Daily Report 10 October 2022

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed 0.34% higher to the 65 832 level, mainly lifted by gains in tech stock Naspers. Pan African Resources said it has completed the R50 million acquisition of the liquidated assets of Mintails Mining SA, a transaction that is expected to be transformative for the firm and could boost its gold output by a quarter. The R50m deal will see Pan African Resources take over Mogale Gold and the Mintails SA Soweto Cluster, both of which belong to Mintails Mining SA (MSC) and went into provisional liquidation in 2018. CEO Cobus Loots said “The area where Mintails is situated presents a number of environmental and social challenges. We will require the assistance of the government and all the other legitimate stakeholders to successfully address those challenges, remediate the site and develop a world-class project.” Thungela Resources said that an extended strike at state-owned logistics firm, Transnet would impact its production and exports. The strike will disrupt the hauling of coal from its operations to the privately-owned Richards Bay Coal Terminal (RBCT) from where it will be exported. Harmony Gold reported that it has bought Eva Copper project in Australia for R4.1bn, as the company seeks to further diversify its revenue base while giving it an opportunity to participate in the global transition to a low-carbon economy. Anglo American said that the value of rough diamond sales for De Beers is provisionally down 21.6% quarter-on-quarter and up 1.6% year-on-year.

SA Economy:

The World Bank has warned that South Africa’s aggressive interest rate hikes could hamper economic growth prospects, affecting the country’s ability to respond to socio-economic challenges of high unemployment and rising inequality. The World Bank also highlighted that aggressive monetary policy, the decline in commodity prices, and weakness in domestic demand will drag down inflation over the forecasting period. Stats SA said that electricity production declined by 2.0% year on year in August, with declines of 7.7% and 4.0% in July and June, respectively. The data has a direct impact on GDP growth forecasts for the quarter as well as consumer and business sentiment.

Global Economy:

Bloomberg News reported that China’s coronavirus cases climbed to their highest in about a month due to people traveling during the week-long holiday. US-based companies announced plans to cut 29 989 jobs from their payrolls in September 2022, the highest reading in three months, and compared to 20 485 cuts announced in August, as hiring is slowing, and downsizing events are beginning to occur. The number of Americans filing new claims for unemployment benefits rose by 29 000 to 219 000 in the week that ended October 1^st. The Federal Reserve said that they want to cool the economy without sparking a big wave of unemployment.

Global Company:

The FTSE 100 closed 0.78% lower at 6 997, pressured by a selloff in the energy and materials sectors. Tobacco group, Imperial shares rose 5% after the company announced a share-buyback program of up to one billion pounds ($1.13 billion) and said its performance in the year ended 30^th September matched expectations. The Hang Seng Index fell 1.5% to 17 730, with most investors staying on the sidelines ahead of US jobs data due out later today, while the Shanghai composite remains closed for the final day of the Golden Week holiday. Samsung Electronics said that it expects profit to fall by 25% to $8.3bn (£7.3bn) in the three months to end September, as its memory-chip and smartphone businesses are feeling the effects of limited consumer spending on tech products. The Dow Jones Industrial Average fell by 1.15% to 29 926, while the S&P 500 was lower by 1.02% to 3 744. The fitness technology company, Peloton Interactive said that they are cutting its workforce by about 500 globally, or 12%, leaving it with about 3 825 employees. CEO Barry McCarthy said that the company is also cutting other operating expenses to reach break-even point on cash flow by the end of the financial year of 2023.

Commodities:

Gold is down 0.51% to $1 712/oz, while Platinum is lower by 0.14% to $923.50/oz. Brent crude was 1.15% firmer at $94.15 a barrel, as OPEC+ agreed to cut production by 2 million barrels per day or about 2% of global supply from November, though Saudi Arabia’s oil minister said the actual cut will likely be around 1 to 1.1 million barrels as some members are already pumping below targets. 

Currencies:

The rand traded at R18.00 against the US Dollar, R20.10 against British Pound and R17.64 against the Euro. The Euro is weaker against the US Dollar to trade at $0.9794.