JSE IT shares were left out of the fuss generated by the rand`s strength against the dollar this week, as the sector grappled with its own set of problems and investor attention focused on other sectors.
This week, the rand strengthened to three-year best levels against the dollar to R6.83/$, breaking through the important R7/$ level as the US unit battled against all major currencies. This helped JSE commodity shares, but left IT shares out in the cold.
This morning, dual listed share Dimension Data was little changed at 300c, Datatec was also unchanged at 870c, Comparex Holdings was up 5c at 840c, and hardware manufacturer Mustek had also risen 5c to 690c.
One JSE analyst says: "The rand`s movements have been a double-edged sword for the IT sector. On the one hand, it has lowered the cost of imports, but this doesn`t mean a corresponding rise in revenues or profitability."
The analyst says while there is some optimism that international IT expenditure should pick up in 2004, this still has to filter through to the market.
Another analyst says: "For investors in IT shares, it depends on which side of the fence they are on. A London investor in Dimension Data has seen a 76% increase in his holdings since March - when the Nasdaq started its present run - but an SA investor is not getting the same return on the rand-based revenues, even though the local share price has also risen since then."
Dimension Data was trading at 26 pence on the London Stock Exchange today compared to a March level of 14.5 pence.
Both analysts are cautiously optimistic that the local and international ICT sectors are due for a turnaround, although the timing of such a recovery is still open.
"There are some peculiar SA issues relating to IT such as black empowerment and regulation that may continue to hamper the rise of local shares to a certain extent," one of the analysts says.
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