In todays taking stock, we look at how Oil jumped to its highest level in nearly three years on stalled OPEC talks.
6 reading min
06 Jul 2021
SOUTH AFRICAN MARKET COMMENTARY
The Johannesburg Stock Exchange's Top-40 Index fell 0.35% to 60,082 points and the broader All-Share Index dropped 0.24% to 66,167. Media and e-commerce group Naspers and its subsidiary Prosus, lost around 6% after ride-hailing firm Didi Global and a number of other newly US-listed Chinese firms found themselves the subject of cybersecurity investigations in China. Shares in retailer Steinhoff dropped over 16% after a South African court ruling, issued on Friday, that threatens its plan to resolve hefty legal claims related to an accounting scandal via a settlement process.
EUROPEAN MARKET COMMENTARY
European stocks closed higher on Monday, with investors digesting new data which showed euro zone business activity surging in June. The pan-European Stoxx 600 closed up around 0.3% provisionally, having fluctuated either side of the flatline earlier in the day. Banks jumped 1.8% to lead the gains, while health care stocks slipped 0.4%. June’s final euro zone purchasing managers’ index showed business activity expanding at its sharpest rate for 15 years as Covid-19 restrictions were unwound across the continent.
US MARKET COMMENTARY
US markets were closed yesterday for a public holiday.
ASIAN MARKET COMMENTARY
Shares in major Asia-Pacific markets struggled for direction in Tuesday morning trade as investors look ahead to the Australian central bank’s interest rate decision. Mainland Chinese stocks, on the other hand, declined. The Shanghai composite slipped 0.27%. Meanwhile, stocks in Australia climbed as the S&P/ASX 200 advanced 0.18%. MSCI’s broadest index of Asia-Pacific shares outside Japan traded around the flatline.
CURRENCY MARKET COMMENTARY
The rand steadied on Monday as a dollar rally stalled when details of last week's US jobs report soothed jitters about a faster end to monetary stimulus in the United States. At the close, the rand was 0.13 weaker as it traded around R14.26 versus the dollar. Analysts said the data from the US showed the US economy was on a strong footing but with no expected major spike in inflation. This allayed fears that the Federal Reserve might raise interest rates earlier than expected.
COMMODITIES MARKET COMMENTARY
Gold prices were hovering close to a two-week high on Tuesday, helped by a subdued dollar, while investors awaited minutes from the US Federal Reserve’s June policy meeting for more clarity on monetary policy going forward. Oil jumped to its highest level in nearly three years on Monday after talks between OPEC and its oil-producing allies were postponed indefinitely, with the group failing to reach an agreement on production policy for August and beyond.
Sun International (SUI) +2.7%
JSE-listed gaming and hospitality group Sun International announced on Monday that it has appointed Sam Sithole as its new non-executive chairman. Sithole’s appointment became effective on Friday, July 2. He replaces Jabu Mabuza who recently passed away suddenly from Covid-19. Sun International said Sithole brings a wealth of experience to the role, having been a member of its board since 2018, in addition to his other corporate roles. Commenting on the appointment, Sun International CEO Anthony Leeming said: “Sam Sithole’s history with the company has given him valuable knowledge and insight, and his more than 20 years of experience in finance and investment will serve us well. The board and management of Sun International congratulate Sam on his new appointment and welcome him as chairman.” Sithole is also a director of several JSE-listed companies including technology giant Altron, workplace solutions provider Adcorp and Metair Investments.
Divercity property fund
CDC Group, the UK’s development finance institution and one of the largest impact investors in Africa, has committed $36 million (R500 million) to Johannesburg-based Divercity Urban Property Fund for the development of 2 500 new affordable residential units over the next five years. The new residential units will be built predominantly in Johannesburg, with the project expected to create between 2 000 and 4 000 construction and permanent operational jobs. Carel Kleynhans, CEO of Divercity, an affordable housing platform focused on the regeneration of South African cities, on Monday expressed confidence that CDC will add significant value to the funds’ goal of changing the face of affordable rental housing in South Africa and establish it as an investment grade asset class. “The business is now adequately capitalised to deliver another 2 500 units, which we intend to commit to and announce this year still. That money will largely be spent by the end of this year.” Kleynhans confirmed that a further R180 million has been committed by Divercity’s existing shareholders, which include Atterbury Property Fund, Ithemba Group Investment, RMH Property and Nedbank Property Partners. He said the CDC investment coincided with Ithemba Group Investments selling its residential and property manager Ithemba Property to Divercity through an ‘internalisation’ process, resulting in Ithemba increasing its shareholding in Divercity. Futuregrowth Asset Management, which is focused on social development and empowerment investments, has also taken a direct stake in Divercity through an asset-for-share transaction “as part of this funding round” and is now also a shareholder in Divercity. Kleynhans said CDC now has a shareholding of more than 26% in Divercity while Futuregrowth has a stake in excess of 10%. Samir Abhyankar, MD and head of direct private equity at CDC Group, said that with the development financier’s re-entry as an equity investor in South Africa, CDC is proud to have partnered with Atterbury and Ithemba to set up Divercity as a leading affordable and sustainable housing platform in South Africa. “The investment will help promote inclusive growth and enhance social and economic integration in the country … CDC’s patient capital and development expertise can help accelerate growth, improve living conditions and support the livelihoods of low-income and vulnerable households,” he added.
Porsche (PAH3) +0.1%
Porsche and Croatian electric performance car manufacturer Rimac have agreed to create a joint venture that incorporates Volkswagen’s high-performance Bugatti brand, officials announced Monday. The new joint venture — called Bugatti-Rimac — is expected to be established as a hypercar manufacturer (think high-end sport car or supercar but better performance and more exclusive) in the fourth quarter of this year. Rimac will have a 55% stake in the joint venture, while Porsche will hold a 45% stake in the company. Bugatti’s shares will be transferred from Volkswagen, which owns Porsche and Bugatti, to Porsche and then to Rimac, the companies said. Porsche also currently holds a 24% stake in Rimac, up from an initial 10% ownership in 2018. The first vehicles planned from the tie-up are an eight-cylinder, 1,500-horsepower Bugatti called the Chiron and a $2.4 million all-electric hypercar called the Rimac Nevera, which the company says has about 1,900 horsepower and can exceed 250 mph. The vehicles had previously been announced separately by the companies.
06 July 2021
5 reading min
Forex Daily Market - The ZAR treaded water yesterday
In today's market update, the ZAR treaded water yesterday not far from last week’s close, as emerging market currencies were a mixed bag and the US dollar flat amid US holiday-thinned trade, resulting in limited opportunities in FX markets.
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