Taking Stock - The Rand Strengthens.

In todays taking stock, we look at how the Rand strengthens to its strongest level against the Dollar Since February, trading below R15.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

South Africa’s economy rebounded strongly in the third quarter as coronavirus restrictions were eased, with mining and manufacturing leading an expansion across all sectors. Statistics South Africa said on Tuesday that gross domestic product expanded by 66.1% in seasonally adjusted, annualised terms in July-September from the second quarter, when the economy shrank by a revised 51.7% as lockdowns stalled activity. Compared with the same period a year earlier, GDP shrank by 6% in the third quarter after a revised 17.5% contraction in Q2. Finally, the benchmark All-Share index traded 0.62% lower, while the Top 40 closed 0.70% down. The All Share is now at 59,159 index points.

 

 

EUROPEAN MARKET COMMENTARY

European stocks closed marginally higher Tuesday afternoon, amid optimism over coronavirus vaccinations and as post-Brexit trade talks between the UK and EU continued to yield little progress. British Prime Minister Boris Johnson is to head to Brussels this week in a last-ditch attempt to secure a Brexit trade deal. In other news, Britain rolled out the Covid-19 vaccine developed by Pfizer and BioNTech on Tuesday, making it the first Western country to start a general coronavirus vaccination program. The pan-European Stoxx 600 index closed up by 0.2%, with a majority of sectors and major bourses in positive territory.

 

US MARKET COMMENTARY

US stocks rose to fresh all-time highs on Tuesday as Pfizer started to roll out its coronavirus vaccine in the UK, lifting hope of the economy recovering in the near future. Pfizer shares rose 3.2% and reached their highest level in about two years. BioNTech, which developed the vaccine alongside Pfizer, saw its stock rise by 1.9%. The Pfizer-BioNTech vaccine rollout came as traders kept an eye on negotiations for additional fiscal stimulus while the U.S. coronavirus caseload continues to rise. Johnson & Johnson and 3M were among the best-performing Dow stocks, rising more than 1% each. Energy led the S&P 500 higher, popping more than 1.5%.

 

 

ASIAN MARKET COMMENTARY

Asian markets traded mostly higher on Wednesday as a coronavirus vaccine rollout commenced in the UK, fuelling some of the optimism among investors. In Australia, the ASX 200 rose 0.75% with most sectors trading higher. Major miners advanced as shares of Rio Tinto rose 0.2% and BHP added 0.92%. Data showed China’s consumer price index fell in November for the first time in about a decade as food prices declined.

 

 

CURRENCY MARKET COMMENTARY

The rand extended gains after better-than-expected GDP data, to trade 1.05% firmer at R14.99 versus the dollar. The local currency was trading around R14.92 to the dollar this morning, or 0.45% firmer. The dollar earned a reprieve from selling pressure this morning as traders paused to weigh risks ahead, ranging from Brexit trade talks in Brussels to Congress’ wrangling over a pandemic relief package and a looming European Central Bank meeting.

 

 

COMMODITIES MARKET COMMENTARY

Gold prices eased this morning as encouraging vaccine developments pushed investors towards riskier equities, although hopes for more US stimulus kept bullion near two-week highs hit in the previous session. The Trump administration on Tuesday proposed a package worth $916 billion including liability protections and state and local government aid, which leading Democrat and Republican lawmakers deemed as progress in the ongoing stimulus talks. Oil prices edged lower today on concerns over an unexpected jump in US oil inventories last week, but positive news on COVID-19 vaccines lifted investors’ hopes for a recovery in fuel demand, capping losses.

LOCAL COMPANIES

Sygnia (SYG) +0.1%

The financial services and asset management group managed to grow assets under management and administration by 5.6% to R251.8Bn, during an extremely volatile year amid the global COVID-19 pandemic. CEO Magda Wierzycka: “This is largely attributable to an ever-expanding brand awareness, strong relative investment performance and the launch of new and innovative funds”. The specialist financial group’s revenue jumped 30.1% to R661 million compared to the R508.1 million in 2019, while headline earnings per share surged 66.6% to 146.4 cents. The group declared a final dividend of 70 cents per share, bringing the total dividend for 2020 to 110 cents versus the 60 cents in the prior year.

 

PPC (PPC) +15.9%

South Africa’s largest cement producer managed to increase revenue slightly to R5Bn for the interim period from R4.94Bn previously, as SA sales rebounded strongly from the COVID-19 related lockdowns. The group said sales fell more than 35% in its first quarter to June, before rising 20-25% in the second quarter of the finance year. CEO Roland van Wijnen: “I think people are taking Covid-19 too lightly. I’m very worried with the festive season is coming up. People need to be very vigilant, wear masks and practise social-distancing. We can’t afford further economic harm”. The industrial group’s headline earnings per share tumbled 40% to 19 cents, however group EBITDA, a measure of operational profitability, increased by 15% to R996 million as the business’s cost cutting efforts are bearing fruits.

INTERNATIONAL COMPANIES

JD Health (6618) +6.6%

JD Health, which specialises in online medical consultation and pharmaceutical sales, made a massive debut on Tuesday as the group closed 56% higher on the day at HK$110. The group a subsidiary of e-commerce giant JD.com, is one of China’s largest pharma retailers, selling to both businesses and consumers, offering a 30-minute delivery service to users. The group projects it will have 100 million users by the end of 2021, after reaching 56.1 million users in the prior year. Revenue rose 76% to 8.8 billion yuan ($1.35 billion) in the first half of 2020, making it the largest internet health-care platform and online pharmacy by revenue in China, according to its prospectus.

 

Stitch Fix (SFIX) +39.2%

Shares in the personal online styling services group surged more than 50% during trading on Tuesday, after the group reported a surprise profit and revenue growth of 10% compared to the prior year. The group uses algorithms and data science to personalize clothing items, accounting for brand preference, size, budget and style, making the group the future personal shopper. The tech group posted earnings of 9 cents per share on revenue of $490.4 million, well ahead of the consensus for a loss of 20 cents per share on revenue of $481.2 million. The personal shopper platform grew active user by 10/2% to 3.8% in the period. “While the apparel industry is currently contracting, we expect to take share and drive higher new client sign-ups as the relevance of our model of personalized discovery and convenience grows,” the company said in a letter to shareholders.

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Media, Sasfin Wealth

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