The Week Ahead

13 - 17 July 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

In what has been a difficult week across most sectors in our local market, Capitec has further underperformed “Blue Chip” and financial counters. Suggestions by the National Credit Regulator (NCR) that the maximum interest rate charged on unsecured loans be reduced by around 8%, catalysed weakness across the local banking sector. The move down was exaggerated in the share price of Capitec, as unsecured lending forms a larger proportion of the banks’ earnings than it does with its major banking peers.

Aggressive selling in Chinese equity markets in the beginning of the week saw Naspers echo losses endured by its Hang Seng listed counterpart Tencent Holdings (of which Naspers owns 34%). The weakness in China further impacted demand concerns from the region, which is the world’s largest consumer of iron ore, sending the underlying price of the commodity to record lows and in turn pushing major producer Kumba Iron Ore lower as well. 

Top gainer

At first glance, the gainers list appears to be made up of predominantly rand hedge counters (excl. resources). A closer look reveals commonality in that Mondi, Old Mutual and SABMiller all have separate listings in the U.K., while Brait SE has recently looked to gain further exposure into the region through its New Look acquisition. The week’s gainers trend perhaps an indication of the London Stock Exchange being a preferred frontier market destination amidst the current global makro uncertainty present.

SABMiller announced that it has appointed Mr Domenic De Lorenzo as an executive director and Chief Financial officer.

Source: IG Insight, as of 10/07/2015

Date Company Event Amount
13-Jul S hoprite Holdings Ltd Full-year operational update n/a
13-Jul Datatec Ex-Dividend R1.08
13-Jul I nvicta Holdings Ltd Ex-Dividend R1.12
13-Jul L ewis Group Ltd Ex-Dividend R3.02
13-Jul O mnia Holdings Ltd Ex-Dividend R3.00
13-Jul F oschini Group Ltd Ex-Dividend R3.25
13-Jul Telkom SA SOC Ltd Ex-Dividend R0.30
13-Jul Telkom SA SOC Ltd Ex-Dividend R2.15
16-Jul Kumba Iron Ore Ltd Q2 production & sales release n/a
16-Jul Anglo American Platinum Ltd Q2 production & sales release n/a

Source:  Economic Calendar, as of 10/07/2015

 

INET BFA's weekly Broker Bonsensus on the top traded shares.

Click to view this week's broker consensus

Market overview

International Data

Following a “no” vote by the Greek people against the austerity suggested by its creditors in lure of further financial aid, the regions banks remained closed and global market uncertainty prevailed. Since the vote, Greece has submitted a new proposal to its creditors, which ironically meets most of the previously suggested spending cuts, pension reforms, and tax increases which were contested in the Greek referendum. It is now left to the Eurogroup to discuss the new proposal over the weekend, essentially guiding the fate of the Greece’s inclusion in the Eurozone.

Chinese stock markets continued the deleveraging induced rollercoaster over the course of the week. In further attempts to incur marketplace stability, regulators suspended trade in more than 1300 listed companies and ordered state run businesses with significant shareholdings not to sell their holdings. 

In the U.S., minutes from the recent Federal Open Market Committee (FOMC) meeting suggested that the world’s largest economy remains on track to start raising interest rates this year, although concerns of a failure in Greece/creditors discussions was noted as having the potential to disrupt financial markets, thereby aiding a more dovish tone to the minutes. 

Local Data

Manufacturing production decreased by 1.4% in May 2015 compared with May 2014.

The 1.4% year-on-year decrease in manufacturing production in May 2015 was mainly due to lower production in the following divisions:

  • Basic iron and steel, non-ferrous metal products, metal products and machinery (-5.8% and contributing -1.2 percentage points)
  • Petroleum, chemical products, rubber and plastic products (-4.6% and contributing -1.1 percentage points).
  • Key findings regarding mining production for May 2015.

Mining production increased by 2.7% year-on-year in May 2015. The highest positive growth rate was recorded for PGMs (99.6%), partly the result of a low base in May 2014 when the PGM sector was adversely affected by industrial action.

Seasonally adjusted mining production decreased by 4.7% in May 2015 compared with April 2015. This followed month-on-month changes of -4.7% in April 2015 and 6.9% in March 2015.

Seasonally adjusted mining production increased by 4.1% in the three months ended May 2015 compared with the previous three months. The main contributor to the 4.1% increase was PGMs (contributing 4.2 percentage points).

The week ahead

The new week will see continued focus on the world’s second largest economy China, as we await trade balance data on Monday and Q2 Gross Domestic Product (GDP) data out on Wednesday. While regulators attempt to control capital markets within the region, the aforementioned data points should provide a better depth of understanding as to the state of the underlying health of the Chinese economy.

Remaining in the headlines, markets will be eagerly anticipating the outcomes of the EU economic summit on the weekend, particularly in terms of the new Greek bailout proposal.  Thursday will also see the ECB rates announcement and press conference to follow in Europe.

Date Time Region Event Previous
12-Jul All day EUR EU economic summit -
13-Jul Tentative CNY Trade blance 59.5B
13-Jul All day EUR EuroGroup meetings -
14-Jul 10:30 GBP CPI y/y 0.10%
14-Jul 11:00 EUR German ZEW economic sentiment 31.5
14-Jul 14:30 USD Core retail sales m/m 1.00%
14-Jul 14:30 USD Retail sales m/m 1.20%
15-Jul 13:00 SA Retail sales 3.40%
15-Jul 04:00 CNY GDP q/q 7.00%
15-Jul 04:00 CNY Industrial production y/y 6.10%
15-Jul 10:30 GBP Average earnings index 3m/y 2.70%
15-Jul 10:30 GBP Claimant count change -6.5K
15-Jul 14:30 USD PPI m/m 0.50%
15-Jul 16:00 USD Fed chair Yellen testifies -
16-Jul 10:00 SA Wholesale trade sales -6.30%
16-Jul 11:30 SA Motor trade sales y/y -2.10%
16-Jul 13:45 EUR Minimum bid rate 0.05%
16-Jul 14:30 EUR ECB press conference -
16-Jul 14:30 USD Unemployment claims 297K
16-Jul 16:00 USD Fed chair Yellen testifies -
16-Jul 16:00 USD Philly Fed manufacturing index 15.2
17-Jul 14:30 USD Building permits 1.28M
17-Jul 14:30 USD CPI m/m 0.40%
17-Jul 14:30 USD Core CPI m/m 0.10%
17-Jul 16:00 USD Prelim UoM consumer sentiment 96.1

Source:  Economic Calendar, as of 10/07/2015

 

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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 10/07/2015

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