Where to for the rand?
The performance of South African rand has been nothing short of spectacular when viewed against the backdrop of its underperformance of the last decade or so, but can the currency maintain its charge to dip below R17/$ and offer a even better buying opportunity? That depends on multiple factors. South Africa’s new political dispensation, the government of national unity (GNU), will need to pass a few stern tests, like the NHI and education (BELA) bills. Municipal and regional politics are also placing strain on the GNU at a national level. Global factors like the US elections, escalating geopolitical tension in the Middle East, a threat of a global recession and an equity market that appears to be acting on steroids will also feed into the equation.
Brimstone sells stake in Stadio for R257m
Brimstone has agreed to sell its entire shareholding in Stadio (SDO-JSE) to ThembiSA Fund 1, through its wholly-owned unit, ThembiSA InvestCo 2, a verified black private equity fund managed by ThembiSA Equity Investments. The R257 million cash deal was equivalent to R5.90 per share.
SA factory sentiment gains
South African manufacturers’ sentiment improved to a five-month high amid optimism about better business conditions as central banks at home and abroad began lowering interest rates. Absa Group Ltd.’s Purchasing Managers’ Index rose to 52.8 in September from 43.6 a month earlier. Business activity rises to 50.7 compared to 38.9 in Aug.
Goldman sees SA fiscal gains boosting assets, ratings
While speaking at a panel discussion held at the London Stock Exchange during a South African investor roadshow, Andrew Matheny, an economist at Goldman Sachs, said South Africa’s recent reforms, particularly in energy and fiscal policy, are starting to bear fruit. Quoted in Bloomberg, Matheny said South Africa could see an upward ratings shift, particularly from Fitch or S&P, within the next six months if growth continues and fiscal performance holds steady.
Trading update : 7 October 2024
Geopolitics has reared its head to become the dominant short-term driver of global markets following the escalation in the Middle East. As the world awaits potential retaliatory measures, concerns are rising about a wider conflict, weighing on risk sentiment.
Risk-off on Iran attack
Iran’s missile attack on Israel catalysed classic risk-off trading defined by US dollar, yield and precious metal strength. Oil stocks dominated the top gainers list, with the likes of APA Corporation (APA-NASQ) jumping 5% and Marathon Oil (MRO-NASQ) rising 3.8%. Risk assets predictably landed on the other side of this market activity. With none of the main protagonists seemingly willing to take a step back, there is serious risk of further escalation. Investors will need to keep a close eye on developments.
US economy shows signs of weakening
The ISM Manufacturing Purchasing Managers’ Index held steady in September but the details suggest some weakening going forward. A Bloomberg report stated that the flow of new orders and production activity declined, albeit at a slower pace than in August. With customers’ inventories improving and employers reducing headcount at an accelerating rate, production activity will likely decline more rapidly in the months ahead. The employment sub-index declined to 43.9 in September from 46.0, pointing to a faster decline in manufacturing employment.
Nike sales take hit
Nike (NKE-NASQ) withdrew its annual revenue guidance, which sent the stock down -6% after hours. Bloomberg reported that sales in the fiscal first quarter fell 10% to $11.59 billion, just short of the average analyst estimate. Declines were especially sharp in North America and the Europe, Africa and the Middle East (EMEA) region, while problems also persisted for the Converse brand.
US car sales struggle
High new-vehicle prices and borrowing costs are keeping some shoppers on the sidelines, suggesting another lacklustre sales year for US automakers, suggests a Bloomberg report. General Motors (GM-NASQ), the nation’s largest carmaker by volume, said sales fell 2% in the quarter compared with a year earlier, with the company’s mass-market Chevrolet brand accounting for most of the decline.
ECB cut on the way
An interest rate cut that European Central Bank officials deemed unlikely just three weeks ago now seems a near certainty when borrowing costs are assessed next on 17 October. According to Bloomberg, markedly souring business surveys, the first inflation reading to drop below 2% in more than three years, and the reassurance offered by the Federal Reserve’s rate cut have all brought policymakers toward the point where a quarter-point reduction appears to need little more than a formal sign-off.
Food retailer M&A activity
PepsiCo. (PEP-NASQ) is in talks to buy tortilla-chip maker Siete Foods for more than $1 billion, the Wall Street Journal reported.
Denim doubt for US consumers
Denim maker Levi Strauss & Co. (LEVI-NASQ) narrowed its full-year revenue outlook to the bottom end of its previous range. The announcement sent shares falling -9.7% in extended New York trading.
Where to for the rand?
The performance of South African rand has been nothing short of spectacular when viewed against the backdrop of its underperformance of the last decade or so, but can the currency maintain its charge to dip below R17/$ and offer a even better buying opportunity? That depends on multiple factors. South Africa’s new political dispensation, the government of national unity (GNU), will need to pass a few stern tests, like the NHI and education (BELA) bills. Municipal and regional politics are also placing strain on the GNU at a national level. Global factors like the US elections, escalating geopolitical tension in the Middle East, a threat of a global recession and an equity market that appears to be acting on steroids will also feed into the equation.
Brimstone sells stake in Stadio for R257m
Brimstone has agreed to sell its entire shareholding in Stadio (SDO-JSE) to ThembiSA Fund 1, through its wholly-owned unit, ThembiSA InvestCo 2, a verified black private equity fund managed by ThembiSA Equity Investments. The R257 million cash deal was equivalent to R5.90 per share.
SA factory sentiment gains
South African manufacturers’ sentiment improved to a five-month high amid optimism about better business conditions as central banks at home and abroad began lowering interest rates. Absa Group Ltd.’s Purchasing Managers’ Index rose to 52.8 in September from 43.6 a month earlier. Business activity rises to 50.7 compared to 38.9 in Aug.
Goldman sees SA fiscal gains boosting assets, ratings
While speaking at a panel discussion held at the London Stock Exchange during a South African investor roadshow, Andrew Matheny, an economist at Goldman Sachs, said South Africa’s recent reforms, particularly in energy and fiscal policy, are starting to bear fruit. Quoted in Bloomberg, Matheny said South Africa could see an upward ratings shift, particularly from Fitch or S&P, within the next six months if growth continues and fiscal performance holds steady.
Information correct at time of publishing. It is important to conduct thorough research and analysis using a combination of fundamental and technical analysis techniques to make informed trading decisions. Additionally, consider your risk tolerance, investment objectives, and time horizon when assessing company performance for trading.