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MARKET COMMENTARY

LOCAL MARKET COMMENTARY

On the stock market, both the Top 40 and the broader All Share indexes showed a decline of approximately 0.1%, ending Tuesday at 72,372 and 78,632 points, respectively. However, South Africa faced concerning economic indicators, with unemployment rising to 32.9% in the first quarter of the year, nearing the pandemic-era peak. Additionally, mining output dropped by 5.8% year-on-year in March. Anglo American Platinum shares fell by 7.1% after its parent company announced plans to explore demerging its platinum unit. Discovery and other medical insurers saw a decline in shares following President Cyril Ramaphosa's intention to sign a new health bill opposed by businesses.

EUROPEAN MARKET COMMENTARY

European shares reached a historic high on Tuesday, driven by Delivery Hero's substantial surge following the sale of its Taiwan foodpanda unit, alongside ongoing interest rate considerations. Despite signals from the European Central Bank suggesting independence from the U.S. Federal Reserve regarding rate cuts, uncertainties persist beyond June. The pan-European Stoxx 600 index closed 0.2% higher, with auto stocks leading the gains, rising more than 1.3% for the session.

US MARKET COMMENTARY

The Nasdaq achieved a record closing high on Tuesday, accompanied by advances in the S&P 500 and the Dow, following reassurances from Federal Reserve Chair Jerome Powell. Investors absorbed Tuesday's data while anticipating today's crucial consumer inflation report. U.S. producer prices rose more than anticipated in April, leading to adjustments in expectations for the timing of the first rate cut in September. Powell characterized the producer price index report as more mixed than hot, considering downward revisions in prior-period data. Despite concerns over higher-than-expected inflation, Powell indicated that the next interest rate move was unlikely to be a hike.

ASIA MARKET COMMENTARY

Asia-Pacific markets mostly saw gains this morning, although South Korea and Hong Kong were closed for a public holiday. The People’s Bank of China maintained its one-year medium-term lending facility rate at 2.5%. In mainland China, the CSI 300 index declined by 0.45%. Meanwhile, Japan's Nikkei 225 rose by 0.75%, and the broader Topix index increased by 0.53%.

CURRENCY MARKET COMMENTARY

South Africa's rand weakened on Tuesday following data that revealed a rise in the country's unemployment rate for the first quarter and a decline in mining output for March. Meanwhile, the dollar edged lower this morning as traders evaluated mixed U.S. producer price data and awaited the crucial consumer price report later in the day, which is expected to influence the Federal Reserve's near-term policy decisions.

COMMODITY MARKET COMMENTARY

Gold prices remained steady this morning as investors awaited crucial U.S. inflation data that could provide insights into the Federal Reserve's future interest rate decisions. Meanwhile, oil prices increased in early trade due to large wildfires threatening Canada's oil sands and market expectations of a drawdown in U.S. crude oil and gasoline inventories later in the day.

LOCAL COMMENTARY

MTN Group Limited (MTN) -8.50%  

Group service revenue experienced a decline of 18.8%, although specific sectors within it showed mixed results, with voice revenue dropping by 32.2%, while data revenue decreased by 14.7%. However, fintech revenue saw a notable increase of 11.4%. Total subscribers increased marginally by 1.0% to reach 287.6 million, with active data subscribers rising by 7.8% to 149.2 million. The number of active Mobile Money (MoMo) monthly active users (MAU) also saw growth, increasing by 6.2% to 65.5 million. Data traffic surged by 36.2% to 4 359PB, and fintech transaction volumes rose by 18.3% to 4.8 billion, with transaction value increasing by 11.2% to US$72.3 billion.

Octodec Investments Limited (OCT) -1.44%

The financial results highlight several key points: distributable income after tax amounted to R219.5 million, showing a slight decrease from the previous period's R234.5 million. Distributable income per share was reported at 82.47 cents, compared to 88.10 cents in the previous period. The dividend per share remained steady at 60.0 cents. Net asset value (NAV) per share slightly declined to R24.11 from R24.24 in the previous financial year. Additionally, the loan to value (LTV) ratio increased to 38.5% from 37.7% in the previous financial year.

Equities Property Fund Limited (EQU) +4.37%

Here are the financial and operational highlights for the year: Distribution per share (DPS) remained steady at 131.12 cents per share, aligning with guidance. Net asset value per share increased by 3.0% to R17.14. The distribution pay-out ratio stood at 100%. The company maintained a strong cash position with R2.3 billion in cash and unutilized facilities. The loan-to-value (LTV) ratio was 39.6%. The South African portfolio valuation rose by 4.2%, while the UK portfolio valuations increased by 2.1% in sterling. Disposals worth R4.8 billion were concluded, and R3.7 billion was spent on development and acquisition. The portfolio vacancy rate remained at 0%, with 97.7% of revenue coming from A-grade tenants. The weighted average lease expiry (WALE) was 12.6 years. Additionally, the company achieved a 20.2MW rooftop solar generation capacity.

Dipula Income Fund Limited (DIB) +2.86%

In the latest financial period, revenue surged to R755.0 million from R691.5 million in 2023, marking significant growth. Distributable earnings per ordinary share slightly decreased to 27.30705 cents compared to 28.71883 cents in the previous year. Similarly, the dividend per ordinary share also saw a decline, reaching 24.57634 cents, down from 25.84695 cents in 2023. Basic earnings per ordinary share dropped to 23.53 cents from 28.47 cents in 2023 due to the implementation of a dividend re-investment plan. However, headline earnings per ordinary share rose to 29.12 cents from 27.93 cents in the previous year. NAV per ordinary share saw a slight uptick, reaching R6.60 compared to R6.58 in 2023. Net profit before finance costs decreased to R384.8 million from R418.7 million in 2023. Attributable comprehensive income also declined to R211.6 million from R254.9 million in 2023 due to the implementation of the dividend re-investment plan.

INTERNATIONAL COMMENTARY

Sony Group Corporation (6758) +0.38%

Sony announced on Tuesday that it anticipates a 5% increase in operating profit for the current business year, largely driven by strong demand for its image sensors. Despite projecting lower sales for its PlayStation 5 console, the company expects profits to rise by 7%, attributed to reduced hardware losses and higher revenue from its PlayStation Plus subscription service. To expand its investor base, Sony plans to conduct a five-for-one stock split and allocate 250 billion yen ($1.6 billion) for a share buyback. In the previous fiscal year, Sony saw a 7% decline in operating profit, primarily due to reduced profits in its life insurance business, aligning with market estimates. Despite this, Sony's shares remained steady ahead of the earnings announcement, after experiencing an approximately 11% decrease year-to-date.

Vodafone Group PLC (VOD) +4.72%

Vodafone reported a 2.2% increase in organic earnings for 2024, meeting market expectations, driven by a return to top-line growth in the final quarter, particularly in Britain and Germany. CEO Margherita Della Valle noted growth across all markets in Africa and Europe, including Germany, following the decision to sell struggling operations in Spain and Italy. The company has undergone simplification measures, including 11,000 job cuts, since Della Valle took the helm permanently in April 2023. Vodafone's shares, which have declined by 22% over the past year, saw a 4.7% increase to 73.52 pence. Core earnings stood at 11.02 billion euros, in line with forecasts, and adjusted free cash flow was 2.60 billion euros, surpassing market expectations for the year ending March. Following the Italian deal announcement in March, Vodafone halved its dividend to 4.5 euro cents a share for the current year. The company anticipates broadly flat core earnings this year, with free cash flow expected to be at least 2.4 billion euros, slightly ahead of forecasts. While Germany saw service revenue growth of 0.2% for the full year and 0.6% for the fourth quarter, adjusted core earnings declined by 5.8% due to higher energy costs.

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About the Author

Research Team
Media, Sasfin Wealth

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