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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 7 November 2019
South Africa
The JSE All Share made gains on Wednesday as investors awaited new catalysts from the US-China trade talks after Washington said it might reverse some of the tariffs on Chinese goods. At the closing bell, the JSE All Share gained 0.71%.
United States
Wall Street indices fell on Wednesday after market heavyweights such as Microsoft and Facebook made losses, while the energy sector lost its footing due to build up in US crude inventories. Shortly after the JSE closed, the Nasdaq was down by 0.39%.
Europe
European markets eased from a four-year high on Wednesday following the release of a mixed bag of earnings reports and poor sector data from the Eurozone. Shortly after the JSE closed, the FTSE 100 lost 0.05%.
Hong Kong
Hong Kong stocks were flat on Wednesday as investors sought further direction from the US-China trade talks and clarity on policy easing. The Hang Seng closed 0.02% in the green.
Japan
The Nikkei edged up by 0.22% on Wednesday as hopes for a US-China trade deal, a weaker yen and rising bond yields buoyed exporters and financials.
Rand
The local currency struggled for direction on Wednesday as the euphoria brought about by hopes of a partial US-China trade deal showed signs of fading. At 19h00, a dollar traded at R14.84.
Precious metals
Gold prices rose on Wednesday as hopes of a partial deal that could halt the prolonged trade war between Washington and Beijing slowly lost traction. An ounce of spot gold traded at $1 492.15 at 19h15.
Oil
Following a bigger-than-expected build up in US crude inventories, oil prices fell on Wednesday while market participants took cues from the US-China trade developments. At 19h30, a barrel of Brent crude was down 1.66% and traded at $62.23.
The JSE All Share made gains on Wednesday as investors awaited new catalysts from the US-China trade talks after Washington said it might reverse some of the tariffs on Chinese goods. At the closing bell, the JSE All Share gained 0.71%.
United States
Wall Street indices fell on Wednesday after market heavyweights such as Microsoft and Facebook made losses, while the energy sector lost its footing due to build up in US crude inventories. Shortly after the JSE closed, the Nasdaq was down by 0.39%.
Europe
European markets eased from a four-year high on Wednesday following the release of a mixed bag of earnings reports and poor sector data from the Eurozone. Shortly after the JSE closed, the FTSE 100 lost 0.05%.
Hong Kong
Hong Kong stocks were flat on Wednesday as investors sought further direction from the US-China trade talks and clarity on policy easing. The Hang Seng closed 0.02% in the green.
Japan
The Nikkei edged up by 0.22% on Wednesday as hopes for a US-China trade deal, a weaker yen and rising bond yields buoyed exporters and financials.
Rand
The local currency struggled for direction on Wednesday as the euphoria brought about by hopes of a partial US-China trade deal showed signs of fading. At 19h00, a dollar traded at R14.84.
Precious metals
Gold prices rose on Wednesday as hopes of a partial deal that could halt the prolonged trade war between Washington and Beijing slowly lost traction. An ounce of spot gold traded at $1 492.15 at 19h15.
Oil
Following a bigger-than-expected build up in US crude inventories, oil prices fell on Wednesday while market participants took cues from the US-China trade developments. At 19h30, a barrel of Brent crude was down 1.66% and traded at $62.23.
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Our daily update
Earlier today Dis-chem released their interim financial results for the period ending 31 August 2019. Below an extract from their latest results
In the current period, with the challenges of the strike coming to an end and the decentralisation of the wholesale space now concluded, the Group continues to focus on Return on Invested Capital ("ROIC") to ensure optimal returns to shareholders over the long term. This has resulted in the necessary inventory reduction and rationalisation without compromising sales to our customers. The rationalisation has resulted in strong cash generation over the corresponding period in the prior year ("corresponding period") and together with the continued emphasis on cost management, positions the Group well to benefit from future growth opportunities. Despite the difficult consumer environment revenue has grown by 13.2% over the corresponding period. External revenue in the wholesale environment grew by 28.5%, mainly due to the successful acquisitions and integration of Quenets - the acquired Western Cape wholesaler.
The Group continues to report revenue growth ahead of market growth, as it grows space and benefits from a maturing store base. As a result the Group has improved its market shares across all core categories. The Group's earnings in the current period was not only impacted by once off items (as described below) but was also impacted by the low growth in purchases from suppliers of only 1.5% against the corresponding period which, despite the successful improvement in additional trade terms, has resulted in the total income margin declining. Earnings attributable to shareholders and headline earnings both declined by 39.0% over the corresponding period. Earnings per share (EPS) and headline earnings per share (HEPS) are both 31.0 cents per share, a decrease of 38.9%. Chief executive, Ivan Saltzman: "I am very pleased that in this extremely tough trading environment we managed strong revenue growth in both our retail and wholesale segments resulting in a 13.2% increase in Group revenue to R11.8 billion. This growth together with the continued roll out of more than 20 stores led to market share gains in all of our core categories. As we have reiterated, commercial decisions made are for the long term benefit of Group growth considering the position of our brand within a resilient, consolidating market. This set of half year results is the last set impacted by once off strike related items which, once eliminated, highlight our cost containment efforts together with a significant stock rationalisation, effected post the conclusion of the strike, driven by our return on investment focus.
The labour issues that led to strikes across two consecutive financial years have been settled and we are actively rebuilding the relationship with distribution staff so that they understand the culture of our brand and our commitment to values that I, together with my partners, have built over many years. NHI's aim is for affordable access to healthcare and we expect that this will frame a change in the consumption of care in the private space going forward. It is no secret that we have the largest and most consistent clinic offering and we are expanding the service scope of our Clinic sisters as well as investing in Telemedicine technology across our 310 clinics to increase the reach and reduce the costs of specialist services for patients. I am excited about the fruition of my vision for Dis-Chem, to play a significant role in bringing affordable healthcare to the many South Africans that are in need."
In the current period, with the challenges of the strike coming to an end and the decentralisation of the wholesale space now concluded, the Group continues to focus on Return on Invested Capital ("ROIC") to ensure optimal returns to shareholders over the long term. This has resulted in the necessary inventory reduction and rationalisation without compromising sales to our customers. The rationalisation has resulted in strong cash generation over the corresponding period in the prior year ("corresponding period") and together with the continued emphasis on cost management, positions the Group well to benefit from future growth opportunities. Despite the difficult consumer environment revenue has grown by 13.2% over the corresponding period. External revenue in the wholesale environment grew by 28.5%, mainly due to the successful acquisitions and integration of Quenets - the acquired Western Cape wholesaler.
The Group continues to report revenue growth ahead of market growth, as it grows space and benefits from a maturing store base. As a result the Group has improved its market shares across all core categories. The Group's earnings in the current period was not only impacted by once off items (as described below) but was also impacted by the low growth in purchases from suppliers of only 1.5% against the corresponding period which, despite the successful improvement in additional trade terms, has resulted in the total income margin declining. Earnings attributable to shareholders and headline earnings both declined by 39.0% over the corresponding period. Earnings per share (EPS) and headline earnings per share (HEPS) are both 31.0 cents per share, a decrease of 38.9%. Chief executive, Ivan Saltzman: "I am very pleased that in this extremely tough trading environment we managed strong revenue growth in both our retail and wholesale segments resulting in a 13.2% increase in Group revenue to R11.8 billion. This growth together with the continued roll out of more than 20 stores led to market share gains in all of our core categories. As we have reiterated, commercial decisions made are for the long term benefit of Group growth considering the position of our brand within a resilient, consolidating market. This set of half year results is the last set impacted by once off strike related items which, once eliminated, highlight our cost containment efforts together with a significant stock rationalisation, effected post the conclusion of the strike, driven by our return on investment focus.
The labour issues that led to strikes across two consecutive financial years have been settled and we are actively rebuilding the relationship with distribution staff so that they understand the culture of our brand and our commitment to values that I, together with my partners, have built over many years. NHI's aim is for affordable access to healthcare and we expect that this will frame a change in the consumption of care in the private space going forward. It is no secret that we have the largest and most consistent clinic offering and we are expanding the service scope of our Clinic sisters as well as investing in Telemedicine technology across our 310 clinics to increase the reach and reduce the costs of specialist services for patients. I am excited about the fruition of my vision for Dis-Chem, to play a significant role in bringing affordable healthcare to the many South Africans that are in need."
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.
So the month of October 2019 saw the JSE All Share Index end in the green. And the first trading day of November 2019 saw the JSE edge up slightly last week Friday. Can the momentum continue and the "Christmas rally" carry the markets higher in the closing months of 2019? So far for the month of November 2019 the JSE All Share Index us up by 2.16%. And has seen four consecutive days of positive returns
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
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