The Week Ahead

19 - 23 January 2015

A regular 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

Source: IG Insight, as of 16/01/2015

Top gainers

Gold shares have had a strong run this week following a more than $40/oz. surge in the underlying price of the precious yellow metal. AngloGold has been a relative underperformer amongst even local gold counters over the last few months and renewed gold safe haven demand for gold witnesses the share rebounding to a relative outperformance in current market conditions.

Mediclinic finds prominence in this week’s gainers list, benefiting from its offshore earnings attributes specifically from that within Switzerland. The rand has depreciated in excess of 15% against the Swiss Franc over the week a currency in which Mediclinic has historically generated around 52% (as per FY 2014 results) of the group’s earnings.

Top Decliners

Richemont head ups this week’s decliners list after being dealt a double blow of negative news as the company’s Q3 earnings update disappointed markets and the Swiss National Bank’s monetary policy actions implied future headwinds for the company. The reporting period highlighted sales for Richemont as being flat at constant rates and 4% at actual rates, far short of a company priced for growth.

The Swiss National Bank’s decision to unpeg the Swiss Franc (CHF) against the Euro equated to massive strength in the CHF causing further concern relative to export demand and the high level of proportionate costs domiciled in Switzerland for Richemont.

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

Click to view this week's broker consensus

 

 

DATE COMPANY EVENT AMOUNT
19-Jan Astral Foods Ltd Ex-Dividend R 2.40
19-Jan Barloworld Ltd Ex-Dividend R 2.14
19-Jan Clicks Group Ltd Ex-Dividend R 1.36
19-Jan Lewis Group Ltd Ex-Dividend R 2.15
21-Jan SABMiller Q3 2015 Trading Update N/A
21-Jan BHP Billiton Operational update N/A
23-Jan Grand Parade Investments Cum-Dividend R 0.02
23-Jan Invicta Holdings Cum-Dividend R 20.24
23-Jan Netcare Ltd Cum-Dividend R 0.48
23-Jan Pioneer Food Group Cum-Dividend R 1.56
23-Jan Tongaat-Hullet Ltd Cum-Dividend R 1.70

 

Market overview

Local Data

It’s been a volatile week in financial markets with disinflation, slowing growth and international monetary policy providing the most significant catalysts in financial markets. Domestic economic data although remaining relevant had little impact on market movements in the last week.

In summary; retail trade sales for November 2014, measured in real terms, increased by 2.6% year-on-year. Wholesale trade sales for November 2014 measured in real terms decreased by 8.1% year-on-year and motor trade sales increased by 1.4% over the same period.

In November, the seasonally adjusted manufacturing production index registered an unexpected drop of 2.1% on a monthly basis in South Africa, compared with a revised advance of 0.1% in the prior month.

International Data

All economic news scheduled over the last week lost its validity when compared to the surprise actions of the Swiss National Bank (SNB) which decided to abandon the pegging of its currency (Swiss Franc) against the Euro. Only a few weeks ago the SNB had reiterated its commitment to keeping the currency pegged at 1.2CHF to the Euro before the apparent backtracking on Thursday 15th Jan which sent FX markets into severe turbulence.

The result of the news witnessed the Euro fall around 30% as the Swiss Franc (CHF) strengthened against most currencies. The rand was not spared, falling more than 15% against the CHF with local equities with exposure to the region (most notably Mediclinic and Richemont) experiencing extreme volatility.

The week ahead

The new week will witness the outcome of European Central Bank (ECB) discussions where market participants are speculating whether not further stimulus measures out of the region are to be announced. The aforementioned move by the SNB has many believing that the ECB conference on Thursday will result in a broadening of the asset purchasing programs by the central bank.

Additional stimulus would suggest a weakening of the Euro and in turn, the SNB may have had difficulty in continuing to buy Euro’s to maintain the currency peg should further easing occur. Essentially the move may be an admission that the SNB expects the ECB to act this week.

Earlier in the week China is set to report Q4 GDP data which also finds increased relevance in the current market’s concerned theme of slowing growth. The expectation is for 7.2% economic growth over the period.

DATE TIME REGION EVENT EST. PREV.
20-Jan 4:00 CNY GDP Q4 7.20% 7.30%
20-Jan 12:00 EU German ZEW Economic Sentiment - 34.9
20-Jan 11:30 SA Mining Production and Sales - -
21-Jan 10:00 SA CPI y/y - 5.80%
21-Jan 11:30 UK Unemployment Claims m/m - -26900
21-Jan 3:30 US Building Permits - 1050000
22-Jan 14:45 EU Interest Rate Decision 0.05% 0.05%
22-Jan 15:30 EU ECB conference - -
22-Jan 15:30 US Unemployment Claims w/w - 316000
23-Jan 3:45 CNY HSBC Flash Manufacturing PMI - 49.6
23-Jan 10:00 EU French Flash Manufacturing  PMI - 47.5
23-Jan 10:00 EU French Flash Services  PMI - 49.8
23-Jan 10:30 EU German Flash Manufacturing  PMI - 51.2
23-Jan 10:30 EU German Flash Services  PMI - 51.4
23-Jan 11:30 UK Retail Sales y/y - 6.40%
23-Jan 17:00 US Existing Home Sales 5.05m 4.93m

 

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When and where

Date

Time

Location

Duration

21 January 18:30 Protea Hotel, Stellenbosch 1.5hrs
22 January 18:30 One & Only, Cape Town 1.5hrs
11 February 18:30 IG office, Johannesburg 1.5hrs
12 February 18:30 Pretoria Country Club, Pretoria 1.5hrs
25 February 18:30 Premier Hotel Regent, East London 1.5hrs
10 March 18:30 Redlands Hotel, Pietermaritzburg 1.5hrs
11 March 18:30 Southern Sun Elangeni & Maharani, Durban 1.5hrs
1 April 18:30 Southern Sun, Bloemfontein 1.5hrs

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Broker consensus

Source: INET BFA, as of 16/01/2015

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