The Week Ahead

8 - 12 December 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

Movements in our local market have primarily been driven by offshore events, most noticeably the European Central Bank (ECB) meetings and the jobs report out of the U.S., although some of the more prominent local data is as follows.

New vehicle sales in South Africa were reported as advancing by 0.9% y/y in November 2014 by the National Association of Automobile Manufacturers of South Africa (NAAMSA).  The growth figure was significantly lower than October’s figure of 4.9%.

The Business Confidence index in South Africa showed a marginal improvement in business sentiment with a reading of 90.80 for November from 88.8 reported in October.

International Data

In Europe, the ECB press conference and rates announcement was arguably the most significant data point in financial markets this week. Markets were looking buoyant leading into the meeting as investors were optimistic that the ECB would broaden the reach of current stimulus measures. However this was not to be, benchmark lending rates remained unchanged and the ECB delayed the use of further easing measures.

In the U.S., the tail end of the week provided further evidence of an improving U.S. economy as employment data came in ahead of consensus. The Non-farm employment change figure showed 321 000 people (excluding the farming community) were added to the payroll last month, which was the best figure in three years. The unemployment rate remained at 5.8% for a second month in a row, the lowest recorded level for the unemployment rate since August 2008.

In China, Manufacturing PMI data alluded to marginal industry growth below that of consensus estimates furthering concerns around a slowing Chinese economy. Services PMI data showed a slight improvement with an index reading of 53.9 (previous 53.8) suggesting growth within the non-manufacturing sector.

Source: IG Insight, as of  5/12/2014

Top movers

Source: IG Insight, as of 5/12/2014

Top gainers

Interestingly enough, the two shares prominent in this week’s gainers list, Steinhoff and Standard Bank, have rebounded from the initial weakness, catalysed by controversy.

It was revealed that Steinhoff International founder, Bruno Steinhoff, CEO Markus Jooste and director Christo Wiese had all bought shares in the Steinhoff shortly before (2 months) news of the acquisition of PepKor was released into the public domain.

In truth the combined share purchase from the company’s directors are only fractions of their net equity within the business, resulting in the news being promptly dismissed by investors as the euphoria of the acquisition overshadows the suggestion of the aforementioned wrong doing.

Standard Bank, along with HSBC and Goldman Sachs are being faced with litigation following claims that the companies had colluded to manipulate platinum and palladium prices over the last eight years. It would appear that investors find little concern on the news as the share remains at the forefront of our gainers list. 

Top Decliners

Assore Limited, a usual suspect in the decliners list, frequents the list once again as commodity prices remain subdued and the company finds itself on the verge of losing it blue chip status. Assore Limited, along with Exxaro will be removed from the Top40 and Swix40 indices and find a new home in the Mid Cap index, after losing significant market capitalisation this year.

Insurance holding company, RMI Holdings and private hospital group Netcare, are set to replace these shares within the Top40 and Swix40 indices which reweights on the 19th December 2014.

Assore also announced that it had conditionally subscribed for an interest in Iron Bridge Resources Limited of up to 30.3%. This follows the recent decision by Assmang ( African Rainbow Minerals and Assore joint venture) not to pursue the Iron Bridge investment.

Broker consensus

Brokers view on the markets.

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Educorner

Non-farm payrolls

The Non-farm payrolls are released on the first Friday of every month, 08:30 New York time. The NFP figures are a major source of trading opportunities, and one of America’s most important economic announcements.

The figures reveal how many people are currently working in manufacturing, construction and goods industries. Why is it important for traders? Watch the video to find out.

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Broker consensus

Source: INET BFA, as of 5/12/2014