< South Africa's GDP
PSG daily investment update for 5 August 2019
Category: Financial markets
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.
JSE Calendar Tracker 2019
JSE All Share Sunburst chart
​JSE All share pie chart
JSE trading statistics ​
Short summary of PSG's market commentary for 5 August 2019
The JSE closed lower on Friday after US President Donald Trump threatened to impose additional tariffs on $300 billion worth of Chinese goods from 1 September. Shortly after the closing bell, the All Share was down 1.66%.
Following a renewed sense of fear over a slowing global economy, shares on Wall Street fell on Friday after Trump fuelled trade tensions with China while investors kept a close watch on employment figures. At 19h00, the S&P 500 was trading 0.73% in the red.
European shares slid into negative territory on Friday, losing over 2% as Trump's latest tariff threat on China pushed trade-sensitive sectors into a nose-dive. At 19h25, the FTSE 100 was 2.34% in the red.
Hong Kong shares fell on Friday as a lack of progress in the US-Sino trade negotiations prompted what Bloomberg economists called a "harsh" response from Trump which had a negative ripple effect on Asian markets. At 19h40, the Hang Seng lost 2.35%.
Japan's Nikkei ended at a six-week low on Friday after Trump threatened to impose a 10% tariff on $300 billion worth of Chinese goods from 1 September, with the likelihood of imposing further tariffs if China continues to drag the bilateral talks. At the closing bell, the Nikkei had lost 2.11%.
The local currency lost its footing against the dollar on Friday after employment figures in the US for July were in line with market expectations. At 19h45, the rand traded R14.97 against the dollar.
Gaining over 1.30%, gold was on track for a good week but prices slipped on Friday in a broad-based sell-off in commodities after Trump's latest threat shook global markets. At 19h50, spot gold was trading in the green at $1 440.88 an ounce.
Rebounding from one of the biggest falls this year, oil prices clawed back on Friday as the current global economic slowdown continued to prompt weakened oil demand in the US. At 20h00, a barrel of Brent crude was trading at $61.36.
Our daily update
We take a look at Peregrine Treasury Services latest weekly market wrap, and below an extract from the weekly market wrap focusing on South African equities.
SOUTH AFRICAN EQUITY
South African markets took on a very slow start to the week, with no more than R11 billion (average - R22 billion) trickling through the All Share index on Monday's trading day. Relatively petty news came out of Old Mutual's slight bickering with their 'suspending' CEO, Peter Moyo, and the legal battle that ensues. With a world of more materially important news, this headline is not worth wasting one's time on - if anything, its more brand-damaging on Old Mutual and Moyo himself. Mondi reported more favorable results, when looking at their counterpart. Some of the numbers coming out of the paper-based producing firm were as follows:
8% increase earnings per share of EUR 0.962 cents per share.
Profit before tax came in at EUR 632 million (up from the previous period by 29%)
Earnings before interest, tax, depreciation and amortisation (six months) came in at EUR 894 million (beating the last period by five percent)
Ordinary interim dividend of EUR 0.27 cents per share.
Sappi reported an 84% decline in profits to $8 million for the quarter ending 30 June, down from $51 million. A disappointing set of results for the company, although it is somewhat understandable given that many companies are feeling the heat in a slowing global economy. The fact that the company paid a once-off finance charge of $9 million also didn't help its bottom-line for the quarter. With overall sales having slipped due to weaker demand, it's likely that a drop in selling prices and profit margins will have impacted a range of products within the paper industry. The effect of this has ultimately reduced overall profits earned, compared to the previous year. The fact that demand was higher last year also didn't assist Sappi, when comparing the two periods.
Shoprite's share price rallied by 9%, after the retailer reported that its core business, Supermarkets RSA, increased its sales by 4.9% for the 52 weeks ending 30 June 2019. In general, the move wouldn't necessarily have been linked to guidance and results being in-line with expectations. The positive move seen in the share price is likely due to stronger sales growth for the period versus the headline earnings numbers which Shoprite actually gave negative guidance on.
Shoprite's African business seems to be battling it's way through the dark-and-dreary woods, especially in Angola, where hyper-inflation is veiling the country. Whether Shoprite decides to keep these kinds of countries within their portfolio, or not, could be a large factor, when looking at the firm's forward-looking trajectory.
For the moment, both declining sales coupled with hyperinflation in Angola is, and will continue to be, a challenging situation for Shoprite to navigate. Currency instability in Angola or any other of Shoprite's African business operations may force the company to examine its strategic geographic business locations on the continent in the longer run.
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 lets see what August 2019 holds for South Africa's stock market. But it started the first day of August on a very positive note, with the JSE All share index ending the day up by 0.77%
​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
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​JSE Calendar Tracker 2019