The Week Ahead

1 August 2014

Our regular look at the news making the headlines, using our market insight information and analysis tools - now with online videos and tutorials.

By Shaun Murison,  Market Analyst

 

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Company announcements

Dividends

Economic catalysts

Market overview

Local Data

The manufacturing sector breathed a sigh of relief as the four week long NUMSA led strike found resolve. Lower level employees are to receive a 10% wage increase each year for the next three years as agreed by the union and employer representative, SEIFSA.

The unemployment rate in South Africa, as reported by STATSSA, rose to 25.5% in the second quarter of this year, marginally worse than consensus estimates had predicted as well as previous quarter’s figures.

Private sector credit growth, reported by the South African Reserve bank (SARB), increased by 8.7% in June from 8.3% in the prior month, while the M3 money supply rose 7.2%, which is 0.4% higher than the previous months reading.

Producer Price Index data showed inflation at a factory level to have increased by 0.3%, which combined with a narrower than expected trade deficit of R190m witnessed temporary strength in our domestic currency.

International Data

In the US, the week started on a negative note as pending home sales data unexpectedly fell 1.1% in June, although the manufacturing business index increased more than expected to an index reading of 12.70 in July. Consumer confidence figures improved to a reading of 90.9 from a revised 86.4 in the previous month.

Annualised advance GDP data showed 4% growth in the world’s largest economy, exceeding consensus estimates which predicted GDP growth of 3.1%. The US Federal Reserve Bank announced the further reduction of monthly bond purchases by $10 billion on the same day as the GDP print. Bond purchases by the Federal Reserve now amount to $25 billion a month.

Jobs data, arguably the most relevant news item in financial markets, fell short of expectation as only 209 000 (231 000 expected 298 000 previous) non-farming jobs were added to US payrolls. The unemployment rate increased marginally to 6.2% from 6.1% in the previous month.

In China, Manufacturing PMI and HSBC final Manufacturing PMI data both alluded to marginal industry expansion with the same reading of 51.7.

Source: IG Insight, as of  1/08/2014

Top movers

Source: IG Insight, as of 1/08/2014

This week the bias has shifted in that, the extent of losses far exceeds the extent of gains on the top movers list.

Naspers heads up the gainers list having reacted positively to news that the Chinese Banking Regulatory Commission had approved and granted permission for the new private bank Webank. Webank was co-founded by Naspers’ counterpart Tencent Holdings which has the largest investor stake in the private bank of 30%.

Exxaro Resources announced the withdrawal of the cautionary announcement relating to the full impact of the impairment relating to the Mayoko Project in the Republic of Congo which has now been determined and finalised. The impairment loss (before tax, including acquisition cost) amounts to $5.807 billion. Along with the cautionary withdrawal, a trading statement for the six month period ending June 2014 was released. Attributable earnings per share for the period are expected to be more than 20% lower than the 2013 comparative.

Impala and Anglo American Platinum find themselves victim of the underlying price of dollar denominated platinum which has shed more than $30/oz in the week gone buy. Speculation continues to mount on whether Anglo Platinum will sell off or separately list some of its more costly platinum assets.

Investec has reacted negatively to news that in the first quarter operating income for the group was marginal adding only 1% on the previous year while operating costs over the period increased by 1%, impairments on loans and advances decreased by 17%.

Earnings focus

Twitter’s 2nd quarter results were met with investor favour as the share price surged more than 20% following the announcement.

Interim results from Barclays Africa Group were towards the upper limits of the company’s guided range, with headline earnings per share increasing by 10% from the 2013 half year comparative. Find out more about the results announcement.

This week look out for Nedbank’s interim results. The bank saw growth in its Q1 2014 earnings results, will the same be true for their interim results? Read Shaun’s analysis on SA’s 4th largest bank ahead of the announcement

Source: Bloomberg

 

Broker consensus

Brokers view on the markets.

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Educorner

Using our trading platform

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Future seminars

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When and where

Date

Time

Location

Duration

13 August 2014

18.30 Premier Hotel Regent, East London 1.5hrs

14 August 2014

18.30 Radisson Blu, Port Elizabeth 1.5hrs

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Broker consensus

Source: I-Net Bridge, as of 1/08/2014