The Week Ahead

21 - 25 September 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

Local blue chip counters had a positive trading week as evidenced by the extent of gains on the gainers list relative to the marginal extent of declines on the decliners list. Weak U.S. inflation data provided an expectation that U.S. rates would remain on hold for an extended period and in turn a boost for equity markets. This sentiment was later validated as the Federal Reserve kept rates on hold at the FOMC meeting.

Top Gainers

SABMiller Plc experienced an intraday gain in excess of 20% on Wednesday, following news that slightly bigger rival, Anheuser-Busch Inbev, is interested in a possible buyout/merger with the company. Anheuser-Busch Inbev has placed no formal bid, although both companies have acknowledged the possibility of a deal. Together the two companies account for around on third of global beer sales.

AngloGold Ashanti has benefited from a slight rebound in the underlying price of gold following the decision by the U.S. Federal Reserve not to raise interest rates at the FOMC meeting this week. AngloGold also announce that the company had concluded an investment agreement with Randgold Resources to redevelop and operate the Obuasi gold mine in Ghana. 

Top Decliners

The Mondi Ltd bucked the relatively bullish trend in equity markets following a ratings downgrade from Goldman Sachs. Goldman downgraded the paper and packaging company to a “sell” rating, citing the kraftliner market as a concern in terms of the group’s pricing power relative to an increased capacity within the segment expected over the next few years. 

Source: IG Insight, as of 18/09/2015

A weekly Broker Consensus of the top traded shares.

Click to view this week's broker consensus

Market overview

Local Data

South Africa’s current account, the broadest measure of trade in goods and services, eased to a deficit of -3.1% of gross domestic product from a revised -4.7% in the previous three months. A weaker rand helping curb the level of import demand into the country aided the improved deficit figure.

Measured at constant 2012 prices, retail trade sales increased by 3.3% year-on-year in July 2015. The highest annual growth rates were recorded for:

  • Retailers in hardware, paint and glass (6.3%)
  • All ‘other’ retailers (4.3%)
  • Retailers in textiles, clothing, footwear and leather goods (3.9%)
  • Retailers in pharmaceuticals and medical goods, cosmetics and toiletries (3.5%)

Measured at constant 2012 prices, wholesale trade sales increased by 8.8% year-on-year in July 2015. Seasonally adjusted wholesale trade sales increased by 2.5% in July 2015 compared with June 2015. This followed month-on-month changes of -0.4% in June 2015 and 3.6% in May 2015.

Measured at current prices, motor trade sales increased by 1.3% year-on-year in July 2015. Positive annual growth rates were recorded for used vehicle sales (8.5%) and sales of accessories (7.3%).

International Data

In China, weekend data saw industrial production increase by 6.1% y/y, which was ahead of the previous month’s figure of 6% although below expectations of 6.3%.

The moment markets had been anticipating finally arrived when the Federal Open Market Committee (FOMC) revealed the Federal Funds rate decision. The central bank kept rates on hold although guided that monetary tightening remained a possibility in October’s meeting. Markets rallied into the Fed meeting after Consumer Price Index data released the day before was weak, increasing the probability of no rate hike to follow.

The week ahead

The new week will see the South African Reserve Bank (SARB) announcing changes (if any) to local lending rates at the conclusion of the Monetary Policy Committee meeting on Wednesday. Expectations for the meeting are divided between no change in interest rates and a marginal 25 basis point increase.

Markets will also look to ECB President Mario Draghi’s public address on Wednesday for any news relating to the economic health and further monetary stimulus in the Euro Area.

The end of the week will see the final Gross Domestic Product (GDP) revision released out of the U.S.

Date Time Region Event Estimation
23-Sep 10:00 SA Consumer Price Index y/y 5%
23-Sep 11.30 SA Producer Price Index y/y

3%

23-Sep 15:00 SA SARB rates decison -
23-Sep 03:45 CNY Caixin flash manufacturing PMI 47.3
23-Sep 09:00 EUR French flash manufacturing PMI 48.3
23-Sep 09:30 EUR German flash manufacturing PMI 48.3
23-Sep 15:00 EUR ECB President Draghi speaks -
23-Sep 10:00 EUR German ifo business climate 108.3
24-Sep 11:15 EUR Targeted LTRO 73.8B
24-Sep 14:30 USD Core durable goods orders m/m 0.40%
24-Sep TBC USD Umemployment claims 264K
24-Sep 11:00 USD Fed Chair Yellen speaks -
25-Sep 14:30 USD Final GDP q/q 3.70%

Source:  Economic Calendar, as of 18/09/2015

 

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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 18/09/2015

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