Market Review: Arrowhead Properties, Tsogo Sun, Lewis Group

  • Market Overview

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the red yesterday, as a resurgence of COVID-19 cases in Europe and prospects of a tighter monetary policy dampened investor morale.
  • Real estate property sector stocks, Dipula Income Fund (JO: DIBJ ) and Accelerate Property Fund (JO: APFJ ) dropped 3.7% and 1.6%, respectively.
  • However, peer, Arrowhead Properties surged 7.0%. Banking companies, Absa (JO: ABGJ ) Group, FirstRand (JO: FSRJ ) and Capitec Bank Holdings (JO: CPIJ ) declined 2.6%, 2.0% and 1.7%, respectively.
  • Platinum mining companies, Northam (JO: NHMJ ) Platinum Holdings and Impala Platinum Holdings (JO: IMPJ ) declined 2.4% and 2.2%, respectively.
  • Gold miners, Harmony Gold Mining, Gold Fields (JO: GFIJ ) and AngloGold Ashanti (JO: ANGJ ) shed 1.7%, 1.4% and 1.2%, respectively.
  • The JSE All Share index declined 0.6% to close at 70,558.89.

UK MARKET REVIEW

  • The UK market finished firmer yesterday, buoyed by broad-based gains in retail and property sector stocks.
  • Retailers, Just Eat Takeaway.com N.V. (LON: JETJ ) and J Sainsbury (OTC: JSAIY ) added 1.8% and 0.6%, respectively.
  • Real estate sector companies, Taylor Wimpey (LON: TW ) and British Land (LON: BLND ) Company gained 1.8% and 1.7%, respectively.
  • Telecommunications company, Vodafone Group (LON: VOD ) climbed 1.6%. Travel and leisure companies, International Consolidated Airlines Group (LON: ICAG ) SA and Whitbread (LON: WTB ) gained 0.9% and 0.5%, respectively.
  • Energy utility companies, National Grid (LON: NG ) and SSE (LON: SSE ) added 0.6% and 0.5%, respectively.
  • On the flipside, mining sector companies, Fresnillo (LON: FRES ) and Antofagasta (LON: ANTO ) shed 2.9% and 0.5%, respectively.
  • The FTSE 100 index advanced 0.3% to close at 7,286.32.

US MARKET REVIEW

  • US markets ended mostly higher yesterday, as investors cheered minutes of the US Federal Reserve’s (Fed) November meeting which indicated that some officials supported a faster pace of tapering of the central bank’s monthly bond-buying program.
  • Deere & Co. soared 5.3%, after the company reported better than expected FY21 profits and sales, on account of strong demand for farm and construction equipments.
  • On the other hand, Nordstrom (NYSE: JWN ) plummeted 29.0%, after the company reported less than expected 3Q21 earnings.
  • The S&P 500 index rose 0.2% to settle at 4,701.46, while the DJIA index marginally declined to close at 35,804.38.
  • The NASDAQ index climbed 0.4% to end the trading session at 15,845.23.

ASIA MARKET REVIEW

  • Asian markets are trading mostly higher this morning, after South Korean central bank, The Bank of Korea, increased its key interest rate as expected to 1.0%.
  • In Japan, motorcycle company, Yamaha Motor corporation has gained 3.1%.
  • On the contrary, Nippon Sheet Glass (T: 5202 ) has shed 1.7%.
  • In Hong Kong, Anta Sports Products (HK: 2020 ) has shed 3.5%.
  • On the flipside, Kaisa Group (HK: 1638 ) has soared 16.8%.
  • Meanwhile, the company has announced an offer to its bondholders to exchange their existing bonds with new bonds that have an extended maturity period.
  • In South Korea, electronics company, LG Electronics (KS: 066570 ) has shed 2.0%. The Nikkei 225 index is trading 0.8% higher at 29,530.45.
  • The Hang Seng index has advanced 0.2% to trade at 24,725.14, while the Kospi index is trading 0.4% lower at 2,983.61.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices fell 0.1% to trade at $81.37/bl, extending previous sessions losses.
  • Yesterday, Brent spot prices fell 0.3% to settle at $81.44/bl, after Japan's Prime Minister, Fumio Kishida announced that the country would release its oil reserves in a way that does not breach the Japanese law that allows stock releases only if there is a risk of supply disruption. Further, the US Energy Information Administration (EIA) reported that US crude inventories advanced by 1.02mn bls for the week ended 19 November.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.1% to $5.62/bushel.
  • At 06:00 SAST today, gold advanced 0.2% to trade at $1,792.39/oz. Yesterday, gold marginally declined to close at $1,788.61/oz, as strength in the greenback dampened demand for the safe haven yellow metal.
  • Yesterday, copper rose 0.9% to close at $9,895.00/mt. Aluminium closed 1.5% higher at $2,707.50/mt.

CURRENCIES

  • Yesterday, the South African rand weakened against the US dollar. The US economy grew in 3Q21, however, increased consumer spending and private inventory investment were partially balanced by a decline in exports, purchases by businesses of non-residential structures, equipment and software and federal government spending. Mortgage applications increased in the last week, following a rise in applications for home purchases even as the market enters the historically slow holiday season amid expectations for an increase in mortgage rates in the future. The number of new claims for unemployment benefits dropped to a 52-year low last week, indicating a rebound in the economic activity as supply constraints, high inflation and an unrelenting pandemic draw to an end. Further, new orders made capital goods increased firmly in October, indicating a rebound in business expenditure on equipment early in 4Q21. Also, the Michigan consumer sentiment rose more than expected in November.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 8.17%. Further, the yield on 2023 bond advanced to 5.33%, while that for the longer-dated 2030 issue rose to 9.74%.
  • At 06:00 SAST, the US dollar is trading marginally lower against the South African rand at R15.8823, while the euro is trading 0.1% higher at R17.8114. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R21.2003.
  • Yesterday, the euro declined against most of the major currencies. In Germany, business sentiment deteriorated in November, amid supply constraints and along with a surge in COVID-19 cases. German business expectations dropped in November. Further service sector sentiment fell in November.
  • At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.1215, while it has marginally weakened against the British pound to trade at GBP0.8401.

ECONOMIC UPDATES

  • The business confidence index remained steady at 43.00 in South Africa, in 4Q21. The business confidence index had recorded a similar level of 43.00 in the previous quarter.
  • The economic expectations index fell to a level of -10.80 in Switzerland, in November. The economic expectations index had recorded a level of 15.60 in the prior month.
  • The Ifo business expectations index in Germany dropped to 94.20 in November, compared to a reading of 95.40 in the previous month. Markets were anticipating the Ifo business expectations index to fall to 95.00.
  • The Ifo business climate index registered a drop to 96.50 in Germany, in November, higher than market expectations of a fall to a level of 96.60. The Ifo business climate index had registered a reading of 97.70 in the prior month.
  • The Ifo current assessment index registered a drop to 99.00 in November, in Germany, compared to a revised reading of 100.20 in the prior month. Market expectations were for the Ifo current assessment index to drop to a level of 99.00.
  • In October, personal spending in the US advanced 1.3% on a monthly basis, higher than market expectations of an advance of 1.0%. Personal spending had climbed 0.6% in the previous month.
  • In October, personal income climbed 0.5% in the US on a MoM basis, higher than market expectations of an advance of 0.2%. In the previous month, personal income had fallen 1.0%.
  • The final Reuters/Michigan consumer sentiment index fell to a level of 67.40 in November, in the US, less than market expectations for a drop to 66.90. The preliminary figures had indicated a drop to 66.80. In the previous month, the Reuters/Michigan consumer sentiment index had registered a reading of 71.70.
  • In the US, new home sales recorded a rise of 0.4% in October on a monthly basis. New home sales had risen by a revised 7.1% in the previous month.
  • In October, on a MoM basis, the preliminary durable goods orders (ex transportation) rose 0.5% in the US, compared to a rise of 0.7% in the previous month. Market expectations were for durable goods orders (ex transportation) to advance 0.4%.
  • The seasonally adjusted wholesale inventories in the US registered a rise of 2.2% in October, on a MoM basis. The wholesale inventories had recorded a rise of 1.4% in the prior month.
  • The second estimate of annualized gross domestic product (GDP) in the US advanced 2.1% on a quarterly basis in 3Q21, lower than market expectations of an advance of 2.2%. The preliminary figures had indicated a rise of 2.0%. In the prior quarter, the annualized GDP had recorded a rise of 6.70%.
  • The seasonally adjusted number of initial jobless claims in the US dropped to 199.00 K in the week ended 20 November 2021, compared to a revised reading of 270.00 K in the prior week.
  • Advance goods trade deficit in the US narrowed to $82.89bn in October, from an advance goods trade deficit of $97.03bn in the prior month.
  • In the week ended 19 November 2021, on a weekly basis, the number of mortgage applications climbed 1.8% in the US. The number of mortgage applications had registered a drop of 2.8% in the prior week.

CORPORATE UPDATES

SOUTH AFRICA

  • Arrowhead Properties Limited: The real estate investment trust company, in its FY21 results, reported that its revenue declined 8.6% from the preceding year to R2.00bn. Its diluted EPS stood at 17.57c, compared with a diluted loss per share of 70.66c recorded in the previous year.
  • Tsogo Sun (JO: TSGJ ) Hotels Limited: The hotel, gaming and entertainment company, in its 1H22 results, stated that its income increased to R959.00mn from R335.00mn posted in the corresponding period of the previous year. Its diluted loss per share fell 32.1% from the same period of the prior year to 11.00c.
  • Lewis Group Limited (JO: LEWJ ): The retail company, in its 1H22 results, indicated that its revenue rose to R3.41bn from R3.03bn posted in the corresponding period of the previous year. Its diluted EPS increased 41.2% from the same period of the prior year to 335.70c.
  • Accelerate Property Fund Ltd (JO: APFJ ): The real estate investment trust company, in its 1H22 results, revealed that its revenue rose 33.9% from the same period of the preceding year to R557.09mn. Its diluted loss per share stood at 3.74c, compared with 6.63c recorded in the corresponding period of the previous year.
  • Oil falls as reserve release eases worry about supply: Oil prices fell as the US-led co-ordinated release of stocks from strategic reserves eased concern over tightness in global supply, while investors took profits from the previous day’s rally ahead of the US Thanksgiving holiday.

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