Daily Report 17 March 2023

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed flat at the 72 906 level.

Gold Fields and AngloGold Ashanti said that they agreed to merge their Tarkwa and Iduapriem mines in Ghana to create Africa’s biggest gold mine. The deal would see Gold Fields and AngloGold owning 67% and 33% of the joint operation, respectively, excluding the 10% stake the Ghanaian government holds in Tarkwa. The companies said this joint venture would produce an average 900 000 ounces annually over the first five years and 600 000 ounces over its estimated 18-year life of the mine.

Food producer, Libstar reported an 11.8% fall in full-year earnings. Headline earnings per share from continuing operations fell to 65.3 cents from 74 cents a year earlier. Libstar’s year-on-year gross profit margin declined to 20.7% from 22.2% reflecting higher costs in its export-facing divisions and cost inflation in the rest of the portfolio.

In a trading update from Investec, the bank said that earnings per share (EPS)  are expected increase to between 66p and 70p, up from 55.1p. Headline earnings per share are likely to increase to between 65 pence and 69 pence, from 53.3 pence . Investec said it is well capitalised with strong liquidity and was well positioned to continue to support its clients and pursue growth opportunities.

In an operational update from PPC, the company said that they expect cement sales volumes to fall by 4% to 7% year-on-year  in South Africa and Botswana. The cement maker will therefore increase prices in its various markets as it deals with significantly higher input costs, because of the price of energy going up worldwide and power cuts in SA. The average selling price for the full year is expected to increase between 5% and 7%.

Caxton CTP Publishers and Printers Ltd published results for the six months ended 31 December 2022.The company said that profit rose 68.4% to about R405 million and revenue grew strongly by R781.7 million from R3 035.7 million to R3 817.4 million. Caxton declared a dividend of 50 cents per share. The company highlighted that they are facing unprecedented increases in raw material input prices as local and international paper and board mills were oversubscribed and access to supply was limited, combined with increased freight rates.

 

SA Economy:

The Bureau for Economic Research (BER) said that inflation expectations rose in the first quarter. The data showed that average inflation expectations for 2023 increased to 6.3% in the first quarter, from 6.1% in the fourth quarter. The survey was conducted between February and March after Stats SA showed growth in food prices increased at the fastest pace in almost 14 years in January.

The value of recorded building plans passed in larger municipalities fell by 40.4% from a year ago to R5.3 million in January 2023, following an 11.5% dive in the previous month.

 

Global Economy:

The European Central Bank (ECB) increased interest rates by 50 bps to a fresh 14-year high as the inflation rate remains high. Eurozone inflation had slowed to 8.5% in February, below its peak of 10.6% but still way above the 2% target. The ECB now sees inflation averaging 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025.

Investors now look ahead to the US Federal Reserve’s policy decision next week Wednesday, where the Fed is expected to deliver a 25 basis point rate increase.

 

Global Company:

The FTSE 100 closed 0.86% higher at 7 41.

Credit Suisse said that they have secured an emergency loan of $54 billion from the Swiss National bank to support its liquidity.

The Hang Seng Index is higher by 1.67% to 19 522.

The tech sector gained nearly 3.5%, led by a 12% climb in Baidu Inc. after its ChatGPT-like service was granted early approval.

In China, the Shanghai Composite is up 1.28% to 3 268.

The Dow Jones Industrial Average closed 1.15% higher to 32 246, while the S&P 500 was up 1.73% to 3 960.

Market sentiment was lifted after it was reported that US lenders agreed to contribute $30 billion in deposits to First Republic Bank.

The US said that TikTok’s Chinese owners must sell their stakes in the video-sharing app or face a possible U.S. ban of the app, driven by fears that US user data held by the company could be passed on to the Chinese government. The UK, Canada and Australia recently moved to ban the app from government phones.

 

Commodities:

Gold is down 0.4% to $1 919/oz, while Platinum is lower by 2.13% to $947.70/oz.

Brent crude was 1.35% higher at $74.70 a barrel.

 

Currencies:

The rand traded at R18.34 against the US Dollar, R22.29 against British Pound and R19.52 against the Euro.

The Euro is slightly firmer against the US Dollar to trade at $1.0645.