The Week Ahead

26 - 30 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

 

Shares overview

Source: IG Insight, as of 23/01/2015

This week’s movers show a distinct bias to the upside as the blue chip decliners list finds itself nearly bare in terms of participants and losses endured. Better than expected gross domestic product data out of China and European Central Banks (ECB) new round of stimulus programs providing an improved market sentiment and in turn equity market gains.

Top gainers

A short-term rebound in commodity prices has seen local resource counters fare much better in the week gone by than they have in the week’s preceding. Assore Ltd and Impala Platinum have exaggerated commodity price gains this week as they have similarly exaggerated losses in previous weeks. The moves have come in the absence of any market moving company specific news. Impala Platinum subsidiary Zimplats (of which Impala Platinum owns around 87%) has said it expects to conclude a deal in which 10% ownership will be transferred to employees by March as the company commences with the indigenisation process.

Imperial Holdings has experienced strong gains this week as market participants anticipate the recent ECB actions to combat a deflationary environment and stimulate economic growth to be of benefit to the company which has a significant logistics business footprint within Europe. The company also looks set to benefit in global operations from the sharp downturn in the oil price.

Top Decliners

Declines on our local equity exchange have been marginal, with Kumba and SABMiller releasing business updates which have induced a relative market underperformance, while Discovery heads up the list on the back of profit taking after recently moving into new high territory.

Kumba Iron Ore released a trading update on Friday the 23rd of January, in which the company has guided that it expects full-year results to reflect a drop in headline earnings of between 26% and 31%. The weaker results highlight what has been a difficult year as the price of iron ore fell in excess of 40% in 2014, which is the second worst performing commodity (after oil -50% in 2014).

SABMiller plc has guided that group Net Producer Revenue (NPR) increased by 4% in the company’s third financial quarter. NPR growth was achieved in Latin America (+5%), Africa (+7%) and Europe (+3%), while NPR contracted in North America (-1%) and Asia Pacific (-2%).

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

Click to view this week's broker consensus

 

 

DATE COMPANY EVENT AMOUNT
26-Jan Invicta Holdings Rights issue N/A
26-Jan Grand Parade Investments Ex-Dividend R 0.20
26-Jan Invicta Holdings Ex-Dividend R 20.24
26-Jan Netcare Ltd Ex-Dividend R 0.48
26-Jan Pioneer Group Ex-Dividend R1.56
26-Jan Tongaat-Hullet Ltd Ex-Dividend R1.70
27-Jan Apple Inc Q1 results

N/A

29-Jan Facebook Inc Q4 FY results

N/A

29-Jan Alibaba Q4 FY results N/A

 

Market overview

Local Data

It has been a relatively quiet week on the economic front domestically with local inflation data being the most significant.

Consumer Price Index (CPI) data showed annualised inflation in December 2014 to have dropped further into the Reserve Bank’s targeted band (3% to 6%) to 5.3%. The rate improved by half a percentage point from November 2014 (5.8%). On a month-on-month basis, prices decreased by 0.2%. 

International Data

In China, Q4 Gross Domestic Product (GDP) data showed the inflation adjusted value of goods and services produced by the region to have increased by 7.3% over the period. The figure was ahead of consensus estimates which predicted GDP to come in at between 7.1% and 7.2%. Although ahead of expectation, the growth recorded from the second largest economy in the world remained at multi-decade.

The European Central Bank (ECB) meeting was at the forefront of investors’ minds over the week as market participants optimistically awaited news from the central bank relating to a possible new round of economic stimulus. The ECB was not to disappoint as central bank president Mario Draghi unveiled a EUR1.08 trillion total asset purchasing program over the next 18 months to September 2016. The stimulus would be provided in tranches of EUR60 billion a month over the year and a half period.  The Euro has since made good headway in accelerating its depreciation towards parity to the dollar (currently $1.12 per Euro).

The week ahead

The new week will find prominence in terms of economic data from preliminary GDP data out of the U.K. on Tuesday and advance GDP data out of the U.S. on Friday. Europe is not without its catalysts in the new week as markets anticipate the outcome from the Greek Parliamentary Election and the potential implications it may have on the Eurozone.

Thursday will see the South African Reserve Bank convene at this quarter’s monetary policy committee meeting and announce any changes to lending rates as well as providing revised guidance relating to the local economic outlook.

 

DATE TIME REGION EVENT EST. PREV.
25-Jan All day EU Greek Parlimentary Election - -
26-Jan 11:00 EU German IFO Business Climate 106.20 105.50
27-Jan 11:30 UK Preliminary GDP y/y 2.80%

0.70&

27-Jan 15:30 US Core Durable Orders m/m - -0.70%
27-Jan 17:00 US New Home Sales m/m 450000 438000
28-Jan 21:00 US FOMC Statement - -
28-Jan 21:00 US Federal Funds Rate unchanged 0.25%
29-Jan All day EU German Preliminary CPI m/m -0.70% 0.00%
29-Jan 11:30 SA PPI y/y - 6.50%
29-Jan 15:00 SA SARB rates decision -unchanged 5.75%
29-Jan 15:00 US Weekly Unemployment Claims - 307000
30-Jan 12:00 EU CPI Flash Estimate  - -0.20%
30-Jan 15:30 US Advance GDP  3.30% 5%
30-Jan 08:00 SA M3 Money Supply 8% 5%
01-Feb 03:00 SA NBS Manufacturing PMI 50.10 50.10

 

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Broker consensus

Source: INET BFA, as of 23/01/2015

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