23 - 27 March 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
Resource counters have been given a moment of relief following dovish comments from Federal Reserve Chairperson Janet Yellen in the U.S. at the Federal Open Market Committee (FOMC) meeting on Wednesday. The meeting resulted in the expectation of rising rates out of the U.S. being pushed to a later date and in turn, we have witnessed dollar weakness and a rebound in commodity prices.
Assore Ltd, which has been a top decliner over the last few weeks, rallied more than 27% on Thursday, in its first opportunity to react to the FOMC news, as short covering in the iron ore producer exaggerated gains on the day.
AngloGold Ashanti gains followed a more than $30/oz. rebound in the underlying precious metals price. Standard Bank and Barclays Africa Group have continued recent gains, as the sector remains one in favour and the shares trade at a relative discount to the market at present.
Tiger Brands sharp decline (more than 5%) remains uncertain, in terms of what the catalyst was to trigger the bearish move. The share now trades at its worst level since October 2014 and more than 20% off the highs realised in February this year.
Discovery’s decline follows the company going both ex-dividend and ex-rights on Monday. The company paid out a dividend of R0.97 and the rights issue will dilute the issued shares by an additional 9.387 shares per 100.
|23-Mar||Argent Industrial Ltd||Ex-Dividend||R 0.08|
|23-Mar||FirstRand Ltd||Ex-Dividend||R 0.93|
|23-Mar||Growthpoint Properties Ltd||Ex-Dividend||
|23-Mar||Imperial Holdings Ltd||Ex-Dividend||R 3.50|
|23-Mar||MMI Holdings Ltd||Ex-Dividend||R 0.63|
|23-Mar||Merafe Resources Ltd||Ex-Dividend||R 0.01|
|23-Mar||RMB Holdings Ltd||Ex-Dividend||R 1.22|
|23-Mar||RMI Holdings Ltd||Ex-Dividend||R 0.52|
|23-Mar||Sabvest Ltd||Ex-Dividend||R 0.25|
|23-Mar||Santam Ltd||Ex-Dividend||R 4.80|
|23-Mar||Sun International Ltd||Ex-Dividend||R 1.10|
|27-Mar||Grindrod Ltd||FY results||N/A|
|27-Mar||Nedbank Group Ltd||Ex-Dividend||R 5.68|
|27-Mar||AVI Ltd||Ex-Dividend||R 2.00|
|27-Mar||AVI Ltd||Ex-Dividend||R 1.32|
|27-Mar||AECI Ltd||Ex-Dividend||R 2.25|
|27-Mar||Sasfin Holdings Ltd||Ex-Dividend||R 3.84|
Source: Economic Calendar, as of 20/03/2015
Local economic data has been mixed over the last week, as trade sales data released was lackluster, although inflation data improved and the current account deficit unexpectedly narrowed.
The headline CPI (for all urban areas) annual inflation rate in February 2015 was 3.9%, which was 0.5% lower than January’s figure of 4.4%.
Measured in real terms (constant 2012 prices), retail trade sales increased by 1.7% year-on-year in January 2015, with the highest annual growth rates being recorded for retailers in:
Wholesale trade sales (at constant 2012 prices) decreased by 7.0% year-on-year in January 2015. Seasonally adjusted wholesale trade sales decreased by 4.0% in the three months ended January 2015 compared with the previous three months.
Motor trade sales decreased by 2.3% year-on-year in January 2015. Negative annual growth rates were recorded for fuel sales (-10.7%), workshop income (-1.9%) and new vehicle sales (-1.2%).
South Africa’s current account deficit unexpectedly narrowed to 5.1% of Gross Domestic Product (GDP) in the fourth quarter of 2014 from 5.8% (revised) in the third quarter. On a year-on-year basis, the deficit on the current account was narrower at 5.4 percent of GDP in 2014, compared to 5.8 percent in 2013. Increased exports of platinum group metals, as well as coal and iron ore, were the main contributors to the uptick in exports volumes, while electricity constraints saw a decline in the export of copper and aluminium.
All eyes were on the Federal Open Market Committee (FOMC) meeting and funds rate announcement on Wednesday. Federal Chairperson, Janet Yellen’s address kept the outlook for when rates will start to rise in the world’s largest economy uncertain, but provided enough in the way of dovish sentiment to see recent strength in dollar start to unwind.
Ms Yellen guided that she awaits further improvement in the jobs data (Fed’s primary indication of economic health) as well as inflation of 2% to be realised before the Federal Reserve will consider committing to raising rates in the U.S. It would appear now that sentiment has shifted to the third quarter before we will see the further commencement of monetary tightening.
The week ahead
The new week will see the South African Reserve Bank (SARB) convene for this quarter’s Monetary Policy Committee meeting. While inflation has been recorded at multi-year lows and economic growth remains subdued it would appear unlikely that we will see any changes to current lending rates.
U.S. data in the form of inflation (CPI), core durable goods orders, retail sales and final GDP will find increased relevance in line with the market looking for further clues as to how soon rates will start to rise in the region. In an ironic turn, poor data releases may find favourable moves in equity markets as it support the longevity of easy monetary policy.
|24-Mar||15:45||CNY||HSBC Flash manufacturing PMI||50.7|
|24-Mar||14:30||US||Core CPI m/m||0.20%|
|25-Mar||11:00||EU||German IFO business climate||106.8|
|25-Mar||14:30||US||Core durables goods orders m/m||0%|
|26-Mar||11:30||UK||Retail sales m/m||-0.30%|
|26-Mar||14:30||US||Weekly unemployment claims||-|
|26-Mar||15:00||SA||SARB rates decision||unchanged|
|27-Mar||14:30||US||Final GDP q/q||2.20%|
Source: Economic Calendar, as of 20/03/2015
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Source: INET BFA, as of 20/03/2015