Taking Stock - South Africa will open up travel to all countries.

President Cyril Ramaphosa announced yesterday that South Africa will open up travel to all countries in an effort to boost the tourism and hospitality sectors.

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MARKET COMMENTARY

SOUTH AFRICA

Local stocks closed lower yesterday with the All Share index ending the day 0.11% weaker at 57,607, while the Top 40 index dropped 0.26%. Industrials led the downward trend, shedding 1.53%. Financials bucked the trend as they added 5.46% on the day. On the economic data front, the latest unemployment figures are set to be released today, with economists expecting the official unemployment rate to increase beyond the record 30.1% level seen previously. Government bonds firmed, with the yield on the benchmark due in 2030 down 3 basis points to 8.85%.

 

 

EUROPE

European stocks closed higher Wednesday, continuing to climb as hopes rise over a forthcoming coronavirus vaccine. The pan-European Stoxx 600 closed up 1.1%, with utilities adding 2.6% to lead gains as most sectors and major bourses advanced. European markets are following the positive momentum seen earlier this week, after Pfizer and BioNTech’s announcement that their Covid-19 vaccine was more than 90% effective in preventing the disease.

 

 

US

The S&P 500 and Nasdaq Composite rose on Wednesday as tech shares recovered some of their losses from earlier in the week at the expense of names who would benefit from an economic recovery. Apple gained 3%. Netflix climbed 2.2%. Facebook and Amazon rose 1.5% and 3.4%, respectively. Wednesday’s moves came after strong back-to-back strong sessions for the Dow that were sparked by Pfizer and BioNTech’s announcement about their more than 90% effective Covid-19 vaccine. The news caused investors to move out of technology names and stay-at-home stocks and into cyclical stocks that hinge on a recovering economy.

 

 

ASIA

Asian shares rose toward a more than two-year peak this morning, buoyed by sustained global stimulus efforts and hopes of a coronavirus vaccine, but some analysts warned of the risk of a correction lower. Australian stocks bucked the regional trend and fell 0.31% as a decline in copper prices hurt shares in miners. The gains in Asia came after a mixed performance for US stocks as investors switched back to technology stocks and away from economically sensitive sectors.

 

 

CURRENCIES

The rand continued to retreat from a more than 8-month high against the dollar yesterday, after news that President Cyril Ramaphosa would address the nation. South Africa will open up travel to all countries in an effort to boost the tourism and hospitality sectors, President Cyril Ramaphosa said on Wednesday, despite having the highest number of confirmed COVID-19 cases on the continent. He also said normal trading hours of alcohol would be restored too, after sales were restricted on weekends in an effort to reduce pressure on hospitals due to alcohol-related accidents. The rand traded at R15.63 against the US dollar at the close, 0.05% weaker. The local currency was trading around the R15.64 mark this morning.

 

 

COMMODITIES

Gold prices inched lower today, after dropping over 1% in the previous session, pressured by a firmer dollar and optimism over the progress of a COVID-19 vaccine bolstering risk appetite. Meanwhile, the European Central Bank will focus on more emergency bond purchases and cheap loans for banks when it puts together its new stimulus package next month to help the pandemic-hit euro zone economy. Oil prices rose in early trade this morning, taking the week’s gains to more than 12% on growing hopes that the world’s major producers will hold off on a planned supply increase as soaring cases of COVID-19 dent fuel demand.

LOCAL COMPANIES

Tsogo Sun Hotels (TGO) -0.6%

The South African hotel group warned overall revenue is expected to be between 81% and 87% lower for the interim period end-September, compared with the more than R2Bn in the previous year. The hospitality sector was battered by the COVID-19 pandemic and subsequent nationwide lockdowns, as business and leisure travel grinded to a halt. The largest hotel operator in SA said it expects further job loss due to the slow recovery in tourism, especially with the Western Cape dependent on international travellers. “These interim results clearly reflect the devastating impact that Covid-19 and the accompanying lockdown regulations have had on the hospitality industry in general and our group in particular”, the group said in a statement.

 

Growthpoint (GRT) +8.5%

SA’s largest Real Estate Investment Trust (REIT), said its short-term focus in the challenging economic environment is to continue strengthening the group’s balance sheet, which will allow more flexibility to pursue strategic goals. The landlord has provided tenants with a further R50.4 million discount, and additional deferrals of R19.3 million, which highlights the pressure its tenants are under, as arrears increased to R594.4 million in the first quarter of its 2021 financial year. Overall group vacancies increased to 10.63% from 9.50% in the prior year, with the weighted average renewal growth rate declining by 12.9%. “While the South African context remains extremely tough, the diversified nature of our business and the geographies in which we operate have been buffers for us”, the landlord said in a statement.

INTERNATIONAL COMPANIES

Tencent Music (TME) +2.4%

The music entertainment group, which is controlled by the Chinese tech giant Tencent, posted better-than-expected quarterly revenue as it added more paying subscribers to its music streaming service. Paid subscribers rose 46% to 51.7 million, while the group generated total revenue of 7.58Bn yuan ($1.15Bn) compared to the 6.51Bn yuan ($910 million) previously, and ahead of the 7.47Bn yuan analysts pencilled in. Online music revenues were $342 million, still well behind the revenues from karaoke, livestreaming and other ‘social entertainment’ that was reported as $773 million.

 

Alibaba (BABA) -0.3%

The US-listed Chinese technology giant set a new sales record for the annual Singles Day shopping event, as lockdown-weary consumers splashed out on as many as 16-million discounted products. The world’s biggest sales event, eclipsing Black Friday and Cyber Monday in the US combined, is typically a 24-hour event, but due to the global pandemic, the Chinese e-commerce platforms extended the event to run from 1 November to 12 November. The Chinese government’s new proposed antitrust regulations, send the share price lower on Tuesday heading into singles’ day. The tech group said gross merchandise value (GMV), a figure that shows the total value of orders across its shopping platforms, surpassed 372.3Bn yuan ($56.42Bn).

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Media, Sasfin Wealth

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