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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 8 August 2019
South Africa
The JSE made up some ground on Wednesday, despite Eskom troubles weighing the rand down and the US-China trade war leading investors away from SA assets. At the closing bell, the All Share was 0.30% in the green.
United States
US markets opened in the red on Wednesday as investors flocked to gold and US government bonds, worried that the escalating trade war between the US and China could dent global growth. At 19h20, the S&P 500 was 0.60% lower.
Europe
Despite concerns around the US-Sino trade spat, European indices rose on Wednesday, lifted by a multi-billion dollar German chemical deal. The STOXX 600 closed 0.24% higher.
Hong Kong
Hong Kong indices ended their losing streak on Wednesday thanks to gains in the materials and industrials sectors. The Hang Seng ended the day 0.08% up.
Japan
On Wednesday, investors continued risk-off trade in fear of a global currency war; however, positive US corporate results curbed the Nikkei’s losses. At the closing bell, the Japanese index had lost 0.33%.
Rand
The local currency had a miserable Wednesday, reaching its lowest point in about 12 months, as investors digested Moody’s comments regarding Eskom’s weak financial situation. At 19h20, the rand traded R15.07 against the dollar.
Precious metals
Bullion prices continued their climb on Wednesday, reaching a record six-year high, as investors tried to hedge against the trade-war fallout. At 19h20, an ounce of spot gold traded at $1 504.44.
Oil
Oil prices faced another dismal day, plummeting about 5% on Wednesday, due to an unexpected rise in US stockpiles and concerns that the trade war between China and the US could lead to lower crude demands. At 19h20, Brent crude was trading at $56.46 per barrel.
The JSE made up some ground on Wednesday, despite Eskom troubles weighing the rand down and the US-China trade war leading investors away from SA assets. At the closing bell, the All Share was 0.30% in the green.
United States
US markets opened in the red on Wednesday as investors flocked to gold and US government bonds, worried that the escalating trade war between the US and China could dent global growth. At 19h20, the S&P 500 was 0.60% lower.
Europe
Despite concerns around the US-Sino trade spat, European indices rose on Wednesday, lifted by a multi-billion dollar German chemical deal. The STOXX 600 closed 0.24% higher.
Hong Kong
Hong Kong indices ended their losing streak on Wednesday thanks to gains in the materials and industrials sectors. The Hang Seng ended the day 0.08% up.
Japan
On Wednesday, investors continued risk-off trade in fear of a global currency war; however, positive US corporate results curbed the Nikkei’s losses. At the closing bell, the Japanese index had lost 0.33%.
Rand
The local currency had a miserable Wednesday, reaching its lowest point in about 12 months, as investors digested Moody’s comments regarding Eskom’s weak financial situation. At 19h20, the rand traded R15.07 against the dollar.
Precious metals
Bullion prices continued their climb on Wednesday, reaching a record six-year high, as investors tried to hedge against the trade-war fallout. At 19h20, an ounce of spot gold traded at $1 504.44.
Oil
Oil prices faced another dismal day, plummeting about 5% on Wednesday, due to an unexpected rise in US stockpiles and concerns that the trade war between China and the US could lead to lower crude demands. At 19h20, Brent crude was trading at $56.46 per barrel.
Our daily update
We covered MTN's latest financial results this morning. Below an extract of the full article
In our March 2019 valuation of MTN we valued the group's shares at R94.52 a share. This was at a time when they were trading in the mid R80's per share. So the MTN share price has certainly recovered strongly since then. The question is has it gone up to fast? And does their current financial results warrant a share price of R112.70 that it is trading at now?
Well their balance sheet is strong, they have a decent net profit margin. They do however continue to have regular clashes with the Nigerian authorities regarding penalties they need to pay and cash being repatriated out of the country, In addition to this they have a big market in Iran, from which they struggle to repatriate cash too since sanctions are often imposed on the country.
But with this all being said, their tougher markets are the more lucarative and their biggest markets so should there be no issues in these markets over the next couple of years MTN could see bumper profits coming from these countries which should be good for its share price. Based on current financials and future prospects our valuation model places a target price of R101.50 on MTN based on their latest set of financial results. While it is an increase on our valuation done in March 2019, its still lower than their current share price by about 10%, so we believe MTN is currently overvalued around 10%
Read full article here
In our March 2019 valuation of MTN we valued the group's shares at R94.52 a share. This was at a time when they were trading in the mid R80's per share. So the MTN share price has certainly recovered strongly since then. The question is has it gone up to fast? And does their current financial results warrant a share price of R112.70 that it is trading at now?
Well their balance sheet is strong, they have a decent net profit margin. They do however continue to have regular clashes with the Nigerian authorities regarding penalties they need to pay and cash being repatriated out of the country, In addition to this they have a big market in Iran, from which they struggle to repatriate cash too since sanctions are often imposed on the country.
But with this all being said, their tougher markets are the more lucarative and their biggest markets so should there be no issues in these markets over the next couple of years MTN could see bumper profits coming from these countries which should be good for its share price. Based on current financials and future prospects our valuation model places a target price of R101.50 on MTN based on their latest set of financial results. While it is an increase on our valuation done in March 2019, its still lower than their current share price by about 10%, so we believe MTN is currently overvalued around 10%
Read full article 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.
So the South African stock market is still up substantially for the year, with the only negative months so far being the month of May in which markets pulled back pretty sharply. But the markets rebounded in June with it ending up close to 5% for the month.
The JSE All Share Index ended the month of July down by -2.36%. Only the second negative month for the JSE in 2019. So far August has gotten off to a horrible start, with the JSE All Share index losing -3.03% so far in August 2019. The strong decline for August 2019 is largely driven by the trade and currency war going on between the United States and China.
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
The JSE All Share Index ended the month of July down by -2.36%. Only the second negative month for the JSE in 2019. So far August has gotten off to a horrible start, with the JSE All Share index losing -3.03% so far in August 2019. The strong decline for August 2019 is largely driven by the trade and currency war going on between the United States and China.
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