South African Market Overview 19 November 2021

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

 

Local Market Update

  • Johannesburg-listed stocks slipped yesterday, with the All-Share Index closing down 0.11% at 70,867 points. Financial services provider Investec was an outlier, rising 1.9% after reporting a more than two-fold rise in profits and announcing it would distribute a 15% stake in asset manager NinetyOne to shareholders. South Africa’s central bank raised its benchmark interest rate by 25 basis points to 3.75%, which would normally support the rand, but some traders focused on the gradual rate path that the Monetary Policy Committee seemed to prefer.
  • The rand fell on Thursday due to contagion from the sharp fall in the Turkish lira and signals from the domestic central bank that rate hikes are likely to be slower than markets have priced in. At the close of trading, the rand was trading 0.97% weaker at R15.65 to the dollar.
  • Oil prices steadied early today as investors paused for breath after a day of wild swings triggered by the prospect of coordinated action by the world’s major economies to release official crude oil reserves from inventory. The Biden administration’s push for a coordinated release of oil stocks was seen as a signal to the OPEC + production group to ramp up output to counter concerns about high fuel prices in the world’s largest economies, starting with the United States, China and Japan. Gold prices edged higher today but fell for the first time in three weeks as rising inflation fuels bets of faster rate hikes and hurts gold’s appeal.

 

In Local News

Investec confident of further recovery

A couple of weeks ago, Investec “warned” shareholders that interim results for the six months to September 2021 would be much better than those for the troubled first half of the last financial year. Despite the advance notice, the 31% increase in revenue and 135% increase in earnings per share still looked pretty good when management reported the actual results. Investec Ltd reported an 87% rise in bank profits, from £93 million to £173 million. At SA, expected credit losses fell to just £4 million (a provision of about 4%), compared with £24 million (35%) in the first half of the previous financial year. In the UK, loan loss provisions fell 88% year-on-year as bad debts were lower than previously expected.

 

Strong performance from Life Healthcare thanks to return of non-Covid 19 patients

Shares in Life Healthcare Group on the JSE closed in the green on Thursday, rising 2.7% to R23.76 after the company proved resilient in its annual results to the end of September 2021. The company reported a 128% jump in profits and a rise in group revenue despite struggling with the Covid 19 pandemic for two years. The hospital operator reported a 12.7% increase in group revenue from continuing operations to R26.8 billion (2020: R23.8 billion). Earnings per share (Heps) rose 128% to 111.1 cents (2020: 48.7 cents). Profit after tax was R1.85 billion – an increase of only R38 million in 2020, but still a far cry from the pre-pandemic level of R2.87 billion in 2019. Life Healthcare has also decided to resume its dividend payout of 25 cents per share.