South African Market Overview 10 May 2022

Sharing our Daily Market Overview with you, ensuring that you do not miss out on any important market changes!

 

Local Market Update

  • On the local Johannesburg Stock Exchange, the Top 40 index closed yesterday down 1.84% and the All-Share index down 1.78%. State-owned power utility Eskom announced it would initiate “Stage 2” of planned blackouts from 5:00 p.m. local time to 10:00 p.m. Monday, following outages at several coal-fired power plants. Domestic data to be released this week include mining figures for March, which will provide further insight into the state of the economy in the first quarter.
  • The rand fell Monday as the U.S. dollar climbed to a two-decade high and as troubled power utility Eskom resumed planned power cuts. At the close of trading, the rand was trading 1.14% weaker at R16.22 to the dollar. The dollar’s recent rise began after the Federal
    Reserve raised interest rates by 50 basis points last week, weighing on currencies worldwide. A stronger dollar makes higher-yielding but riskier assets like the rand less attractive to investors.
  • Gold prices rose slightly this morning as a drop in U.S. Treasury bond yields countered pressure on the precious metal from the dollar’s continued strength. While gold is considered a safe store of value in times of political and economic crisis, it is very sensitive to rising short-term U.S. interest rates, which increase the opportunity cost of owning gold. Oil prices fell more than 1% today, continuing the previous day’s steep decline, as the coronavirus in China, the main oil importer, a strong dollar and growing recession risks added to concerns about the outlook for global demand.

 

In Local News

 

ANGLOGOLD ASHANTI LIMITED – Q1 2022 Market Update Report

Total cash costs for the three months were $1,041/oz, up 4% year-on-year. This was primarily due to uncontrollable factors, including rising inflation in several input cost categories and higher royalties – due to the higher gold price. Inflationary pressures were partially offset by operational improvements and an 8% increase in underground grades. Free cash flow increased to $268 million from an outflow of $92 million in the first quarter of 2021, ensuring the balance sheet remains flexible during an ongoing period of reinvestment in portfolio improvement. The increase in free cash flow was helped by the receipt of $326 million from the Kibali gold mine in Congo.

TRANSACTION CAPITAL LIMITED – Voluntary Trading Statement

Core profit from continuing operations is a non-IFRS measure that excludes gains/losses, costs and adjustments related to acquisitions and disposals of investments. The core adjustments for the period ended March 31, 2022 relate to transaction costs of R5 million for the acquisition of an additional 25% of WeBuyCars by Transaction Capital Motor Holdco (Pty) Ltd (TCMH) and adjustments relating to the written put option for the non-controlling interest in WeBuyCars (imputed interest charge of R125 million). Management believes that the most appropriate metric to measure performance for the six months ended March 31.
March 2022 is core EPS from continuing operations.