Daily Report 20 October 2022

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed 1.1% lower to the 65 653 level, mainly pressured by tech share Naspers, tracking weakness in Hong Kong via Tencent, while financials advanced on a positive update from Standard Bank which was up more than 6% to R161.25 per share.

In a trading update from Standard Bank Group, the company said that earnings attributable to ordinary shareholders will be 42% higher than in the comparative period. In an operational update on the Industrial and Commercial Bank of China Limited it was reported that performance was strong as higher average interest rates supported strong double-digit net interest income growth, with the strong non-interest revenue growth seen in the first six months of the year, while ongoing market volatility drove client trading activity, which supported continued strong trading revenue growth.

Telkom SA SOC Limited withdrew its cautionary announcement in relation to MTN, whereby MTN terminated discussions regarding acquiring the entire issued share capital of Telkom in return for shares or a combination of cash and shares in MTN, as Telkom was not in a position to provide MTN with assurances around exclusivity.

Sasol published its production and sales performance metrics for the 3 months ended 30 September 2022, saying that they have received a notice of force majeure from Transnet, which impacts the movement of certain feedstocks and products between its inland operations and the Durban and Richards Bay ports. As a result, Sasol has declared force majeure on the local supply and export of certain chemical products. Production rates at selected plants in Secunda and Sasolburg has also been impacted.

SA Economy:

The annual inflation rate was lower for the second month to 7.5% in September 2022, from 7.6% in August, matching market expectations, but still above the upper limit of SARB’s target range. The annual core inflation, which excludes prices of food, non-alcoholic beverages, fuel and energy, picked up to an over five-year high of 4.7% in September 2022, from 4.4% in the prior month. Food prices climbed by 11.9% year-on-year in September 2022, picking up from an 11.3% rise in the previous month.
Retail sales rose by 2% from a year earlier in August 2022, after an upwardly revised 8.9% jump in the previous month and below market forecasts of a 4.2% rise.

The Transnet strike is officially over after smaller unions that were holding out for a bigger wage increase have called off their boycott. All workers are now expected back at work today.

Global Economy:

The Eurozone annual inflation rate was revised slightly down to 9.9% in September 2022 from a preliminary estimate of 10%. The European Central Bank is widely expected to lift its key interest rates by 75 basis points when they meet at the end of this month.
The People’s Bank of China kept its key lending rates unchanged. The one-year loan prime rate (LPR), which is used for corporate and household loans, was kept at 3.65%; while the five-year rate, a reference for mortgages, was maintained at 4.3%.

Global Company:

The FTSE 100 closed 0.17% lower at 6 924, after data showed U.K. annual inflation rose more than expected.

The Hang Seng Index fell 1.52% to 16 255. The depreciating Yuan and the delayed economy data in China kept investors nervous, with Alibaba Group Holdings down 3.65% to HK$70.05 and Tencent Holdings falling 3.7% to HK$235.20.

In China, the Shanghai Composite is up 0.18% to 3 049.

The Dow Jones Industrial Average fell by 0.33% to 30 423, while the S&P 500 was down 0.67% to 3 695.

Netflix shares rose 12% after the company said that they have attracted 2.4 million new subscribers worldwide in the third quarter, more than double the consensus forecast, and guided for 4.5 million additions by year-end.

Procter & Gamble rose almost 3% after the consumer packaged goods company reported results that surprised investors on the upside.

Tesla shares fell 5% after reporting a revenue of $21.45 billion, less than the $21.96 billion forecasted by analysts.

Commodities:

Gold is down 0.74% to $1 631/oz, while Platinum is lower by 1.52% to $881/oz.
Brent crude was 2.72% firmer at $92.57 a barrel.

Currencies:

The rand traded at R18.30 against the US Dollar, R20.53 against British Pound and R17.91 against the Euro.
The Euro is slightly weaker against the US Dollar to trade at $0.9787.