Daily Report 18 October 2022

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed 3% higher at 66 191, as the JSE tracked firmer US and European markets.

In a trading update from Murray & Roberts Holdings, the company advised shareholders that for the year ended 30 June 2022, the disruption in supply chain delivery and delay in project milestone payments continue to persist with a number of projects progressing slower than planned, impacting margin, and working capital requirements. Murray & Roberts said that there is a degree of certainty that the margin deterioration

described above will result in the financial results for the six months period ending 31 December 2022,

to be at least 100% down on the previous and corresponding reporting period. Murray & Roberts shares fell 34% to R4.32 per share.

Calgro M3 said that the pipeline for its residential property development business will yield R15.9bn in revenue. This excludes the Frankenwald development near Sandton, which is expected to come on stream by mid-2023. The company reported that its headline earnings per share increased to 57.00 cents per share from 42.79 cents per share in 2021 and earnings per share increased to 57.04 cps from 39.56 cps. Revenue increased by 5% to R607 million. No dividend was declared for the period ended 31 August 2022.

RCL Foods has said that they will have to unwind its 2014 Black Economic Empowerment (BEE) transaction at a total cost to shareholders of R230 million, meaning that the company needs to bail out its BEE shareholders, because since the implementation of the transaction its “share price has significantly declined in value, resulting in the transaction being materially underwater at the end of its term in May”. It will have to buy back shares from its Employee Share Trust (the ESOP Trust), two special purpose vehicles, SPV 1 and SPV 2, and “the Strategic Partners” through a targeted buyback of nearly 20 million common shares from the trust and SPV 2 at R11.49 per share as well as 43 million nominal shares at 1c each. RCL shares gained 2.33% to R11.00 per share.

Pick n Pay Stores Limited reported its interim results for the 26 weeks ended 28 August 2022, the company delivered a positive performance in its first trading period under the Ekuseni strategic plan. The group turnover was up 11.5% to R51.3 billion and headline earnings per share (HEPS) was higher by 59.5% to 97.73 cents per share. Pick n Pay have declared an interim gross dividend of 44.85 cents per share, payable on Monday, 5^th December.

 SA Economy:

Saudi Arabia and South Africa have signed agreements and memorandums of understanding worth about $15 billion (over R270 billion) during a state visit by President Cyril Ramaphosa to Riyadh.

The United National Transport Union (UNTU) has agreed to a three-year wage deal proposed by the CCMA. The deal will see workers receive a 6% increase for year one and three, and a 5.5% hike in year two. This will see more than half of the striking workers at Transnet go back to work.

Eskom announced the return of Stage 4 load shedding, following breakdowns of five generating units at five power stations overnight.

 Global Economy:

China said yesterday that they will delay the release of growth figures for the third quarter along with a host of other economic indicators expected this week, as the country’s leadership gathers for a meeting to hand President Xi Jinping a third term in office.

The annual inflation rate in Nigeria increased to 20.77% in September 2022 from 20.52% in the previous month.

The newly appointed UK Finance Minister, Jeremy Hunt said yesterday that they will reverse almost all previously announced tax measures, a move that is intended to restore credibility and ease market uncertainty.

 Global Company:

The FTSE 100 closed 0.9% higher at 6 920, driven by gains in real estate, utilities, and financials shares.

Credit Suisse Group said that they have agreed to pay $495m to settle the largest remaining case related to its role in selling residential mortgage-backed securities in the US that contributed to the 2008 financial crisis. However, investors will be closely watching the bank ahead of its 27^th of October strategy announcement.

The Hang Seng Index is up 1.35% to 16 839, as shares there remain supported by upbeat global sentiment.

In China, the Shanghai Composite is flat at 3 083.

The Dow Jones Industrial Average rose by 1.86% to 30 185, while the S&P 500 climbed 2.65% to 3 677.

Major growth stocks such as Apple Inc was up 2.74%, Meta Platforms Inc jumped 5.74%, Amazon.com and Tesla Inc added more than 7%, as the yield on the U.S. 10-year bonds retreated from multi-year highs.

Bank of America jumped over 5% after reporting its quarterly results that surprised investors on the upside as the bank benefited from higher net interest income in its third quarter, even though it added $378 million to its loan-loss reserves.

 Commodities:

Gold is up 0.48% to $1 660/oz, while Platinum is higher by 1.03% to $922/oz.

Brent crude was 0.22% lower at $92.30 a barrel.

 Currencies:

The rand traded at R18.01 against the US Dollar, R20.44 against British Pound and R17.76 against the Euro.

The Euro is slightly firmer against the US Dollar to trade at $0.9868.