The Week Ahead

16 - 20 November 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

In the aftermath of strong U.S. jobs data, monetary tightening in the world’s largest economy (before year end) has once again become the probability favoured by the majority of analysts surveyed by Bloomberg. Weaker commodity pricing has been the most obvious misfortune realised, sending local resource counters to levels of depression not realised in many years and in some cases ever before (i.e. Kumba Iron Ore). Losses, although led by resource counters have been broad-based with industrial and financial counters largely weaker as well.

Top decliners

Anglo American Plc has been at the forefront of the decline. While its iron ore subsidiary, Kumba, suffers share price weakness, as an excess of supply (of the steel making ingredient) meets waning demand, the company’s platinum subsidiary, Anglo American Platinum, suffers in lieu of the underlying metal’s price now entrenched at multi-year lows ($875/oz.). Anglo American Plc draws further investor concern, as the company’s elevated levels of debt, look set to accompany a further decline in earnings, while there no plans being communicated to the market, to address the current situation.

Top gainers

While there is not much to talk about in the gainers list, SABMiller Plc did extend recent gains as the prospect of a deal being finalised with Anheusr-Busch inBev drew closer to conclusion.

The Boards of Anheuser-Busch InBev SA/NV and SABMiller Plc announced that they have reached agreement on the terms of an acquisition of the entire issued and to be issued share capital of SABMiller by AB InBev.

  • The Transaction will be implemented by means of the acquisition of SABMiller by Newco (a Belgian company to be formed for the purposes of the Transaction). AB InBev will also merge into Newco so that, following completion of the Transaction, Newco will be the new holding company for the combined Group.
  • Pursuant to the terms of the Transaction, each SABMiller Shareholder will be entitled to receive, for each SABMiller Share, £44.00 in cash.

The company also released H1 2016 results in which the following salient features were highlighted:

  • Group net producer revenue +4%
  • Beverage volumes +1%
  • Group lager volumes +3%
  • Group NPR, EBITA and adjusted EPS declined by 12%, 11% and 11%, respectively 
  • Interim dividend per share of 28.25 US cents declared, up 9% on prior year

Source: Market Insight, as of 13/11/2015

Date Company Event
16-Nov Barloworld FY 2015 results
16-Nov Telkom SA H1 2016 results
16-Nov Shoprite Holdings  H1 2016 results
17-Nov PPC Ltd FY 2015 results
17-Nov Brait SE H1 2016 results
18-Nov Mr Price Group H1 2016 results
19-Nov Gold Fields Q3 results
19-Nov Tiger Brands FY 2015 results
19-Nov Investec Ltd H1 2016 results
19-Nov Tsogo Sun FY 2015 results

Source: Economic Calendar, as of 13/11/2015

A weekly Broker Consensus of the top traded shares.

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Economic overview

Local Data

Production and sales data released in the last week provided further testament to a weak economic environment, as mining data showed year-on-year contraction within the sector and manufacturing data alluded to lacklustre industry growth.

South African mining production decreased by 4.8% year-on-year in September 2015. The largest negative growth rates were recorded for diamonds (-38.5%), 'other' metallic minerals (-30.1%) and iron ore (-17.9%). The main negative contributors to the 4.8% decrease were iron ore (contributing -3.5 percentage points), coal (contributing -3.4 percentage points) and diamonds (contributing -1.2 percentage points).

Manufacturing production increased by 0.9% in September 2015 compared with September 2014. The largest positive contributions were made by the following divisions:

  • Petroleum, chemical products, rubber and plastic products
  • Food and beverages
  • Large negative contributions were made by the following divisions:
  • Motor vehicles, parts and accessories and other transport
  • Basic iron and steel, non-ferrous metal products, metal products and machinery

International Data

Industrial production data in China showed growth of 5.6% y/y, which was marginally short of consensus estimates, which had forecast growth of 5.8% y/y. CPI data showed slower than expected inflation at 1.3% y/y (est. 1.5% y/y).

European Central Bank (ECB) president Mario Draghi reiterated that the central bank had a range of tools to address weak core inflation being realized within the euro-area. The suggestion of further stimulus did however fail to please equity markets, which remain under pressure. Preliminary Gross Domestic Product (GDP) data showed the German economy to have grown 0.3% q/q.

In the U.S. Federal Reserve Chairperson, Janet Yellen, provided no further comment relating to the timing of rate hikes in the U.S. in her public address.

The week ahead

The local economic calendar will be busy over the next week, with Consumer Price Index (CPI) data and retail sales data scheduled for Wednesday, while wholesale and motor sales trade data is scheduled for Thursday. Of most importance will be the SARB rates decision, also scheduled for Thursday, where the reserve bank governor will find himself hard placed in his decision, as a weakening rand’s threat to inflation will be balanced against a diminishing outlook for economic growth.

Date Time Region Event Previous
17-Nov 11:30 GBP CPI y/y -0.10%
17-Nov 12:00 EUR German ZEW economic sentiment 1.9
17-Nov 15:30 USD CPI m/m -0.20%
17-Nov 15:30 USD Core CPI m/m 0.20%
18-Nov 09:00 USD FOMC meeting minutes -
18-Nov 10:00 SA CPI m/m 0.00%
18-Nov 10:00 SA Retail trade sales September 2015 3.90%
18-Nov 15:30 USD Building permits 1.10M
19-Nov 10:00 SA Wholesale trade sales September 2015 -0.10%
19-Nov 11:30 SA Motor trade sales September 2015 -3.30%
19-Nov 15:00 SA SARB rates decision unchanged
19-Nov 10:00 SA CPI y/y 4.60%
19-Nov 11:30 GBP Retail sales m/m 1.90%
19-Nov 15:30 USD Unemployment claims -
19-Nov 17:00 USD Philly Fed Manufacturing Index -4.5

Source: Economic Calendar, as of 13/11/2015


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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 13/11/2015

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