LOCAL MARKET COMMENTARY

Shares on the Johannesburg Stock Exchange experienced gains, with both the broader all-Share index and the blue-chip Top-40 index closing more than 0.3% higher to close at 74,589 and 69,029 points, respectively. South African investors are closely monitoring the release of August inflation figures on Wednesday and an impending interest rate decision by the central bank on Thursday, with analysts surveyed by Reuters anticipating that the South African Reserve Bank will maintain its current interest rates during its September 21 meeting. In other news, Spar Group's Chief Information Technology Executive, Mark Huxtable, has resigned from the South African food and liquor retailer, following a turbulent rollout of a R1.8 billion software system. 

EUROPEAN MARKET COMMENTARY

European markets closed slightly higher on Friday following the European Central Bank's indication that its most recent interest rate hike might be its last. The regional Stoxx 600 index finished with a 0.2% gain, with most sectors and major stock exchanges showing positive results. Household goods saw the most significant increase, rising by 1.4%, and luxury stocks benefited from positive Chinese retail sales data. Notably, ECB Governing Council members strongly implied that they do not anticipate additional rate hikes in the near future and are considering keeping rates unchanged for an extended period.

US MARKET COMMENTARY

US stocks declined on Friday as investors concluded a week marked by volatility in anticipation of the Federal Reserve's policy meeting. The information technology sector took the biggest hit in the S&P 500, falling nearly 2%. Adobe's shares experienced a more than 4% drop the day after the software company reported quarterly results that exceeded expectations. On the economic front, the University of Michigan's consumer sentiment survey revealed a decrease in one-year inflation expectations to 3.1% in September, matching the lowest level since January 2021. Additionally, the five-year outlook also fell to 2.7%, reaching its lowest point since December 2020.

ASIA MARKET COMMENTARY

Asia-Pacific markets experienced a decline this morning as investors turned their attention to a week filled with central bank decisions. The Bank of Japan is set to conclude its monetary policy meeting on Friday, and market participants are eager for insights into when the BOJ might begin to adjust its extremely accommodative monetary stance. Meanwhile, the People's Bank of China is expected to announce its loan prime rate decisions on the same day. In other news, Japanese investment holding company SoftBank is reportedly preparing to make substantial investments, potentially in the "tens of billions," into the field of artificial intelligence, as reported by the Financial Times.

COMMODITY MARKET COMMENTARY

Gold prices remained stable on Monday as investors continued to factor in the possibility of the Federal Reserve pausing interest rate hikes at its upcoming policy meeting, with particular attention on the central bank's rate projections. On the other hand, oil prices saw a slight increase on Monday, supported by forecasts indicating a growing supply deficit in the fourth quarter. This was influenced by Saudi Arabia and Russia extending production cuts and optimism regarding a demand rebound in China, which is the largest importer of crude oil globally.

CURRENCY MARKET COMMENTARY

On Friday, the South African rand slightly weakened against the US dollar, primarily due to a deteriorating power crisis, as the country awaited local inflation data and an upcoming interest rate decision. In contrast, the US dollar and other major currencies remained relatively stable in early trading, except for a minor fluctuation in the British pound. This calm was attributed to a Japanese holiday and the anticipation of several central bank meetings, which contributed to subdued market activity.

Outsurance Group Limited (OUT) -1.7%

In 2023, OUTsurance reported R2,924 million in earnings, excluding Hastings, marking a significant 43.4% increase from the previous year. When including Hastings in OUTsurance Holdings, the earnings were R2,924 million, a 39.3% rise from 2022. The Central/Treasury company's performance improved with earnings of -R49 million, an 81.6% improvement from -R266 million in 2022. Normalized earnings from continuing operations reached R2,875 million, reflecting a substantial 62.2% growth. Normalized earnings per share from continuing operations stood at 187.7 cents, a 62.1% increase, and diluted normalized earnings per share were 185.2 cents, up 61.5%. However, when considering both continuing and discontinued operations, there was a slight decrease in earnings per share, from 192.8 cents to 187.7 cents. The normal dividend per share rose significantly to 134.8 cents, while the special dividend per share dropped to 8.5 cents, down by 94.0%.

Putprop Limited (PPR) 0.0%

In the financial sector, there was notable growth in rentals and recoveries, reaching R128,439 million in 2023 compared to R111,325 million in 2022. Operating profit also increased to R77,468 million from R67,283 million in 2022, resulting in an operating profit margin of 60.3% (compared to 60.4% in 2022). However, the cost-to-income ratio rose to 36.9% (from 34.2% in 2022). The net asset value per share was 1,612 cents in 2023, up from 1,601 cents in 2022. Total debt increased to R504,942 million in 2023, compared to R448,556 million in 2022. Earnings per share (EPS) experienced a significant decrease from 150.97 cents in 2022 to 26.20 cents in 2023. Key metrics for the period included a total gross lettable area (GLA) of 97,601m2 in 2023, up from 84,112 m2 in 2022. The leverage ratio improved to 0.46 times from 0.79 times in 2022. Dividends per share (DPS) increased to 11.25 cents, compared to 10.25 cents in 2022. The proportion of A Grade Tenants grew to 52% in 2023, up from 37.0% in 2022. The retention rate for tenants whose leases expired during the review period was 47.3% in 2023, compared to 100% in 2022.

Tesla (TSLA) -0.6%

Turkish President Recep Tayyip Erdogan has reportedly urged Tesla CEO Elon Musk to consider establishing a Tesla manufacturing facility in Turkey. The request was made during a meeting held at Turkish House, a skyscraper near the United Nations in New York, as reported by the Turkish state-owned news agency, Anadolu Agency. Additionally, Elon Musk is scheduled to meet with Israeli Prime Minister Benjamin Netanyahu in California, where discussions are expected to revolve around artificial intelligence technology. Notably, Tesla has already expressed interest in building a factory in India to produce affordable electric vehicles (EVs). With existing factories and ongoing expansion efforts, including a new factory in Mexico, Tesla continues to extend its global presence.

Evergrande (3333) -10.1%

Police in southern China have reportedly detained some individuals associated with China Evergrande Group's wealth management unit, potentially adding to the challenges facing the troubled property conglomerate. Shenzhen city police released a statement on social media stating that they had taken "criminal compulsory measures" against Du and other suspected individuals at Evergrande Financial Wealth Management Co. Du Liang was previously identified as the general manager and legal representative of Evergrande's wealth management division during investor protests at the company's Shenzhen headquarters in 2021. It should be noted that Reuters has not independently verified whether Du was among those detained, and the police statement did not provide details regarding the number of detainees, the charges filed, or the date of their detention.

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