Daily Market Overview 11 October 2021

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Local Market Update

– Local stocks ended in the green due to a stellar performance from precious metal miners and after Britain said it would scrap tough COVID-19 quarantine requirements for 47 destinations including South Africa. The Johannesburg Stock Exchange’s All-Share index rose 0.13% to 65,242 points, while the Top-40 index climbed 0.2% to 58,839 points. The resources index jumped 2.66%, led by Northam Platinum up 14.07% and Sibanye Stillwater up 9.60%, as gold, platinum, silver and palladium miners tracked a rise in prices of those metals. The travel and leisure index climbed 1.17% as City Lodge Hotels, Tsogo Sun Hotels, Tsogo Sun Gaming and Sun International rose between 0.56% and 2.98%.

– The rand was little changed against the dollar on Friday, as markets bet a lacklustre U.S. jobs report would not prevent the Federal Reserve from starting to taper its asset purchases as early as November. At the close of the session, the rand was trading around R14.93 to the dollar, 0.23% firmer.

– Gold prices were flat this morning as the bullion was caught between a dip in the dollar and fears that the U.S. Federal Reserve would start paring stimulus this year despite weak jobs data. Oil prices rose earlier, extending multiweek gains, amid supply restraint from major producers and growing demand for fuels as economies try to recover from the coronavirus pandemic. Prices have risen as more vaccinated populations are brought out of lockdowns and fuel economic activity, with Brent advancing for five weeks and U.S. crude for seven.

In Local news

PSG Konsult keeps growing
Financial planning and asset management firm PSG Konsult reported that headline earnings increased by 23% in the six months to end-August 2021 compared with the first half of the previous financial year. More importantly, management points out that earnings per share (EPS)
were 30% higher compared with 2019, before Covid-19 struck. Thus, PSG Konsult maintained its decades-long record of growing EPS at between 15% and 20% per annum. Chief executive Francois Gouws says all three operating divisions – PSG Wealth, PSG Asset Management and PSG
Insure – achieved growth in revenue and earnings despite the difficult operating environment during the period.

Sanral’s total liabilities top R140bn
The South African National Roads Agency (Sanral) has published its latest integrated annual report (totalling 368 pages) for the year ended March 31, 2021, which shows that its total liabilities are a gargantuan R140.4 billion (2020: R130.6 billion). Sanral is not only facing mounting objections to the paying of tolls, but is also facing mounting liabilities. Cabinet has been tasked with making a
decision on the future of the e-tolls scheme in Gauteng. One would think that the major liability would be debt, sitting at R45.9 billion (2020: R47.8 billion). But no, there is a liability referred to as ‘deferred income’, which at the end of the financial year is R79 billion (2020: R68 billion), representing 56.3% of total liabilities (2020: 52.1%).

International Market Update

– European markets closed lower on Friday afternoon following a roller-coaster week for global stocks, as investors digested a dire U.S. jobs report. The pan-European Stoxx 600 ended down 0.2%, with autos gaining 1.2% while tech slid 1.3% to lead losses. In corporate news, Stellantis is reportedly mulling splitting off two of its Opel plants in Germany, one of which is temporarily closing next week due to the global semiconductor shortage. On the data front, Germany’s trade balance for August came in at positive 13 billion euros (positive $15 billion) on a seasonally adjusted basis, slightly below a forecast of 15.8 billion euros.

– The Dow was little changed on Friday, notching a winning week as optimism about a short-term debt ceiling deal trumped a disappointing jobs report. There was something for both bears and bulls in Friday’s jobs report, which explains the gyrations in stocks following the release. The headline number was a major disappointment as the economy added just 194,000 jobs in September, the Labor Department reported. That was well below the Dow Jones estimate of 500,000.

– Shares in Asia-Pacific were mostly higher in early morning trade as stocks in Hong Kong led gains regionally. Shares of Meituan in Hong Kong surged more than 7%. China’s market regulator on Friday said it had fined the company about 3.4 billion Chinese yuan ($527.71 million) after finding it guilty of monopolistic practices.

In International news

Southwest Airlines cancels 1,800 flights, blaming weather and staffing
Southwest Airlines cancelled more than 1,800 flights this weekend, disrupting the travel plans of thousands of customers and stranding flight crews — the airline blamed the meltdown on a combination of bad weather, air traffic control and its own shortage of available staff. The airline said initial problems on bad weather and an “FAA-imposed air traffic management program” were to blame. Other airlines cancelled relatively few flights. Southwest did not comment on the disparity.

Elon Musk’s SpaceX hits $100 billion valuation after secondary share sale
The valuation of Elon Musk’s SpaceX crossed $100 billion following a share sale by existing investors announced this week, CNBC has learned. SpaceX has an agreement with new and existing investors to sell up to $755 million in stock from insiders at $560 a share, according to multiple people familiar with the deal — increasing the company’s valuation to $100.3 billion. The company did not raise new capital at this time, sources said, with the purchase offer representing a secondary sale of existing shares. The new share price is an increase of 33% from SpaceX’s last valuation of $74 billion at $419.99 a share in February, when the company raised nearly $1.2
billion.