The Week Ahead

30 November - 4 December 2015

A look at local and international economic data, major events, economic releases and company news expected in the week to come.

By Shaun Murison,  Market Analyst

 

Shares overview

Top decliners

Anglo American Plc is at the forefront of the resource decline as investors ponder what the company’s plan is to try stemming the pain of a pressured commodity environment and the toll on its balance sheet. The future of the company’s dividend is in focus as is whether there will be a need for Anglos to recapitalise. The group was also downgraded in the week by equity researchers at HSBC from a “hold” rating to a “reduce rating”.

In addition to depressed commodity prices (iron ore and oil in particular) and possible ratings downgrades looming for BHP Billiton, the recent dam collapse in Brazil has further taken its toll on the company’s share price. The UN has suggested that current efforts to contain mine waste from the accident have been insufficient adding to the negative sentiment around the company.

Netcare results released in the week saw the company’s share price met with an unfavourable reaction as growth realised fell short of expectation. Some of the salient features in the full year results are as follows:

  • Group EBITDA up 13.1% to R4 981m
  • Adjusted HEPS up 12.6% to 189.0c
  • Profit after tax 16.4% to R2 439m
  • Final dividend per share up 12.5%to 54.0c

Investors also expressed disappointment with MMI Holdings’ three month trading update which provided the following operational review:

  • The MMI group continued to attract new single premium inflows, ending 3% higher than the very strong prior year comparative quarter
  • New business recurring premiums were lower than the same quarter of 2014
  • The growth in the market value of investment assets under management has been curtailed by the performance of markets as a whole, resulting in pressure on top-line asset-based fee income in the current year

Top Gainers

Financial counters are once again at the forefront of the gainers list led by Investec which continues to gain following the previous weeks release of the group’s interim results (covered in last weeks newsletter).

Source: Market Insight, as of 27/11/2015

Date Company Event Amount
30-Nov Steinhoff International Holdings N.V New listing on JSE n/a
30-Nov Adcorp Holdings Ltd Ex-Dividend R0.6
30-Nov Ascendis Health Ltd Ex-Dividend  R0.11
30-Nov Coronation Fund Managers Ltd Ex-Dividend R2.70
30-Nov Famous Brands Ltd Ex-Dividend R1.90
30-Nov Illovo Sugar Ltd Interim 2016 results n/a
30-Nov Invicta Holdings Ltd Ex-Dividend R0.67
30-Nov Mediclinic International Ltd Ex-Dividend R0.36
30-Nov Spar Group Ltd Ex-Dividend  R3.93
30-Nov Vodacom Group Ltd Ex-Dividend R3.95
02-Dec Sanlam Ltd FYI 2015 results n/a

Source: Economic Calendar, as of 27/11/2015

A weekly Broker Consensus of the top traded shares.

Click to view this week's broker consensus

Economic overview

Local Data

Gross Domestic Product (GDP) estimates for the 3rd quarter 2015 (as reported by Statssa) showed our local economy to have narrowly missed moving into a technical recession as marginal q/q growth was reported.

The seasonally adjusted real GDP at market prices increased by an annualised rate of 0.7 per cent compared with a decrease of 1.3 per cent during the second quarter of 2015.

The main contributors to the increase in economic activity for the third quarter of 2015 were the manufacturing industry (contributing 0.8 of a percentage point), finance, real estate and business services (contributing 0.6 of a percentage point) and the wholesale, retail and motor trade; catering and accommodation industry (contributing 0,3 of a percentage point).

Negative contributions were recorded by the mining and quarrying industry (contributing -0.8 of a percentage point) and the agriculture, forestry and fishing industry (contributing -0.3 of a percentage point).

The annual percentage change in the PPI for final manufactured goods was 4.2% in October 2015. From September 2015 to October 2015 the PPI for final manufactured goods increased by 0.9%.

International Data

U.S. markets experienced a three-day trading week in lieu of Thanks Giving holiday celebrations. Preliminary GDP data, revised from the Advance GDP data released last month, estimated economic growth to be at 2.1% q/q annualized.

In Europe, French and German Flash manufacturing PMI data both came in ahead of expectations, alluding to marginal industry growth. U.K. second estimate GDP data was in line with consensus estimates alluding to 0.5% q/q growth.

The week ahead

While markets will be cognate of Federal Chairperson, Janet Yellen’s three public addresses scheduled for the new week, the primary focus will be on U.S. employment data set for release on Friday. The Non-Farm employment change and unemployment rate data will be the last of its sort, before the next Federal Funds Rate announcement in mid-December 2015. Markets are pricing in the first interest rate hike since 2006 as the U.S. economy starts to show signs of improvement, particularly within the labour market.

Date Time Region Event Previous
30-Nov 08:00 SA M3 money supply y/y 8.4%
01-Dec 03:00 CNY Manufacturing PMI 49.8
01-Dec 03:45 CNY Caixin manufacturing PMI 48.3
01-Dec 11:30 GBP Manufacturing PMI 55.5
01-Dec 17:00 USD ISM manufacturing PMI 50.1
02-Dec 11:30 GBP Construction PMI 58.8
02-Dec 15:15 USD ADP non-farm employment change 182K
02-Dec 15:30 USD Fed Chair Yellen speaks n/a
03-Dec 11:30 GBP Services PMI 54.9
03-Dec 14:45 EUR Minimum bid rate 0.05%
03-Dec 15:30 EUR ECB press conference n/a
03-Dec 15:30 USD Unemployment claims 260K
03-Dec 17:00 USD ISM non-manufacturing PMI 59.1
03-Dec 09:15 SA Whole economy PMI HSBC 47.5
04-Dec 15:30 USD Average hourly earnings m/m 0.40%
04-Dec 15:30 USD Non-farm employment change 271K
04-Dec 15:30 USD Trade balance -40.8B
04-Dec 15:30 USD Unemployment rate 5.00%

Source: Economic Calendar, as of 27/11/2015

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Last week's report

A reminder of the key company news announced last week.

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Broker consensus

Source: iNet BFA, as of 27/11/2015

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