Daily Report 17 October 2022

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed 0.2% lower to the to the 64 271 level. The JSE closed the week about 2.1% lower.

In a trading update from Mondi, the company reported that profit from continuing operations, and excluding Russia, rose 55% to €450 million (R8 billion) in the three months to end September, with higher volumes and prices more than offsetting input cost pressure. Mondi generates most of its revenue in Europe, which is currently facing an energy crunch, although this is putting disproportionate pressure on many of Mondi’s rivals. This is due to the firm producing the majority of its own energy needs internally through biomass sources, with only about 10% of its fuel needs coming from natural gas.

Grindrod said that feasibility studies are under way for the expansion of its Matola terminal in Mozambique after upgrades at its Maputo port paid off in double-digit revenue growth. Grindrod said it wants to make similar changes to the Matola terminal, which handles mainly magnetite and coal.

Glencore is now facing lawsuits from investment and pension funds in the UK, months after the mining company pleaded guilty to market manipulation and bribery. Mubadala Investment Company and International Petroleum Investment Company (IPIC) filed claims at a London court against Glencore and a group of its executives in recent weeks, according to court records.

Prosus said that it has sold its Russian classifieds unit, the Avito Group, for 151-billion roubles (R44.8bn) to prominent businessman Ivan Tavrin, bringing the Naspers subsidiary one step closer to fully exiting the country.

SA Economy:

The Finance minister, Enoch Godongwana says SA still has time to avoid a greylisting by global regulator, the Financial Action Task Force. The minister said government will be filing a report with the FATF in October and they will be engaging with them up to the date of the complete decision.

The focus this week will be on September inflation data and August retail sales, which will come out on Wednesday. Nedbank economist, Matimba Johannes Khosa said that inflation is likely to ease further in the months ahead, ending the year at about 6.9%.

The unions have rejected the CCMA-recommended settlement offer of 4.5% across-the-board increase in the current year, 5.3% in 2023/24, and 5.3% in 2024/25 with Transnet, saying that they will not accept anything below inflation, which means the strike will continue.

Global Economy:

The International Monetary Fund (IMF) reported that India is likely to become the third-biggest economy behind the US and China by FY2028, two years earlier than initially expected, overtaking Germany and Japan.

The Peoples Bank of China rolled over maturing medium-term policy loans while keeping the one-year medium-term lending facility (MLF) interest rate unchanged at 2.75%.

In Britain, the newly appointed finance minister, Jeremy Hunt, said over the weekend that nothing is “off the table” when it came to reversing more of Prime Minister Liz Truss’s planned tax cuts. The new minister will announce tax and spending measures later today.

Chinese President Xi Jinping laid out the Communist Party’s agenda for the country over the next five years, stressing support for the tech sector to achieve self-reliance.

Global Company:

European stock markets rose on Friday as investors shrugged off higher-than-expected US CPI data and the prospect of faster policy tightening by the US Federal Reserve.

The FTSE 100 closed 0.12% higher at 6 858.

The Hang Seng Index fell 0.36% to 16 524.

In China, the Shanghai Composite is up 0.3% to 3 081.

US stocks extended losses on Friday, with the Dow Jones Industrial Average falling by 1.34% to 29 634, while the S&P 500 was lower by 2.37% to 3 583.

JPMorgan gained more than 2% after reporting third-quarter results for profit and revenue surprised investors on the upside, while Morgan Stanley’s and Citigroup’s shares came under pressure, with both banks reporting quarterly profits that came in below forecasts.

Commodities:

Gold is down 1.08% to $1 652/oz, while Platinum is lower by 0.05% to $912.50/oz.

Brent crude was 2.5% lower at $92.50 a barrel.

Currencies:

The rand traded at R18.25 against the US Dollar, R20.54 against British Pound and R17.77 against the Euro.

The Euro is slightly weaker against the US Dollar to trade at $0.9734.