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In our continued efforts to give our readers a broad number of views, opinions and information, we provide readers with Peregrine Treasury Services weekly market wrap below.
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Peregrine Treasury Services Weekly Wrap as at 18 October 2019
NOW WE’RE GETTING SOMEWHERE….
Just when we thought that this week would merely represent a continuation of the dominant themes that have been lingering for months, and even years, we finally saw some crucial issues drawing to a close. Brexit has dominated the United Kingdom’s (UK) agenda since 2016, leaving many to wonder whether the UK and the European Union (EU) would ever be able to negotiate a deal. The tide turned on Thursday, however, as the EU and UK announced that they had finally reached an agreement. South Africa also managed to take a step in the right direction on Thursday, as Cabinet promulgated the long-awaited Integrated Resource Plan (IRP)
Brexit news sweeps all else aside, but is it really over?
It is a breath of fresh air to see US President Donald Trump fade into the background, with UK Prime Minister Boris Johnson taking centre stage this week after reaching a deal with the EU. The controversial prime minister might have this victory in his pocket, but the fight to leave the EU by end of October is far from over, as the true challenge now lies in getting the deal approved by parliament. Opposition leader Jeremy Corbyn is ready to put up a fight, publicly condemning the deal shortly after it was announced while encouraging MPs to vote against the agreement.
President Donald Trump remained true to form, engaging in conflict with Turkey this week following Turkey’s military incursion in Syria. In a rather scathing letter that urged the Turkish president Recep Tayyip Erdoğan not to be a “fool” and a “tough guy”, President Trump made it abundantly clear that he would not hesitate to destroy the Turkish economy should an acceptable agreement between the two countries not be reached. The recent poor economic data from the US reignited fears of a global slowdown, and markets are once again preparing for an interest rate cut by the Federal Reserve as a counter measure. Retail sales disappointed, dropping to 4.1% year-on-year in September, while a contraction of 0.3% was witnessed month-on-month. Initial jobless claims this week rose to 214k, while manufacturing production also showed signs of a slowdown.
Brexit has been only one of the many woes facing the EU, as sluggish economic growth continues to add pressure to the bloc. Thursday saw the start of the EU summit in Brussels, where key topics such as its expansion, employment and economic growth will be addressed. While there are many questions to be raised, the chances of finding answers to these core issues are slim. A contraction of 2.8% in industrial production year-on-year in August, and a decline in construction output of 0.46% month-on-month during the same month are just some of the factors pointing to a tough economic road for the EU. Third-quarter GDP figures, released by China earlier today, revealed that economic growth slowed to 6% from a year ago, slightly weaker than the expected 6.1%, and representing the lowest growth level seen since 1992.
Load-shedding hogs SA news, and it’s also not over
Unexpected load-shedding has again left the country intermittently in the dark since mid-week, as embattled power utility Eskom fights to avoid a total collapse of the local power system. This latest round of load-shedding comes shortly after NERSA declined Eskom’s application for yet another tariff hike. With the timing being rather suspicious, Eskom has blamed the load-shedding on five power-generating units falling out of use due to boiler tube leaks.
Load-shedding is estimated to be costing the economy in the region of R2bn a day and poses a significant threat to the local GDP. A downward adjustment in the GDP forecast to 0.8% could now be an overestimation, depending on the duration and intensity of rolling blackouts throughout the country.
In these “dark times”, there is at least a glimmer of hope: Cabinet promulgated the Independent Resource Plan (IRP) that addresses electricity supply for the next 10 years. The IRP incorporates aspects such as the deployment of alternative energy sources, the decommissioning of coal power stations, while proposing nine interventions to respond to energy demand.
Local retail sales released this week undershot expectations, rising by 1.1% year-on-year during August, down from the previous 2%. While the rand momentarily pushed above R15.00/$ following the reintroduction of load-shedding, poor economic data from the US, coupled with the approval of the IRP, saw the rand gain substantial ground against major currencies again on Thursday. After starting the day at R14.92/$, the rand managed to rally to an intraday high of R14.79/$.
Just when we thought that this week would merely represent a continuation of the dominant themes that have been lingering for months, and even years, we finally saw some crucial issues drawing to a close. Brexit has dominated the United Kingdom’s (UK) agenda since 2016, leaving many to wonder whether the UK and the European Union (EU) would ever be able to negotiate a deal. The tide turned on Thursday, however, as the EU and UK announced that they had finally reached an agreement. South Africa also managed to take a step in the right direction on Thursday, as Cabinet promulgated the long-awaited Integrated Resource Plan (IRP)
Brexit news sweeps all else aside, but is it really over?
It is a breath of fresh air to see US President Donald Trump fade into the background, with UK Prime Minister Boris Johnson taking centre stage this week after reaching a deal with the EU. The controversial prime minister might have this victory in his pocket, but the fight to leave the EU by end of October is far from over, as the true challenge now lies in getting the deal approved by parliament. Opposition leader Jeremy Corbyn is ready to put up a fight, publicly condemning the deal shortly after it was announced while encouraging MPs to vote against the agreement.
President Donald Trump remained true to form, engaging in conflict with Turkey this week following Turkey’s military incursion in Syria. In a rather scathing letter that urged the Turkish president Recep Tayyip Erdoğan not to be a “fool” and a “tough guy”, President Trump made it abundantly clear that he would not hesitate to destroy the Turkish economy should an acceptable agreement between the two countries not be reached. The recent poor economic data from the US reignited fears of a global slowdown, and markets are once again preparing for an interest rate cut by the Federal Reserve as a counter measure. Retail sales disappointed, dropping to 4.1% year-on-year in September, while a contraction of 0.3% was witnessed month-on-month. Initial jobless claims this week rose to 214k, while manufacturing production also showed signs of a slowdown.
Brexit has been only one of the many woes facing the EU, as sluggish economic growth continues to add pressure to the bloc. Thursday saw the start of the EU summit in Brussels, where key topics such as its expansion, employment and economic growth will be addressed. While there are many questions to be raised, the chances of finding answers to these core issues are slim. A contraction of 2.8% in industrial production year-on-year in August, and a decline in construction output of 0.46% month-on-month during the same month are just some of the factors pointing to a tough economic road for the EU. Third-quarter GDP figures, released by China earlier today, revealed that economic growth slowed to 6% from a year ago, slightly weaker than the expected 6.1%, and representing the lowest growth level seen since 1992.
Load-shedding hogs SA news, and it’s also not over
Unexpected load-shedding has again left the country intermittently in the dark since mid-week, as embattled power utility Eskom fights to avoid a total collapse of the local power system. This latest round of load-shedding comes shortly after NERSA declined Eskom’s application for yet another tariff hike. With the timing being rather suspicious, Eskom has blamed the load-shedding on five power-generating units falling out of use due to boiler tube leaks.
Load-shedding is estimated to be costing the economy in the region of R2bn a day and poses a significant threat to the local GDP. A downward adjustment in the GDP forecast to 0.8% could now be an overestimation, depending on the duration and intensity of rolling blackouts throughout the country.
In these “dark times”, there is at least a glimmer of hope: Cabinet promulgated the Independent Resource Plan (IRP) that addresses electricity supply for the next 10 years. The IRP incorporates aspects such as the deployment of alternative energy sources, the decommissioning of coal power stations, while proposing nine interventions to respond to energy demand.
Local retail sales released this week undershot expectations, rising by 1.1% year-on-year during August, down from the previous 2%. While the rand momentarily pushed above R15.00/$ following the reintroduction of load-shedding, poor economic data from the US, coupled with the approval of the IRP, saw the rand gain substantial ground against major currencies again on Thursday. After starting the day at R14.92/$, the rand managed to rally to an intraday high of R14.79/$.
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Our highlight for the week:
Our highlight of the week is the latest financial results of financial services group, PSG Konsult for the 6 months ended 31 August 2019
During the week we covered the latest financial results from PSG Konsult. Below an extract from that article
Read the full article here
- Total Income: R2.516 billion (up from R2.306 billion for the same period of the previous year)
- Total expenses: R2.026 billion (up from R1.851 billion for the same period of the previous year)
- Profit for the year: R335.475 million (up from R306.257 million for the same period of the previous year)
- Diluted earnings per share: R0.231 (up from R0.213 for the same period of the previous year)
- PE ratio: 18.4
- Dividend declared: R0.075
- Dividend yield. 1.76%
- Cash generated from operations: R311.634 million
- Cash generated from operations per share: R0.236
- Net asset value: R2.35
- So PSG Konsult is trading at 3.61 times its stated net asset value. Firms tend to trade at between 2 to 4 times its stated net asset value.
- Total assets under mangement: R228 billion
- Number of advisors: 928
- Gross written premiums: R2.718 billion
Read the full article here