The Week Ahead

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

 

Shares overview

Source: IG Insight, as of 20/03/2015

Top mover

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.

Top gainers

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. 

Top Decliners

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.

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

Click to view this week's broker consensus

 

 

DATE COMPANY EVENT AMOUNT
23-Mar Argent Industrial Ltd Ex-Dividend R 0.08
23-Mar Cashbuild Ex-Dividend R 3.76
23-Mar FirstRand Ltd Ex-Dividend R 0.93
23-Mar Growthpoint Properties Ltd Ex-Dividend

R 0.84

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

 

Market overview

Local Data

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:

  • Textiles, clothing, footwear and leather goods (8,8%) and
  • Hardware, paint and glass (6,4%)

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.

International Data

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.

Date Time Region Event Previous
24-Mar 15:45 CNY HSBC Flash manufacturing PMI 50.7
24-Mar 11:30 UK CPI y/y 0.30%
24-Mar 14:30 US CPI m/m -0.70%
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 SA PPI m/m -1.10%
26-Mar 11:30 SA PPI y/y 3.50%
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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Broker consensus

Source: INET BFA, as of 20/03/2015

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