold Fields Ltd rising 7.73 percent to 37.22 rand and AngloGold Ashanti gaining 7.42 percent to 84 rand as the price of bullion rose.

Gold recovered after falling to a 5-1/2-year-low on a strong dollar before losing ground as bearish sentiment on expectations for a near-term US interest rate hike weighed on bullion.

The JSE Top-40 index ended 0.20 percent weaker at 45,768.94 and the broader All-share index inched 0.11 percent lower to 51,301.55 points.

Trading volumes were high with more than 205 million shares changing hands, above last year’s daily average of 183 million.

Copyright Reuters, 2015

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