South African Market Overview 21 February 2022

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

 

Local Market Update

  • Local stocks traded higher on Friday, with the All-Share index up 0.28%, while the blue-chip Top 40 index ended the day up 0.35%. On an individual stock basis, Harmony Gold and Gold Fields led the blue-chip index along with other mining companies, gaining 7.53% and 5.85%, respectively, as investors turned to gold stocks amid tensions between Russia and Ukraine that continue to dominate headlines.

     

     

  • The rand initially gained on Friday, heading for a weekly gain of more than 1% against the U.S. dollar, as the standoff between the West and Russia over Ukraine boosted appetite for gold, a key export. However, the rand was trading R15.12 weaker against the dollar, or 0.83%, at the close of trade. According to a Reuters poll, the South African Reserve Bank is expected to raise its key interest rate by another 25 basis points next month, continuing its cycle of rate hikes.

     

     

  • Gold prices fell from a more than eight-month high reached earlier today as safe-haven demand eased after the U.S. president agreed to meet his Russian counterpart over the Ukraine crisis. Oil prices rose more than $1 in early trading today as nervousness grew over a possible conflict between Russia and Ukraine. The United States and the European Union made it clear that Russia would face sanctions if it invaded its neighbouring country.

 

In Local News

 

MTN GROUP LIMITED – Trading Statement

Shareholders are advised that MTN expects earnings per share (EPS) to decline between 15% and 25% (or 142 cents to 237 cents). Considering the EPS of 946 cents for the corresponding fiscal year ended December 31, 2020, this results in a range of 710 cents to 804 cents for the fiscal year ended December 31, 2021. The EPS includes impairment charges totaling approx. 64 cents (2020: 61 cents) mainly relating to MTN Yemen, largely non-cash losses from the deconsolidation of the subsidiary MTN Syria totaling approximately 262 cents (2020: 0 cents), fair value gains on acquisition or disposal totaling 99 cents (2020: 341 cents gain on disposal of ATC Uganda and ATC Ghana Tower joint ventures).

 

HARMONY GOLD MINING COMPANY LIMITED – trading statement and operational update.

Harmony shareholders are cautioned that it is reasonably certain that H1FY22 earnings will be 68-72% lower than H1FY21. This is primarily due to a one-time bargain purchase gain recognised for the acquisition of the assets and liabilities of the Mponeng operation and related assets in H1FY21; lower gross profit due to higher production costs offsetting the increase in production and revenue; a translation loss on U.S. dollar-denominated debt as of 31 December 2021 (compared to a gain at December 31, 2020); and a loss on derivatives recognised in H1FY22 compared to a gain in H1FY21. The decrease in profit was partially offset by a decrease in tax expense due to changes in the utilisation of unamortized capital allowances and assessed losses compared to the prior period.