23 - 27 November 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
The share price of the Mr Price Group saw investor descent following a miss on expectations in the company’s interim results released on Wednesday. The group saw a 9.2% increase in total revenue while diluted headline earnings per share grew by 16.6%. The interim dividend was increased by 17.3% to 406.8c per share. Five of Mr Price’s six divisions managed to achieve double digit growth and the group has now managed to increase operating profit in twenty-nine consecutive reporting periods. The selloff in the company’s share price, despite the robust set of results reported, highlights the high level of expectations set for the group which has been priced for growth.
Financial counters have performed well to find dominance in terms of presence in the gainers list for the week. The sector does appear to offer a relative price to earnings value in current market conditions in which industrial counters trade at a premium to historical valuation means and uncertainty continues to plague the commodity space.
Investec Ltd results revealed operating profit to have increased 16.1% to £279.4 million while adjusted earnings per share increased 13.2% from 19.7 pence to 22.3 pence. The following salient features were highlighted by the group:
Tiger Brands results for the year ending September 2015 were met with approval as investors praised a strong domestic performance and definitive action on the group’s Nigerian operations. Group turnover increased by 5% to R31,6 billion, underpinned by 1% volume growth and pricing inflation of 4%.
Operating income of R3,7 billion was up 3% on the prior year after accounting for a R29 million IFRS 2 share option charge and foreign exchange losses of R134 million in Tiger Branded Consumer Goods Plc (TBCG, formerly Dangote Flour Mills). Profit before tax decreased by 20% to R2,1 billion (2014: R2,7 billion) after accounting for net financing costs of R397 million, income from associate companies of R603 million and abnormal charges of R1,7 billion, the bulk of which relates to the impairment of the group’s investment in TBCG. This impairment fully covers Tiger Brands’ residual exposure in respect of TBCG.
|23-Nov||Reunert||FY 2015 results||n/a|
|23-Nov||Netcare Ltd||Full year 2015 preliminary results||n/a|
|23-Nov||Redefine Properties Ltd||Ex-Dividend||R0.41|
|23-Nov||Reunert||Full year 2015 results||n/a|
|24-Nov||Omnia Holdings||Interim 2016 results||n/a|
|24-Nov||Pioneer Foods||Full year 2015 results||n/a|
|26-Nov||Nampak||Full year 2015 results||n/a|
Source: Economic Calendar, as of 20/11/2015
In a surprise conclusion to this quarters Monetary Policy Committee (MPC) meeting, Reserve Bank Governor, Mr Lesetja Kganyago announced a 25basis point increase to the repo rate. The increase in lending rates (repo now 6.25% and prime now 9.75%) follows concerns over a depreciating rand, higher electricity tariffs and the current drought being experienced in South Africa. The rate hike comes despite the expectations for economic growth having been revised lower once again. Gross Domestic Product (GDP) growth is expected to be 1.4% in 2015 and 1.5% in 2016. Inflation is expected to test the outer limits of the reserve bank’s targeted band at 6% in 2016.
A relatively quiet week in terms of economic data saw markets finding catalysts from European Central bank (ECB), the Federal Reserve Bank and the Peoples Bank of China (PBOC).
ECB President Mr Mario Draghi reaffirmed to markets, the central bank’s “readiness to act” in terms of stimulating a sluggish Euro-area economy, furthering expectations that additional quantitative easing is likely at December’s monetary policy meeting.
In the U.S., minutes from last month’s FOMC meeting showed policy makers were gaining confidence in majority that economic conditions were improving sufficiently to support the case for a rate hike in December. The meeting from which the minutes were produced predate the much-improved jobs numbers released at the beginning of this month. The strong jobs data would further support the base case for the December rate hike’s probability.
The PBOC lowered the standard lending facility rate for loans, in an attempt to support the Chinese economy, by injecting further liquidity into the banking system.
The week ahead
The new week will reveal our domestic GDP data for the third quarter. Markets will be hoping to see a return to growth over the period from what was a 1.3% contraction in the second quarter, as two consecutive quarters of economic contraction would suggest a technical recession in our local economy.
The new week will also see the second revisions of Q3 GDP data in the U.S. on Tuesday and the U.K. on Friday.
|23-Nov||10:00||EUR||Flash manufacturing PMI||50.6|
|23-Nov||10:30||EUR||German Flash manufacturing PMI||52.1|
|24-Nov||11:00||EUR||German IFO business climate||108.2|
|24-Nov||11:30||SA||Q3 GDP q/q||-1.30%|
|24-Nov||15:30||USD||Prelim GDP q/q||1.50%|
|24-Nov||17:00||USD||CB consumer confidence||97.6|
|25-Nov||15:30||USD||Core durable goods orders m/m||-0.30%|
|27-Nov||11:30||GDP||Second estimate GDP q/q||0.50%|
Source: Economic Calendar, as of 20/11/2015
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Source: iNet BFA, as of 20/11/2015