Daily Report 16 November 2023

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed 1.9% higher at the 74 800 level.

In a trading update from Telkom, the company said its interim profit could rise by almost 50% in the six months ending September 2023, due to lower depreciation and improved performance. Telkom expects headline earnings per share to increase between 40% and 50%. Telkom is finalising its interim results for the six months ended 30 September 2023 and is scheduled to be released on 21^st of November 2023.

Woolworths said that sales grew by almost 5% in the 20 weeks through November 2023 despite the tough operating environment. Its business operations were further disrupted by a number of external factors, including the Western Cape taxi strike, congestion at the ports, and the impact of Avian flu on the availability of eggs and poultry.

Liberty Two Degrees delisted from the JSE and now becomes part of the Standard Bank Group, following Liberty’s acquisition of L2D minority shares at R5.55 per share.

SA Economy:

Retail sales rose by 0.9% from a year earlier in September 2023, following a downwardly revised 0.3% decrease in the prior month and better than market forecasts of a 0.1% increase, largely driven by increased sales of textiles, clothing, footwear and leather goods (13.5% vs 11.2% in August) and food, beverages and tobacco (2% vs 0.2%).

Heavy congestion at the Port of Durban is forcing retailers to fly clothing and shoes into SA at a higher cost, thereby damaging SA’s reputation as a reliable trading partner and potentially jeopardising its competitiveness in the global economy. The high cost of getting goods into SA means profit margins on their sales will be lower, at the same time as consumers are spending less on fashion because of high interest rates and the high cost of living.

Global Economy:

The inflation rate in the United Kingdom dropped to 4.6% in October 2023, down from 6.7% in both September, falling short of market expectations of 4.8%.

The Euro Area posted a trade surplus of EUR10 billion in September 2023, from a EUR29.8 billion gap in the corresponding month of the previous year, largely due to the stabilization in prices of natural gas and other major imports.

Industrial production in the Euro Area declined by 1.1% month-over-month in September 2023, following a 0.6% growth in the previous period and surpassing market expectations of a 1% decrease.

Nigeria’s annual inflation rate climbed to 27.3% in October 2023, up from 26.7% in the prior month. Inflationary pressures have intensified over the recent months due to the government’s elimination of fuel subsidies in May and the naira currency’s weakness, which followed the Central Bank’s decision to reduce interventions in the foreign exchange markets in June.

US PPI fell 0.5% month-over-month in October 2023, while core producer prices were unchanged from the previous month in October of 2023, compared to market expectations of a 0.3% increase.

Retail sales in the United States decreased by 0.1% month-over-month in October 2023, compared with the market consensus of a 0.3% decline.

New home prices in China’s 70 major cities dropped by 0.1% year-on-year in October 2023, as demand remained weak.

Global Company:

The FTSE 100 closed 0.62% higher at 7 486.

The Hang Seng Index is trading 1.2% lower at 17 861. The Hang Seng is trading lower as property stocks come under pressure following weak China home price data.

Tencent Holdings reported that net profit dropped 9.4% from a year earlier to 36.18 billion Chinese yuan ($4.99 billion) for the three months ended 30 September. Tencent said third-quarter revenue rose 10% from a year earlier to CNY154.625 billion as its games business recovered from the regulatory crackdown on the country’s tech sector.

In China, the Shanghai Composite is down 0.51% to 3 057.

The Dow Jones Industrial Average closed 0.47% higher to 34 991, while the S&P 500 closed 0.16% higher at 4 502.

Cisco Systems reported first quarter EPS of $1.11, $0.08 better than the analyst estimates of $1.03, while revenue for the quarter came in at $14.7 billion versus the consensus estimate of $14.62 billion.

Commodities:

Gold is trading lower by 0.16% at $1 963/oz, while Platinum is higher by 1.1% to $898.70/oz.

Brent crude was 2.74% lower at $80.42 a barrel.

Cryptocurrencies:

The price of Bitcoin traded close to $38 000 level for the first time in nearly 17 months. Bitcoin’s ongoing price rally is fueled by market participants’ anticipation of a spot BTC ETF approval by US financial regulator, the Securities and Exchange Commission (SEC). Bitcoin continued its rally, despite the delay in the approvals of Hashdex’s and Grayscale’s spot ETF applications.

Currencies:

The rand traded at R18.25 against the US Dollar, R22.61 against British Pound and R19.78 against the Euro.

The Euro is slightly weaker against the US Dollar to trade at $1.0835.