South African Market Overview 11 November 2021

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

 

Local Market Update

  • The Johannesburg Stock Exchange traded higher yesterday, with the Top 40 index closing 0.48% higher and the broader All-Share Index up 0.44%. The commodities sector continued to provide the biggest boost to the overall market as the commodities index gained 1.97%. Investors were also cautious ahead of South Africa’s medium-term budget due today. Economists polled by Reuters expect the Treasury to announce that the consolidated budget deficit will roughly halve this year due to healthy corporate tax revenues.
  • The rand was weaker yesterday, a day after state-owned power utility Eskom painted a gloomy picture of the outlook for the country’s electricity supply. At the close, the rand was trading R15.44 to the dollar, or 2.59% weaker. Eskom, which is currently carrying out scheduled power cuts due to several faults in its coal fleet, said on Tuesday that the risk of blackouts would remain until a further 4,000 to 6,000 megawatts of capacity was added to the grid.
  • Gold prices were unchanged this morning after a rise in U.S. consumer prices pushed the metal, considered a hedge against inflation, to a five-month high in the previous session. Oil prices were steady this morning after falling in the previous session. This was due to fears that rising inflation in the United States, fueled by rising energy costs, could prompt the government to release more strategic crude oil stocks to bring prices down.

 

In Local News

 

Vodacom to buy Egypt unit from parent company for R40.86bn.

Vodacom has agreed to buy a majority stake in Vodafone Egypt from its UK parent for $2.7 billion. (R40.86 billion), expanding the South African operator’s operations into the north of the continent. The Johannesburg-based company, which is more than 60% owned by Vodafone Group, will issue new shares to cover 80% of the cost of acquiring the Egyptian market leader, with the balance to be paid in cash, it announced on Wednesday. The acquisition will allow Vodacom to expand beyond its key markets and pose a greater challenge to arch-rival MTN, the continent’s largest operator. The Egyptian market is particularly attractive because most of its 100 million inhabitants do not use traditional banks, which will allow Vodacom to launch its lucrative mobile money services.

GEPF investment portfolio grows by 27.5%

The Government Employees Pension Fund (GEPF) has reached a significant milestone on the 25th anniversary of its inception, with the fund’s investment portfolio now worth over R2 trillion. This is according to the GEPF’s latest financial results for the year ended 31 March 2021, which were released on Monday. This shows that the fund’s investment portfolio increased by 27.5% or R451 billion for the FY2021. The fund’s market value increased to R2.09 trillion in 2021 from R1.59 trillion in 2020, “despite turbulent and unpredictable market conditions during the financial year”. The market value of investments increased by 27.5% (2020: decreased by 11.4%). Net investment income amounted to R483,8 billion (2020: R179,7 billion loss). Membership fees amounted to R82 billion (2020: R80 billion), and benefits paid totalled R110.6 billion (2020: R111 billion).