Broad Based Gains in Telecommunications and Real Estate Property Stocks

SOUTH AFRICA MARKET REVIEW

• South African markets closed in the green yesterday, buoyed by broad based gains in telecommunications and real estate property stocks.
• Telecommunications companies, MTN Group (JO: MTNJ ) and Telkom (JO: TKGJ ) SA SOC soared 5.6% and 1.6%, respectively.
• Real estate companies, Arrowhead Properties (JO: AHAJ ) and Capital & Counties Properties (JO: CCOJ ) surged 5.0% and 2.0%, respectively.
• Miners, Kumba Iron Ore (JO: KIOJ ), African Rainbow Minerals (JO: ARIJ ) and Exxaro (JO: EXXJ ) Resources advanced 4.5%, 3.4% and 1.6%, respectively.
• Financial companies, RMB Holdings (JO: RMHJ ), FirstRand (JO: FSRJ ) and Nedbank Group (JO: NEDJ ) added 0.7%, 0.6% and 0.5%, respectively.
• On the flipside, retailers, Cie Financiere Richemont SA (JO: CFRJ ), Clicks Group (JO: CLSJ ) and Massmart Holdings (JO: MSMJ ) shed 2.1%, 1.6% and 1.2%, respectively.
• The JSE All Share index advanced 0.2% to close at 71,544.82.

UK MARKET REVIEW

• The UK market finished weaker yesterday, amid persistent fears over the impact of Omicron variant on the economy.
• Rentokil Initial (LON: RTO ) plummeted 12.3%, after the company agreed to buy US based Terminex in a stock and cash deal of $6.70bn, at a significant premium of 47.0%.
• BT Group (LON: BT ) shed 4.3%, after Franco-Israeli telecoms company, Altice, increased its stake to 18.0%, restating that it had no plans to stage a takeover under the UK rules.
• On the contrary, Ocado Group (LON: OCDO ) soared 5.5%, after the supermarket company won a patent infringement lawsuit against Norwegian robotics company, AutoStore Holdings (OL: AUTO ), in the International Trade Commission.
• The FTSE 100 index declined 0.2% to close at 7,218.64.

US MARKET REVIEW

• US markets ended lower yesterday, as the higher wholesale price inflation for November increased expectations for a faster tapering of bond purchases by the US Federal Reserve (Fed).
• Technology sector stocks, salesforce.com (NYSE: CRM ), Microsoft (NASDAQ: MSFT ) and Apple (NASDAQ: AAPL ) shed 3.8%, 3.3% and 0.8%, respectively.
• On the flipside, Neogen Corporation surged 8.2%, after the food-safety company indicated that it is merging with a similar unit of 3M (NYSE: MMM ) Co., in a deal with an enterprise value of $9.30bn.
• Lenders, Goldman Sachs Group (NYSE: GS ) and JPMorgan Chase (NYSE: JPM ) advanced 1.1% and 0.8%, respectively.
• The S&P 500 index fell 0.8% to settle at 4,634.09, while the DJIA index declined 0.3% to close at 35,544.18.
• The NASDAQ index eased 1.1% to end the trading session at 15,237.64.

ASIA MARKET REVIEW

• Asian markets are trading mostly higher this morning, despite overnight losses on Wall Street.
• On the data front, Chinese industrial output climbed more than expected in November, while retail sales rose less than expected in November.
• In Japan, transport company, Kawasaki Kisen Kaisha (T: 9107 ) has plunged 5.7%. On the contrary, Shinsei Bank has soared 7.5%.
• In Hong Kong, glass manufacturing company, Xinyi Glass Holdings (HK: 0868 ) has advanced 1.5%.
• On the other hand, sports apparel company, Anta Sports Products (HK: 2020 ) has shed 3.1%.
• In South Korea, chemical company, Daewon Chemical has plunged 6.6%, while pharmaceutical company, Boryung Pharmaceutical (KS: 003850 ) has jumped 6.8%.
• The Nikkei 225 index is trading marginally higher at 28,433.31.
• The Hang Seng index has advanced 0.2% to trade at 23,682.43, while the Kospi index is trading 0.3% lower at 2,980.20.

COMMODITIES

• At 06:00 SAST today, Brent spot prices fell 0.5% to trade at $72.35/bl, extending previous sessions losses.
• Yesterday, Brent spot prices fell 1.3% to settle at $72.73/bl, after the International Energy Agency (IEA) stated that the Omicron variant of Covid-19 is likely to impact the global oil demand recovery. The World Health Organization revealed that the Omicron variant was spreading at an "unprecedented" rate, pressuring markets. On the other hand, the American Petroleum Institute (API) reported that crude oil inventories declined by 0.82mn bls for the week ended 10 December.
• Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.9% to $5.7625/bushel.
• At 06:00 SAST today, gold prices marginally declined to trade at $1,770.18/oz. Yesterday, gold declined 0.9% to close at $1,770.85/oz, as a stronger US dollar dented the demand for the safe haven yellow metal.
• Yesterday, copper declined 0.3% to close at $9,406.50/mt. Aluminium closed 1.7% lower at $2,626.00/mt.

CURRENCIES

• Yesterday, the South African rand weakened against the US dollar. In the US, producer price index (PPI) surged more than expected in November, strengthening views that the inflation will remain high for a longer time. The small business owners' sentiment boosted slightly in November, however firms continued to grow doubtful on future economic conditions.
• The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 7.77%. Further, the yield on 2023 bond advanced to 5.13% while that for the longer-dated 2030 issue fell to 9.39%.
• At 06:00 SAST, the US dollar is trading marginally higher against the South African rand at R16.0883, while the euro is trading marginally higher at R18.1167. At 06:00 SAST, the British pound has marginally gained against the South African rand to trade at R21.2873.
• Yesterday, the euro declined against most of the major currencies. In the eurozone, industrial production advanced in October, but supply chain constraints continue to pressure.
• At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.126, while it has marginally weakened against the British pound to trade at GBP0.851.

ECONOMIC UPDATES

• In South Africa, the consumer confidence index advanced to -9.00 in 4Q21. The consumer confidence index had recorded a revised reading of -10.00 in the prior quarter.
• The three month moving average ILO unemployment rate in the UK registered a drop to 4.2% in October, compared with a reading of 4.3% in the previous month. Markets were expecting the three month moving average ILO unemployment rate to fall to 4.2%.
• The producer and import price index recorded a rise of 0.6% on a monthly basis in Switzerland, in November. In the previous month, the producer and import price index had registered a rise of 0.6%.
• In October, on a monthly basis, the seasonally adjusted industrial production in the eurozone rose 1.1%, compared with a fall of 0.2% in the previous month. Markets were expecting industrial production to climb 1.2%.
• The small business optimism index advanced to 98.40 in November, in the US. In the previous month, the small business optimism index had recorded a reading of 98.20.
• The PPI climbed 0.8% in the US on a MoM basis in November, compared with an advance of 0.6% in the prior month. Markets were anticipating PPI to rise 0.5%.
• The Redbook index registered a rise of 16.0% in the US on an annual basis, in the week ended 11 December 2021. In the previous week, the Redbook index had advanced 15.3%.
• On a YoY basis, the final industrial production recorded a drop of 4.1% in October, in Japan. In the prior month, industrial production had fallen 2.3%. The preliminary figures had recorded a drop of 4.7% on a YoY basis, the final industrial production recorded a drop of 4.1% in October, in Japan. In the prior month, industrial production had fallen 2.3%. The preliminary figures had recorded a drop of 4.7%.
• On an annual basis, in China, retail sales rose 3.9% in November, lower than market expectations of a rise of 4.6%. Retail sales had registered a rise of 4.9% in the prior month.
• In November, on an annual basis, industrial production advanced 3.8% in China, compared with a rise of 3.5% in the prior month. Market anticipations were for industrial production to climb 3.6%.
• Current account deficit in New Zealand rose to NZD8.30bn in 3Q21, more than market expectations of a current account deficit of NZD7.91bn. New Zealand had posted a current account deficit of NZD1.40bn in the previous quarter.

CORPORATE UPDATES

SOUTH AFRICA

• Sasol (JO: SOLJ ) Limited: The chemical company, in its operational update for three months ended 30 September 2021, that the forecast production volumes for Secunda Operations (SO) for financial year 2022 were revised from 7.40mn to 7.50mn tons to 7.30mn to 7.40mn tons. This reduction was largely due to unforeseen delays during the September shutdown, interruption of power supply from Eskom, poor coal quality and other operational instabilities. As of 13 December 2021, the operational instabilities at SO have been largely resolved. It has seen significant improvements with gasifier and boiler availability in the Synfuels facility over the past three months.
• Telkom SA SOC Limited: The telecommunications company announced that Sipho Maseko, current Group Chief Executive Officer (CEO), will now step down as Group CEO with effect from 31 December 2021.
• Adcock Ingram (JO: ADEOJ ) Holdings Limited: The pharmaceutical company, in its 1H22 trading statement, revealed that it expects an improvement of at least 20.0% in EPS as well as HEPS from the 186.50c reported in the corresponding prior year.
• Hulamin Limited (JO: MTNJ ): The aluminium semi-fabricator company, in its FY21 trading statement, stated that it expects its loss per share to be at least 60.00c as compared with 75.00c in the previous year. It expects its headline loss per share to be at least 54.00c as compared with 68.00c in the prior year.
• Steinhoff (JO: SNHJ ) Investment Holdings Limited: The household goods manufacturing company, in its FY21 trading statement, stated that it expects its EPS to be between R100.00 and R130.00 as compared with a loss per share of R228.04 in the previous year. It expects its HEPS to be between R105.00 and R130.00 as compared with headline loss per share of R124.83 in the prior year.
• Oil reverses declines: Oil prices rose, steadying around $75 a barrel and erasing the previous day’s declines as investors continued to weigh up the effects of renewed restrictions in Europe and Asia amid the spread of the Omicron coronavirus variant.