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
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.
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.
|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|
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.
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.
|20-Jan||12:00||EU||German ZEW Economic Sentiment||-||34.9|
|20-Jan||11:30||SA||Mining Production and Sales||-||-|
|21-Jan||11:30||UK||Unemployment Claims m/m||-||-26900|
|22-Jan||14:45||EU||Interest Rate Decision||0.05%||0.05%|
|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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|21 January||18:30||Protea Hotel, Stellenbosch||1.5hrs|
|22 January||18:30||One & Only, Cape Town||1.5hrs|
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|12 February||18:30||Pretoria Country Club, Pretoria||1.5hrs|
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|1 April||18:30||Southern Sun, Bloemfontein||1.5hrs|
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Source: INET BFA, as of 16/01/2015