LOCAL MARKET COMMENTARY

Shares on the Johannesburg Stock Exchange experienced a 1.11% decline, notably affecting the blue-chip Top 40 index as well as the broader All Share index which ended the day at 73,303, down 1.06%. In other developments, long-standing JSE participant AngloGold Ashanti is set to shift its primary listing to the New York Stock Exchange in the coming week, while retaining secondary listings on the JSE, A2X, and the Ghana Stock Exchange. This move has been anticipated due to the company's corporate headquarters relocating to London. Meanwhile, Growthpoint has disclosed a modest reduction in vacancies within its South African portfolio, which now stands at 9.2% for the year ending June 2023.

EUROPEAN MARKET COMMENTARY

European stock markets closed with slight losses on Wednesday in response to stronger-than-expected U.S. inflation data. The Stoxx 600 index finished down 0.3%, with various sectors and major exchanges recording negative performance. Retail stocks saw the most significant decline, dropping 0.9%. In economic news, official data revealed that the U.K. economy contracted by 0.5% in July, surpassing the 0.2% decrease predicted by economists in a Reuters poll. The Office for National Statistics attributed this decline primarily to a 0.5% reduction in services output.

US MARKET COMMENTARY

On Wednesday, the Dow Jones Industrial Average experienced a decline as traders reacted to higher-than-expected inflation data. The core inflation figures for August, as measured by the consumer price index, showed a 0.3% increase, matching the 4.3% estimate. Federal Reserve officials tend to focus more on the core number because it offers a better insight into long-term inflation trends. In contrast, the headline numbers, which include all items, rose by 0.6% last month and were up 3.7% compared to the previous year. Economists surveyed by Dow Jones had anticipated slightly lower increases of 0.6% and 3.6%, respectively.

ASIA MARKET COMMENTARY

In the Asia-Pacific region, all markets showed gains today. Australia's unemployment rate remained stable at 3.7% in August, aligning with economist forecasts. Meanwhile, Japanese investment holding company Softbank saw a minor decline in its shares as its subsidiary, Arm, priced its initial public offering at $51 per share. Arm's fully diluted market capitalization, which factors in outstanding restricted stock units, is valued at over $54 billion. Trading of Arm's shares is set to commence on Thursday on the Nasdaq exchange.

CURRENCY MARKET COMMENTARY

South Africa's rand saw a boost on Wednesday following the release of U.S. inflation data, which may provide the Federal Reserve with the flexibility to maintain current interest rates at its upcoming meeting. The U.S. dollar, on the other hand, remained just below a three-month high against the euro as market attention shifted to the European Central Bank's rate-setting meeting scheduled for later in the day. The U.S. inflation figures did not significantly alter expectations for a Federal Reserve rate pause next week. Additionally, the yen experienced a slight rebound from its nearly 10-month low against the dollar, partly due to a decrease in long-term Treasury yields, which reduced some of the support for the U.S. currency.

COMMODITY MARKET COMMENTARY

Gold prices strengthened in the morning due to a weakened dollar and lower Treasury yields, driven by U.S. inflation data supporting the case for a Federal Reserve interest rate pause in the upcoming week. However, gold remained close to the near three-week lows observed in the previous session. Meanwhile, oil prices experienced a rebound as market focus shifted back to a tighter crude supply outlook for the remainder of 2023, given the expectation of robust demand continuing into the next year.

Lesaka Technologies (LSK) +8.73%

In Q4 2023, Lesaka reported a revenue of $133.1 million (ZAR 2.5 billion), marking a 9% increase primarily due to the inclusion of the Connect Group for the entire period and the strong performance of the Consumer Division. Despite a non-cash impairment charge related to the Merchant Division and PPA amortization charge, the net loss narrowed to $11.9 million (ZAR 223.2 million), a 21% improvement from Q4 2022. Excluding the impairment charge, the net loss would have been $4.9 million (ZAR 91.2 million), a 68% improvement. Operating loss improved to $6.6 million (ZAR 124.3 million). Group Adjusted EBITDA surged to $8.4 million (ZAR 158.3 million), a 115% increase from Q4 2022. The Merchant Division achieved an excellent Segment Adjusted EBITDA of $8.2 million (ZAR 154.2 million), while the Consumer Division reported profitability with a Segment Adjusted EBITDA of $2.5 million (ZAR 46.5 million). Additionally, Lesaka achieved positive net cash provided by operating activities of $9.8 million (ZAR 182.9 million) in Q4 2023, a significant improvement compared to Q4 2022 when there was a net cash outflow.

Universal Partners(UPL) 0.0%

For the year ending on June 30, 2023, the net asset value per share (NAV) was GBP 1.296, which decreased from GBP 1.438 in the previous year. The company incurred a loss of GBP 3,062,172 during the year, in contrast to a profit of GBP 13,977,271 in the prior year. Consequently, the (loss) / earnings per share for the year were (4.21) pence, compared to 19.25 pence in the previous year. The headline (loss) / earnings per share also stood at (4.21) pence, the same as the (loss) / earnings per share figure for the year.

Momentum Metropolitan Holdings (MTM) -1.39%

In the fiscal year 2023 (F2023), Momentum Metropolitan Holdings Limited achieved significant financial milestones. Earnings per share (cents) rose by 20% to 313.3, while headline earnings per share (cents) increased by 5% to 310.7. Normalised headline earnings per share (cents) surged by 19% to 342.3, and normalised headline earnings (R million) grew by 16% to 5,079. Operating profit (R million) saw remarkable growth, increasing by 31% to 4,419, despite a 35% decline in investment return (R million). New business volumes (PVNBP, R million) decreased by 5%, with a 4% drop in the value of new business (VNB, R million), maintaining a stable new business margin of 0.9%. Diluted embedded value per share (Rand) rose by 13% to 33.75, while return on embedded value per share improved significantly to 17.0%. Return on equity remained steady at 22.3%, and a 20% increase in dividend per share (cents) was reported, reaching 120 cents. 

Berkshire (BRK.B) +0.01%

Warren Buffett's Berkshire Hathaway has recently sold approximately 5.5 million shares of HP, undoing a portion of its once-significant but unsuccessful investment in the computer and printer manufacturer. The sale, amounting to approximately $158 million, has reduced Berkshire's stake in HP to approximately $3.27 billion, as reported in a filing with the U.S. Securities and Exchange Commission. Following the sales, Berkshire now holds around 11.7% of HP's shares, down from its previous 12.2% stake. The filing does not provide specific reasons for the share sales, and Berkshire has not issued a comment on the matter as of now.

American Airlines (AAL) -5.67%

American Airlines and Spirit Airlines have joined other airline companies in warning investors that increased costs will impact their profits during the busy summer quarter. American Airlines has revised its third-quarter adjusted earnings per share outlook to be between 20 cents and 30 cents, down from the previous projection of up to 95 cents per share. The reasons cited include higher fuel costs and a new pilot labor agreement, causing the carrier to cut its operating margin forecast to a range of 4% to 5%. Similarly, Spirit Airlines now anticipates negative margins of up to 15.5% for the third quarter, compared to the earlier estimate of -5.5% to -7.5%, and has also reduced its revenue forecast for the same period.

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