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Local Market Update
– Local stocks rose yesterday, rebounding alongside commodity prices after the previous day’s heavy
selling. The Johannesburg Stock Exchange’s Top-40 Index climbed 1.5% to 56,086 points and the
broader All-Share Index was up by almost the same amount to 62,362 points. Among the biggest
gainers of the day on the blue-chip index were petrochemicals producer Sasol and gold miner
AngloGold Ashanti, both up around 4.5%.
– The rand fell to more than three-week lows on Tuesday, hurt by subdued risk appetite and after
ratings agency Fitch said Africa’s most industrialised economy will continue to face challenges as it
seeks to stabilise debt. At the close, the rand was trading around R14.84 to the dollar or 0.35%
– Gold prices were flat this morning amid rising uncertainties triggered by China Evergrande’s debt
crisis and anticipation of policy cues from the U.S. Federal Reserve on its timeline for reducing
stimulus for the world’s largest economy. Oil prices rose around 1% earlier today, extending
overnight gains, after industry data showed U.S. crude stocks fell more than expected last week in
the wake of two hurricanes, highlighting tight supply as demand improves.
In Local news
Authorities greenlight Burger King sale
The competition authorities have finally approved Grand Foods Investments and Grand Foods
Proprietary’s sale of their shares in Burger King South Africa (BKSA) and Grand Foods Meat Plant to
Emerging Capital Partners (ECP) Africa Fund. The sale, approved on September 17, came with a list
of conditions aimed at boosting South Africa’s economy. The sale was announced in a Sens
statement released by parent company Grand Parade Investments (GPI) on Tuesday morning
FSCA’s warning on Binance is the latest salvo against crypto operators
Earlier this month the Financial Sector Conduct Authority (FSCA) warned the public to be cautious
in dealing with Binance, the world’s largest crypto exchange. This follows similar warnings in the
UK, Japan and Canada. Head of enforcement at the FSCA, Brandon Topham, says Binance has
engaged with the FSCA with a view to addressing the concerns raised by the regulator, though the
warning still stands. The notice says the FSCA received information that Binance Group, situated in
Seychelles (which Binance disputes*) has a Telegram group that South Africans can join to gain
access to the crypto exchange.
International Market Update
– European stocks closed higher on Tuesday, bouncing back from heightened investor nerves over a
Chinese property developer and ahead of a two-day meeting of the U.S. Federal Reserve. The panEuropean Stoxx 600 index closed up 1%, led by travel and leisure stocks which climbed 3.2%, as
most sectors and major bourses entered positive territory. Oil and gas stocks rose 1.4% amid
consumer and business worries over a shortage of natural gas in the region.
– U.S. stocks on Tuesday fought to rebound from Monday’s rout, but failed as the Dow Jones
Industrial average trended lower for most of the session and closed in the red. Investors are
looking for more information from Fed Chairman Jerome Powell on Wednesday about the central
bank’s plans to taper its bond buying, specifically when that will happen. Powell said last month
that he sees the Fed slowing its $120 billion in monthly purchases at some point this year.
– Markets in mainland China fell more than 1% on today’s open before bouncing back slightly amid
the ongoing Evergrande crisis, as markets reopened for trade after a two-day holiday. With global
markets selling off earlier this week, investors will be keeping a close watch on the China markets
for any fallout surrounding the embattled developer.
In International news
Stitch Fix shares surge as online styling service reports surprise profit
Sales for the three-month period ended July 31 also came in higher than analysts were expecting,
thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing
more slowly, the company said. Net income attributable to shareholders was $28 million, or 19
cents per share, in the latest period. A year ago, it posted a net loss of $44.5 million, or 44 cents a
share. Analysts had been looking for the company to book a loss of 13 cents per share. Revenue
grew to $571.2 million from $443.4 million a year earlier. That was better than analysts’
expectations for $548 million.
DraftKings makes $20 billion offer for UK sports betting company Entain
The offer is largely in DraftKings stock, along with cash, according to the sources. Entain shares
jumped about 18% in London trading Tuesday. DraftKings shares closed 7.4% lower Tuesday after
the news. On Monday, before news of the deal, the enterprise value of Entain was about £13.2
billion, or $18 billion. In a filing with the London Stock Exchange, Entain’s board confirmed that it
received a proposal from DraftKings, which would include a combination of stock and cash.