Market Review: Massmart. Nedbank, Goldman Sachs, Reunert Limited

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SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, boosted by gains in property sector stocks and as investor morale was restored after the US President, Joe Biden’s decision to continue with Jerome Powell as the Federal Reserve (Fed) Chairman for a second term.
  • Dipula Income Fund (JO: DIBJ ) and Accelerate Property Fund (JO: APFJ ) soared 9.1% and 3.3%, respectively.
  • Mining sector companies, BHP Group (JO: BHPJ ), African Rainbow Minerals (JO: ARIJ ) and Anglo American (JO: AMSJ ) gained 3.4%, 1.4% and 1.2%, respectively.
  • Financial companies, RMB Holdings (JO: RMHJ ), Nedbank Group (JO: NEDJ ) and Standard Bank (JO: SBKJ ) Group added 2.1%, 1.0% and 0.8%, respectively.
  • On the flipside, retailers, Massmart Holdings (JO: MSMJ ), Cie Financiere Richemont SA (JO: CFRJ ) and Mr Price Group (JO: MRPJ ) shed 2.6%, 1.0% and 0.4%, respectively.
  • The JSE All Share index advanced 0.2% to close at 71,015.40.

UK MARKET REVIEW

  • The UK market finished firmer yesterday, buoyed by broad based gains in mining and energy sector stocks.
  • Mining companies, BHP Group, Rio Tinto (LON: RIO ) and Glencore (LON: GLEN ) advanced 3.0%, 2.9% and 0.9%, respectively. Oil and energy companies, BP (LON: BP ) and Royal Dutch Shell (LON: RDSa ) added 1.5% and 1.4%, respectively.
  • Compass Group (LON: CPG ) surged 5.6%, after the company announced that it was reinstating its dividend and that its FY21 pre-tax profits has more than doubled. Building materials company, CRH (LON: CRH ) gained 3.5%.
  • On the contrary, safety equipment manufacturer, Halma (LON: HLMA ) plunged 5.7%. Online retailer, Ocado Group (LON: OCDO ) shed 4.8%.
  • The FTSE 100 index advanced 0.2% to close at 7,266.69.

US MARKET REVIEW

  • US markets ended mostly higher yesterday, buoyed by gains in banking and insurance sector stocks.
  • Banking firms, Goldman Sachs Group (NYSE: GS ), JPMorgan Chase (NYSE: JPM ) and Wells Fargo & Co. (NYSE: WFC ) gained 2.6%, 2.4% and 2.1%, respectively.
  • Insurance companies, UnitedHealth Group (NYSE: UNH ) and Travelers (NYSE: TRV ) advanced 2.2%, each.
  • Dollar Tree (NASDAQ: DLTR ) soared 9.2%, after the company reported better than expected 3Q21 profits and sales, despite a drop in its gross margin.
  • On the other hand, Best Buy (NYSE: BBY ) plunged 12.3%, after the company forecasted that its holiday season comparable sales will be below expectations, despite reporting upbeat 3Q22 results.
  • The S&P 500 index rose 0.2% to settle at 4,690.70, while the DJIA index advanced 0.5% to close at 35,813.80.
  • The NASDAQ index eased 0.5% to end the trading session at 15,775.14.

ASIA MARKET REVIEW

  • Asian markets are trading lower this morning, despite overnight gains on Wall Street.
  • In Japan, advertising company, CyberAgent has shed 3.1%.
  • On the contrary, automotive manufacturer, Mitsubishi Motors (T: 7211 ) has soared 5.3%.
  • In Hong Kong, Geely Automobile Holdings (HK: 0175 ) has dropped 3.4%, while insurance company, AIA Group has gained 2.5%.
  • In South Korea, technology company, Samsung Electronics (KS: 005930 ) has eased 1.1%. Meanwhile, reports indicated that Samsung Electronics and LG Electronics (KS: 066570 ) accounted for 47.1%, nearly half of the global TV sales in the third quarter of this year.
  • On the other hand, K Car has surged 9.5%.
  • The Nikkei 225 index is trading 1.3% lower at 29,397.77.
  • The Hang Seng index has declined 0.1% to trade at 24,629.54, while the Kospi index is trading 0.3% lower at 2,988.61.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices fell 0.1% to trade at $81.58/bl, reversing the previous session’s gains.
  • Yesterday, Brent spot prices rose 2.8% to settle at $81.68/bl, after the US President, Joe Biden announced the release of millions of barrels of oil from the country’s strategic reserves in co-ordination with China, India, South Korea, Japan and the UK, in order to cool prices after OPEC+ producers repeatedly overlooked calls for more crude. The American Petroleum Institute (API) reported that crude oil inventories rose by 2.30mn bls for the week ended 19 November.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.7% to $5.63/bushel.
  • At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,793.33/oz. Yesterday, gold declined 0.9% to close at $1,789.16/oz, as a strong greenback dented demand for the safe haven yellow metal.
  • Yesterday, copper declined 0.3% to close at $9,805.00/mt. Aluminium closed 0.9% lower at $2,668.50/mt.

CURRENCIES

  • Yesterday, the South African rand strengthened against the US dollar. In the US, business activity slowed moderately in November, amid labour shortages and raw material delays, which are likely to contribute to a surge in prices in 4Q21. Also, service activity dropped in the US in the same month. However, manufacturing activity in the central Atlantic region of the US grew in the month of November.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 8.10%. Further, the yield on 2023 bond advanced to 5.30%, while that for the longer-dated 2030 issue rose to 9.67%.
  • At 06:00 SAST, the US dollar is trading 0.2% higher against the South African rand at R15.8649, while the euro is trading 0.1% higher at R17.8253. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R21.2112.
  • Yesterday, the euro advanced against most of the major currencies. In Germany, private sector activity accelerated in November, but persistent supply bottlenecks in manufacturing continued to impact factory output and pushed up inflationary pressures to unprecedented highs. Service sector activity advanced more than expected in November. In the eurozone, business activity surged in November, despite supply chain disruptions, higher prices, and a surge in COVID-19 cases. Factory activity accelerated more than expected in November. Meanwhile, the European Central Bank (ECB) Vice President, Luis de Guindos stated that the factors influencing inflation are becoming more structural and permanent, thus dampening economic growth. He also stated that the ease in inflation is not as projected by the ECB.
  • At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.1235, while it has weakened 0.1% against the British pound to trade at GBP0.8403.

ECONOMIC UPDATES

  • The leading indicator recorded a rise to 150.00 in South Africa, in September. Leading indicator had recorded a reading of 127.90 in the prior month.
  • The preliminary manufacturing PMI advanced unexpectedly to a level of 58.20 in the UK, in November. In the previous month, the manufacturing PMI had registered a level of 57.80.
  • The flash services PMI registered a drop to 58.60 in the UK, in November, lower than market expectations of a drop to 58.50. In the prior month, the services PMI had registered a level of 59.10.
  • The flash manufacturing PMI advanced unexpectedly to a level of 56.90 in November, in France. Manufacturing PMI had recorded a level of 53.60 in the previous month.
  • In France, the flash services PMI rose unexpectedly to a level of 58.20 in November. Services PMI had recorded a level of 56.60.
  • The flash manufacturing PMI registered a drop to 57.60 in Germany, in November, compared with a reading of 57.80 in the previous month. Market expectations were for manufacturing PMI to fall to 56.90.
  • The preliminary services PMI registered an unexpected rise to a level of 53.40 in Germany, in November. Market anticipations were for services PMI to ease to a level of 51.50.
  • In November, the preliminary manufacturing PMI in the eurozone recorded an unexpected rise to a level of 58.60. In the prior month, the manufacturing PMI had registered a reading of 58.30.
  • The preliminary services PMI in the eurozone recorded an unexpected rise to a level of 56.60 in November. In the previous month, services PMI had registered a level of 54.60.
  • The preliminary Markit manufacturing PMI in the US rose to a level of 59.10 in November, higher than market expectations of an advance to 59.00. The Markit manufacturing PMI had recorded a reading of 58.40 in the previous month.
  • The flash Markit services PMI eased unexpectedly to 57.00 in the US, in November. Markets were anticipating Markit services PMI to advance to a level of 59.00.
  • In November, the Richmond Fed manufacturing index in the US eased to 11.00, compared with a level of 12.00 in the previous month.
  • In November, the preliminary Nikkei Japan services PMI in Japan rose to a level of 52.10. In the previous month, Nikkei Japan services PMI had registered a level of 50.70.
  • In November, the flash manufacturing PMI in Japan advanced to 54.20, compared with a level of 53.20 in the prior month.

CORPORATE UPDATES

SOUTH AFRICA

  • Old Mutual (LON: OMU ) Limited: The insurance company, in its voluntary operating update, indicated that its solvency ratio for the Old Mutual Life Assurance Company South Africa for 9M21 was 225.0%, above its target range of 175.0% and 210.0%. The increase in its solvency ratio from 206.0% as on 30 June 2021, was largely driven by the impact of the issuance of R1.50bn subordinated debt and the introduction of a collar structure on the majority of the retained Nedbank stake. The Prudential (LON: PRU ) Authority approved the unbundling of 12.2% of Nedbank held by the company, which was implemented on 8 November 2021. This is expected to decrease the Group solvency ratio by approximately 3.0% points. The company continues to monitor the Group solvency ratio of 184.0% which remains strong relative to its target range of 165.0% and 195.0%.
  • Coronation Fund Managers Ltd (JO: CMLJ ): The fund management company, in its FY21 results, reported that its revenue advanced 17.1% from the preceding year to R4.26bn. Its diluted EPS stood at 487.90c, compared with 398.50c recorded in the previous year.
  • Reunert Limited (JO: RLOJ ): The fiber optic cable manufacturing company, in its FY21 results, indicated that its revenue increased to R9.58bn, compared with R8.05bn posted in the previous year. Its diluted EPS rose from the prior year to 481.00c.
  • Hosken Consolidated Investments Limited (JO: HCIJ ): The investment company, in its 1H22 trading statement, revealed that it expects its basic EPS to be between 284.60c and 319.90c, as compared with a basic loss per share of 353.10c reported in the prior comparative period and expects its HEPS to be between 250.20c and 300.50c, as compared with a headline loss per share of 503.40c recorded in the prior comparative period.
  • Brait Plc (JO: BATJ ): The investment holding company, in its 1H22 results, stated that its diluted EPS rose from the same period of the prior year to 27.00c. Its profit for the period stood at R359.00mn.
  • Oil price falls notably on expected release of reserves: Oil prices dropped by more than 1% ahead of the expected release of US crude reserves to cool the market while resurgent Covid-19 cases in Europe also weighed on demand.

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