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In our continued efforts to give our readers a broad number of views, opinions and information, we continue to provide PSG's daily market updates and add our own daily inputs in at the end.
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Short summary of PSG's market commentary for 16 September 2019
South Africa
The JSE ended the week flat, but in the green, as markets digested the European Central Bank’s (ECB) decision to cut interest rates after it pledged to boost economic activity. Shortly after the closing bell, the All Share was up by 0.06%.
United States
Notwithstanding losses from technology stocks, US markets traded higher on Friday after Washington backtracked tariff hikes on Chinese goods, easing trade tensions. The Dow was up by 0.20% shortly after the JSE closed.
Europe
European shares surged on Friday after the ECB decided to boost economic activity on the back of cooling trade tensions. Shortly after the JSE closed, the FTSE 100 was up 0.31%, France's CAC 40 rose to 0.22% and Germany's DAX 30 ended 0.47% in the green.
Hong Kong
Hong Kong stocks ended slightly lower on Friday after reports of progress in US-China trade talks. The Hang Seng Index closed 0.10% in the red.
Japan
Signs of easing trade tensions and cheers over the ECB’s decision to launch a new stimulus programme lifted the Nikkei to a four-month high on Friday. The Nikkei Index closed 1.05% in the green.
Rand
The rand strengthened against the dollar on Friday afternoon as investors sought higher-yielding investments after the ECB trimmed interest rates. Just after the JSE closed, the rand weakened to R14.55/$.
Precious metals
More risk appetite from the ECB’s economic stimulus programme pushed the price of gold lower on Friday, while palladium retreated from a record high seen in the previous session. At 19h00, an ounce of spot gold traded at $1 489.50.
Oil
Oil prices declined on Friday on the back of growing concerns over the state of the global economy and its growth trajectory. At 19h00 a barrel of Brent crude lost 0.20% and traded at $60.57.
The JSE ended the week flat, but in the green, as markets digested the European Central Bank’s (ECB) decision to cut interest rates after it pledged to boost economic activity. Shortly after the closing bell, the All Share was up by 0.06%.
United States
Notwithstanding losses from technology stocks, US markets traded higher on Friday after Washington backtracked tariff hikes on Chinese goods, easing trade tensions. The Dow was up by 0.20% shortly after the JSE closed.
Europe
European shares surged on Friday after the ECB decided to boost economic activity on the back of cooling trade tensions. Shortly after the JSE closed, the FTSE 100 was up 0.31%, France's CAC 40 rose to 0.22% and Germany's DAX 30 ended 0.47% in the green.
Hong Kong
Hong Kong stocks ended slightly lower on Friday after reports of progress in US-China trade talks. The Hang Seng Index closed 0.10% in the red.
Japan
Signs of easing trade tensions and cheers over the ECB’s decision to launch a new stimulus programme lifted the Nikkei to a four-month high on Friday. The Nikkei Index closed 1.05% in the green.
Rand
The rand strengthened against the dollar on Friday afternoon as investors sought higher-yielding investments after the ECB trimmed interest rates. Just after the JSE closed, the rand weakened to R14.55/$.
Precious metals
More risk appetite from the ECB’s economic stimulus programme pushed the price of gold lower on Friday, while palladium retreated from a record high seen in the previous session. At 19h00, an ounce of spot gold traded at $1 489.50.
Oil
Oil prices declined on Friday on the back of growing concerns over the state of the global economy and its growth trajectory. At 19h00 a barrel of Brent crude lost 0.20% and traded at $60.57.
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Our daily update
On Friday we covered the latest weekly market wrap published by Peregrine Treasury Services. Below an extract of that article that focuses on South Africa's equity markets
SOUTH AFRICAN EQUITY
Closer to home, SA equities experienced a relatively robust week, supported mainly by a stronger local currency and the small instance of hope emanating from the small good-will gestures made between US China within their trade war. Although global factors played a massive role in the moves seen within SA equity markets this week, there were definitely one or two interesting company movements that seemed to grab the spotlight.
On Wednesday morning, Naspers (NPN) was seen dropping around 32% upon open – this, however, only due to the unbundling and listing of its consumer internet company, Prosus (PRX), on Amsterdam’s Euronext stock exchange. PRX is now officially the largest listed consumer internet company in Europe, with operations and investments totaling more than $100 billion. The unbundling saw NPN closing Wednesday’s trading day at R2,465.00 per share (down from R3,513.00 on open). PRX closed its first trading day at R1,202.65. NPN, as a group, up around 4% on the day. NPN now only represents around 15% weight on the JSE All Share index, down from around 21.12% before the unbundling. NPN and PRX opened Friday’s trading day at R2,519.98 and R1,168.00 respectively.
After having had a relatively tough year so far, dropping 49% between January and August 2019, Aspen Pharmacare seems to be turning the corner, with major focus being placed on settling the large debt-pile the company has. The release of their results for the financial year ending 30 June 2019, saw investors definitely seeing the company in a more positive light. Some key figures were as follows:
Similarly to Aspen, Famous Brands has also found themselves in a tricky situation after their overvalued 2016 acquisition of the Gourmet Burger Kitchen (GBK), in the U.K., continues to create a financial drag on the company, as a whole. The group announced that system-wide sales numbers for the GBK business decreased by 12.5% for the six months ending 31 August 2019. Main reason for this sales drop was actually the closure of stores and not the actual burger sales, which actually increased for the period by 8.6%, where the same corresponding period in 2018 saw a 9.7% decrease in actual burger sales.
For September, so far:
Read the full market review here
SOUTH AFRICAN EQUITY
Closer to home, SA equities experienced a relatively robust week, supported mainly by a stronger local currency and the small instance of hope emanating from the small good-will gestures made between US China within their trade war. Although global factors played a massive role in the moves seen within SA equity markets this week, there were definitely one or two interesting company movements that seemed to grab the spotlight.
On Wednesday morning, Naspers (NPN) was seen dropping around 32% upon open – this, however, only due to the unbundling and listing of its consumer internet company, Prosus (PRX), on Amsterdam’s Euronext stock exchange. PRX is now officially the largest listed consumer internet company in Europe, with operations and investments totaling more than $100 billion. The unbundling saw NPN closing Wednesday’s trading day at R2,465.00 per share (down from R3,513.00 on open). PRX closed its first trading day at R1,202.65. NPN, as a group, up around 4% on the day. NPN now only represents around 15% weight on the JSE All Share index, down from around 21.12% before the unbundling. NPN and PRX opened Friday’s trading day at R2,519.98 and R1,168.00 respectively.
After having had a relatively tough year so far, dropping 49% between January and August 2019, Aspen Pharmacare seems to be turning the corner, with major focus being placed on settling the large debt-pile the company has. The release of their results for the financial year ending 30 June 2019, saw investors definitely seeing the company in a more positive light. Some key figures were as follows:
- Revenue from continuing operations increased by 1% to R38.9 billion
- Earnings per share from continued operations decreased by 52% to R5.95 per share
- normalised earnings before interest, tax, depreciation and amortisation (Ebitda) dipped by 2% to R10.8 billion
- earnings per share up 19% to R15.73 per share
- no dividend released, due to debt management
- debt burden decreased to R39 billion from R53.5 billion.
Similarly to Aspen, Famous Brands has also found themselves in a tricky situation after their overvalued 2016 acquisition of the Gourmet Burger Kitchen (GBK), in the U.K., continues to create a financial drag on the company, as a whole. The group announced that system-wide sales numbers for the GBK business decreased by 12.5% for the six months ending 31 August 2019. Main reason for this sales drop was actually the closure of stores and not the actual burger sales, which actually increased for the period by 8.6%, where the same corresponding period in 2018 saw a 9.7% decrease in actual burger sales.
- System-wide sales for Wimpy, Steers and Debonairs (SA operations) grew by 6%
- Like-for-like sales rose 4% for SA operations
- Niche-brands like Tashas and Vovo Telo grew system-wide sales gaining 14%
- Like-for-like sales in this niche category only rose 1.4%
For September, so far:
- All Share and Top 40 indices: up around 2.92% and 3.22% respectively
- Resources: down around 1.45%
- Industrials: up around 4.31%
- Financials: up around 6.20%
Read the full market review here
Our JSE All Share index daily performance calendar
Visit our JSE Calendar tracker page for a expanded version of the calendar below
The graphic below provides the daily returns of the JSE All Share Index (J203) on a calendar chart. Provides a great overview of the All share index over the course of the month. It will be updated daily with our daily investment update as received from PSG.
While the month of August was negative by -1.73% lets see what the month of September holds for the South African stock market.
So half way through the month of September 2019 and so far the JSE All Share Index is up by 3.04% for this period. A very strong first half of September 2019. Investors will be hoping this trend can continue, but drone attacks on Saudi Arabian crude oil facilities sent the crude oil price soaring which will not be good for investor sentiment and future inflation levels. Lets hope there is a de-escalation of tension in the middle east.
There continues to be concerns about a global economic slow down largely driven by the trade ware between the US and China. Continued tariffs by the US on Chinese goods and the retaliation by China by raising tariffs on US goods keeps hurting markets and global economic growth, as the world's two biggest economies continue to stand off in this trade war.
For more on daily market movements see our 2019 Calendar tracker.
But we as South African investors are losing out in Dollar terms. Largely due to continued Rand weakness not only over the short term but over the last couple of years. We continue to advise investors to take money out of South Africa and invest it offshore. Looking for ideas for investments to make? Go read this article
So half way through the month of September 2019 and so far the JSE All Share Index is up by 3.04% for this period. A very strong first half of September 2019. Investors will be hoping this trend can continue, but drone attacks on Saudi Arabian crude oil facilities sent the crude oil price soaring which will not be good for investor sentiment and future inflation levels. Lets hope there is a de-escalation of tension in the middle east.
There continues to be concerns about a global economic slow down largely driven by the trade ware between the US and China. Continued tariffs by the US on Chinese goods and the retaliation by China by raising tariffs on US goods keeps hurting markets and global economic growth, as the world's two biggest economies continue to stand off in this trade war.
For more on daily market movements see our 2019 Calendar tracker.
But we as South African investors are losing out in Dollar terms. Largely due to continued Rand weakness not only over the short term but over the last couple of years. We continue to advise investors to take money out of South Africa and invest it offshore. Looking for ideas for investments to make? Go read this article