The Week Ahead 14 March

14 March 2014

Our regular look at the news making the headlines, using our market insight information and analysis tools.

By Shaun Murison, IG Market Analyst

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Company announcements

Dividends

Economic catalysts

Market overview

Local Data

Resource companies, with exposure to iron ore and copper in particular, were under pressure as the aforementioned news out of China fueled demand concerns.  

The business confidence index in South Africa, as reported by the Bereau of Economic Research, showed an index reading of 41 in the first quarter of 2014, which fell short of consensus forecasts and alluded to deteriorating industry sentiment.

The current account data, as reported by StatsSA, showed an improved deficit of R179bn in the first quarter of 2014, which equates to 5.1% of South Africa’s Gross Domestic Product (GDP). The previous quarter was revised higher to R216bn which was 6.4% of GDP.

Mining production in January showed a year on year increase of 3.1%, with iron ore providing the strongest positive contribution, while coal provided the most significant negative contribution thereof.

Manufacturing production in January showed a year on year increase of 2.5%, with food and beverages providing the strongest positive contribution.

International Data

Financial markets remain on the back foot following weekend data that China reported a trade deficit of $23bn in February. The figure fell well below market expectations of a trade surplus, as well as being $54bn lower than the previous months reading.

Investors are concerned over an economic slowdown in China as the news follows what has been weaker economic data over the last few months.

Continuing tensions between Ukraine and Russia hampered market sentiment further, catalyzing a higher gold price as safe haven buying of the precious metal resumed.

Source: IG Insight, as of  14/03/2014 14:05

Top movers

Source: IG Insight, as of 14/03/2014 13:10

Shares with significant exposure to iron ore have underperformed this week, as the price of iron ore finds itself under pressure amidst poor economic data out of China and in turn demand concerns.

Kumba Iron Ore heads up the worst performer list, although it should be considered that the company was ex-dividend on Monday with the dividend amounting to R19.94 per share.

The weakness in Naspers (most noticeably on Friday) follows on from a selloff in China’s largest listed internet company Tencent. Tencent, of which Naspers owns more than 30%, reacted negatively to the news that the company had received instruction, from China’s central bank, to halt payments made with mobile devices by scanning of barcodes.

Gold mining companies are benefitting from a higher denominated price of the precious metal as safe haven buying continues to be catalyzed by nervousnesss surrounding the tensions between Russia and the Ukraine in the Black Sea region.

Broker consensus

Brokers view on the markets.

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Spotlight on equities

An analysis of upcoming company announcements, using our market insight information and analysis tools:

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Broker consensus

Source: I-Net Bridge