Taking Stock - The rand hit a two-month low on Monday.

In todays takin stock, we look at how the rand hit a two-month low on Monday on fears of tighter domestic coronavirus restrictions.

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MARKET COMMENTARY

SOUTH AFRICA

Local stocks ended firmer after a volatile session as anxious investors positioned their bets ahead of Ramaphosa's address last night. Twenty land ports in SA will be closed until February 15 while the country will remain on the same level of lockdown, President Cyril Ramaphosa said yesterday. Market heavyweights Naspers and its international arm Prosus kept gains intact, lifting the Johannesburg All-Share index up 0.38% and the Top-40 index up 0.5%. Naspers climbed 4.31%, while Prosus rose 3.92%. Government bonds dipped, with the yield on the 2030 instrument rising 5 basis points to 8.84%.

 

 

EUROPE

European stocks closed lower on Monday as surging coronavirus cases in many major countries weighed on investor sentiment. The pan-European Stoxx 600 finished 0.7% lower, with autos shedding 1.7% to lead losses while health care stocks added 0.6%. At the weekend, the UK’s Queen Elizabeth and her husband Philip, both in their nineties, received vaccinations against Covid-19, Buckingham Palace said. Meanwhile, French Prime Minister Jean Castex said Moderna’s Covid-19 vaccine would arrive in France on Monday.

 

 

US

US stocks came off record highs on Monday partly on caution over rising coronavirus cases globally while elevated Treasury yields continued to support the dollar, which touched its highest in two and a half weeks against a basket of peers. Worldwide coronavirus cases surpassed 90 million on Monday, according to a Reuters tally. Stocks on Wall Street slipped ahead of the start of an earnings season that arrives with equities at record highs, and as House Democrats introduced an article of impeachment against President Donald Trump. Longer-term Treasury yields were at their highest since March before new long-dated supply this week and on speculation of more US fiscal stimulus since Democrats will have control of Congress and the White House.

 

 

ASIA

Stocks in Asia-Pacific were mixed this morning after shares on Wall Street pulled back overnight from all-time highs. South Korea’s Kospi led losses as it declined 1.96%. Malaysia’s king on Tuesday declared a state of emergency in the country. Over in Australia, the S&P/ASX 200 was flat. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.29%.

 

 

 

CURRENCIES

The rand hit a two-month low on Monday as the US dollar gained on further stimulus hopes, while fears of tighter domestic coronavirus restrictions weighed on the South African currency. At the close, the rand was at R15.53 versus the dollar, 1.54% weaker than its previous close. The rand slumped around 4% against the US currency last week, as sentiment soured over a new peak in daily coronavirus infections and doubts over vaccine supplies.

 

 

COMMODITIES

Oil prices slipped this morning as investors remained concerned about climbing coronavirus cases globally, though an anticipated drawdown in crude oil inventory in the United States for a fifth straight week stemmed losses. Gold ticked higher today as Asian stocks slipped on political ferment in Washington and a global surge in coronavirus cases, although a firmer dollar and higher US Treasury yields limited gains.

LOCAL COMPANIES

Discovery (DSY) -2.7%

Members of Discovery Health Medical Scheme (DHMS) are still leaving the top-tier plans offered by the medical aid, with a further 8% decline between 2018 and 2019. Every plan across these top tiers has shown declines in members and beneficiaries over the past year (and over the six-year period), with the exception of the Classic Comprehensive Zero MSA (Medical Savings Account) plan, which has a tiny base of under 1 000 members. Across the six years between 2013 and 2019, 28% of members – or nearly 91 000 – have ditched these plans. Some of these members will have emigrated and left the scheme completely, while others would have downgraded their plans. Movement within the scheme includes new members joining, existing members upgrading or downgrading, and members leaving. In a stagnant economy with formal employment growth all but stalled in recent years, the movement across the different plans is not at all surprising.

 

Headline - Proposed bill amendments could expose SA’s wage gap

The Companies Amendment Bill is expected to make some progress during 2021 after apparently stalling somewhere along the legislative process during 2019 and 2020. Unless watered down before enacted, some of the proposed amendments might prompt a level of restraint so far missing from executive remuneration in South Africa. One of the most significant sections of the bill, and likely to be one of the most contentious, are the proposed changes to Section 30 of the Companies Act relating to ‘Duties to prepare directors’ remuneration report’. If enacted, the changes will require public companies and state-owned entities (SOEs) to disclose the details of the highest and lowest paid employees in the company. The proposed amendment, which reflects the efforts of the labour movement and some academics, will provide the first-ever detailed insight into the extent of the wage gap at individual company level in South Africa.

INTERNATIONAL COMPANIES

Marks & Spencer (MKS) -2.6%

The group announced that it has bought the Jaeger fashion brand, which fell into administration last November. M&S is taking on the brand, but not Jaeger's scores of shops and concessions. It is now in the process of finalising a deal to buy its products and "supporting marketing assets". M&S announced in May 2020 that it planned to stock other complementary brands to boost sales. Since then, it has started to sell products online from the Early Learning Centre, as well as from two designers, Nobody's Child and Ghost London. Richard Price, managing director of M&S Clothing & Home, said: "We have set out our plans to sell complementary third-party brands as part of our Never the Same Again programme to accelerate our transformation and turbocharge online growth. "In line with this, we have bought the Jaeger brand and are in the final stages of agreeing the purchase of product and supporting marketing assets from the administrators of Jaeger Retail Limited. We expect to fully complete later this month". Jaeger had 244 staff and some 63 stores and concessions. In addition, 13 stores closed after administrators were appointed, with the loss of more than 120 posts across stores, head office and distribution.

 

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