Taking stock - SA Manufacturing Output Fell 3.4%.

In todays taking stock, we look at how SA Manufacturing Output Fell 3.4% year-on-year in October While Mining Output Dropped 6.3%.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

Local stocks were stable yesterday, despite a 3.1% drop in the banking sector weighing on gains. The benchmark All-Share index dipped 0.02% (at 59,282 index points) while the Top 40 index closed 0.03% lower. MTN group fell 3.5% after Nigeria directed all telecommunications firms to stop selling SIM cards while it audits rule compliance. Gold stocks firmed 3.41% as the rand weakened, with Harmony Gold closing up 2.26%. South African gold miners benefit from a weaker currency, as their revenues are often in dollars while costs are in rand.

 

 

EUROPEAN MARKET COMMENTARY

European stocks closed lower Thursday as investors tracked the parlous state of Brexit trade talks, as well as fresh stimulus measures from the European Central Bank (ECB). UK and European officials vowed to make a formal decision on the future of post-Brexit trade talks by the end of the weekend. Meanwhile, the European Central Bank on Thursday expanded its massive monetary stimulus program by another 500 billion euros ($605 billion), taking its total value to 1.85 trillion euros. The ECB held interest rates steady.

 

 

US MARKET COMMENTARY

US stocks closed little changed on Thursday as lawmakers struggled to push through new fiscal stimulus before year-end. Sentiment was also dampened by the release of weaker-than-expected jobless claims data. House Speaker Nancy Pelosi told reporters Thursday that bipartisan negotiations were leading to “great progress” for an additional government aid package. However, Pelosi added that both sides were still debating over a liability waiver for businesses. Finally, initial weekly jobless claims jumped to 853,000 last week, topping a Dow Jones estimate of 730,000.

 

 

ASIAN MARKET COMMENTARY

Asian markets traded mixed this morning as investors kept an eye on negotiations over additional fiscal stimulus in the US. South Korea’s Kospi index rose 1.21% as government data showed the country’s exports in the first 10 days of December, jumped 26.9% from a year ago thanks to a sales boost in major products such as semiconductors. Australia’s benchmark ASX 200 fell 0.26%, with most sectors trading in the red. The heavily-weighted financials subindex declined 0.37% as three of the country’s so-called Big Four banks struggled for gains.

 

CURRENCY MARKET COMMENTARY

The rand touched its best level since mid-February this week as global risk appetite lifted demand for the currency. But data showing manufacturing output fell 3.4% year-on-year in October while mining output dropped 6.3% tempered investors' enthusiasm. At the close, the rand traded at R15.02 versus the dollar, 0.34% weaker than its previous close. The local currency was trading around R15.01 to the greenback this morning.

 

 

COMMODITIES MARKET COMMENTARY

Gold prices edged higher on Friday, as rising coronavirus cases and dour US jobs data cast doubts over a swift economic recovery, offsetting the pressure from delayed US fiscal stimulus talks. Oil rose around 1% this morning, extending a sharp rally overnight that saw Brent rise above $50 for the first time since March, as coronavirus vaccination rollouts kept hopes alive that demand for crude would build up next year. That leaves prices set for a sixth consecutive week of gains.

LOCAL COMPANIES

Delta Property (DLT) -31.7%

The JSE-listed property group exposed another accounting scandal, after the group’s new management launched a forensic investigation into former executives, and found instances of unsubstantiated payments, procurement irregularities and other unethical business dealings totalling some R46 million. The landlord’s share price tumbled more than 31% on Thursday, as the group also announced the delay of its interim results for the period end-August, as it warned the valuation of its investment property for the 2020 year, could decline by R1.9Bn due to the findings in the investigation. “While the Forensic Report is confidential and subject to legal privilege, and without waiving this legal privilege, the board confirms that the Forensic Investigation has found evidence of past practices involving governance failings and wrongdoing at the company, including unsubstantiated payments, procurement irregularities and other unethical business dealings”, the group said in a statement.

 

MTN Group (MTN) -3.8%

The largest telecoms operator on the African continent, was ordered by the Nigerian government to suspend the sale of sim cards while authorities check their compliance with registration guidelines. “Mobile network operators are hereby directed to immediately suspend the sale, registration and activation of new sim cards until the audit exercise is concluded,” the Nigerian Communications Commission (NCC) said in a statement on its website, with no time lines on the duration of the reviews. The telco group had a run in with the NCC in 2015, failing to disconnect undocumented sim cards as part of a security crackdown, leading to an $839 million fine.

INTERNATIONAL COMPANIES

Broadcom (AVGO) -31.7%

The semiconductor and software firm reported results after the bell on Wall Street, topping expectations and increasing its dividend. CEO Hock Tan: "We concluded the year with strong fourth quarter results driven by continued demand for networking from cloud and for broadband from service providers as well as the significant ramp in wireless, even as enterprise demand remained soft. Our infrastructure software segment continued to be stable and delivered solid results”. The group posted adjusted earnings of $6.35 a share versus the $6.25 pencilled in by analysts, as it generated 12% higher sales to $6.47Bn in the fourth-quarter, slightly pipping the $6.43Bn consensus mark.

 

Airbnb (ABNB)

The accommodation rental platform made its long-awaited debut on the Nasdaq on Thursday, as the stock surged 112% to close at $144.71, after its IPO price of $68 and open price of $146 per share, pushing it to a $100Bn-plus valuation in one of the biggest first-day rallies in history. CEO Brian Chesky: “No year in our history has been as wild and crazy and defining as this year”. International travel was down, but demand for domestic, short-distance trips and stays outside the top 20 cities proved resilient, the group said in a statement. The tech group has not turned a profit since its launch in 2008 and it is not expected to do so this year either, despite a better-than-expected third quarter numbers.

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