MONEYWEB, BY BYRON KENNEDY, 11 JULY 2002
Johannesburg — Once part of the London Stock Exchange’s prestigious FTSE-100 index, Dimension Data is fast making its way to the bottom of the Top-40 pile and could be in danger of losing its “blue-chip” status in South Africa. Currently Didata ranks as the 34th largest component in the recently introduced FTSE/JSE Top-40 Index, a barometer that measures forty of the largest companies listed on the JSE by market capitalisation.
Traders report that the latest bout of selling pressure emanates from the futures markets where reverse arbitrage and futures selling has resulted in Didata slumping to its lowest level since 1996.
Dimension Data touched an intra-day low of 520c ? not far off the 500c mark that some technical analysts suggested it call fall to when the share was still trading north of 900c. In particular Gregor Krall, of NIB Securities, has been accurate in his assessment of Dimension Data and says the trend remains “bearish with no major previous congestion area to stop the fall.” He reckons that a short-term buy “will only be indicated above 610c and a long-term buy signal will only be given above 850c.”
Arthur Buchner, a trader at BOE Securities, says it could take “a couple of weeks” to eradicate to stock’s weaker holders and the bearish trend reversed.
Buchner says negative global market sentiment continues to weigh on Didata’s fortunes while he says most of the Top-40 constituents were marginally softer after SAB had its weighting increased in that blue-chip index.
Shares in Didata have shed 93% since the height of the IT boom in September 2000 and is 62% worse off on a year-to-date basis.