Taking Stock - TFG reports a 5.5% rise.

In todays taking stock, The TFG reports a 5.5% rise in third-quarter turnover.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

Shares on the Johannesburg Stock Exchange were mixed on Tuesday, with retailers gaining and miners falling. The benchmark All-Share index was down 0.17% at the close to 63,603 index points. The blue-chip Top-40 index ended down 0.32%. The general retailers index was up almost 6% at market close, helped by gains for companies such as TFG which reported a 5.5% rise in third-quarter turnover. In economic news, mining output slumped 11.6% year on year in November, data showed yesterday, extending output declines seen in previous months.

 

 

EUROPEAN MARKET COMMENTARY

European stocks fell Tuesday as investors monitored hopes for economic recovery and the confirmation speech of incoming US Treasury Secretary Janet Yellen. The pan-European Stoxx 600 ended the session down by around 0.2%, with basic resources and travel shares both falling 1.3% to lead losses as most sectors and major bourses dipped into negative territory. There were no major earnings yesterday, but on the data front Germany’s ZEW published its latest survey of economic sentiment. The survey of investor economic sentiment increased to 61.8 in January from 55.0 points the previous month.

 

 

US MARKET COMMENTARY

Stocks climbed on Tuesday, rebounding from a losing week, as investors digested results from the new earnings season as well as signals for another big stimulus and faster pace of vaccine distribution ahead. Shares of Goldman Sachs erased earlier gains and fell 2.3% as traders took profits after the bank topped expectations for fourth-quarter profit and revenue. The blowout results came on the back of strong performance from its equities traders and investment bankers. Bank of America dipped 0.7% after the bank posted quarterly revenue that missed expectations. Profit came in slightly above estimates, however.

 

 

ASIAN MARKET COMMENTARY

Stocks in major Asia markets were mixed this morning as investors reacted to the release of China’s latest benchmark lending rate. The moves in Chinese stocks came as the one-year prime rate (LPR) and five-year LPR in China were both left unchanged at 3.85% and 4.65%, respectively. It was in line with expectations of a majority of traders and analysts in a snap Reuters poll. In corporate developments, shares of South Korean automaker Kia Motors surged more than 7% after the firm said it is looking at electric car projects with multiple firms.

 

 

CURRENCY MARKET COMMENTARY

The rand rose strongly on Tuesday, helped by a surge in global risk appetite as investors expected Janet Yellen to use her confirmation speech as US Treasury Secretary to lay out the case for more stimulus spending. At the close, the rand traded at R14.98 versus the US dollar, 1.16% firmer than its previous close, breaking below the R15 per dollar mark for the first time in two weeks. The rand has mainly taken its cue from global drivers so far this month in the absence of major local data releases. But this week that changes with releases including retail sales figures for November and the December consumer price index.

 

 

COMMODITIES MARKET COMMENTARY

Gold prices edged higher this morning as the dollar weakened after US Treasury Secretary nominee Janet Yellen urged lawmakers for more coronavirus relief spending, lifting bullion's appeal as an inflation hedge. Oil prices rose in early trade today, adding to solid gains overnight, on expectations the incoming US administration will go ahead with massive stimulus spending that would boost fuel demand and draw down crude stocks.

LOCAL COMPANIES

The Foschini Group (TFG) +8.2%

South African fashion retailer TFG reported a 5.5% rise in third-quarter turnover on Tuesday, thanks to its acquisition of budget clothing retailer Jet and strong online sales growth during the Covid-19 pandemic. The announcement came even as its two main markets, Britain and South Africa, are reeling under subdued consumer demand due to lower spending and local restrictions. Group turnover for the three months ended December 26 rose to R12.2 billion from R11.6 billion, the company said. Its shares rose after the announcement and were up almost 10%. TFG, formally known as The Foschini Group, said online group turnover rose 32.3% for the quarter ended December 26, with a 114.1% jump in TFG Africa. Group online sales contributed 12% to nine-month-ended December 26 overall group sales. TFG Africa, its biggest unit which houses Jet stores, grew turnover by 14.7%, boosted by its clothing and homeware divisions. Sales in TFG Australia, its third operating region, were up 0.4% in Australian dollars, supported by minimal lockdown restrictions in November and at the start of December, which resulted in a strong sales trend into Christmas, TFG said. In London, sales performance continues to be negatively impacted by a government-enforced national lockdown and reduced levels of consumer demand for occasion and formal workwear. Sales plunged 41.4% in British pounds. It said it does not expect a near-term recovery in sales in Britain amid the latest lockdown. Excluding the Jet acquisition, which added R1.2 billion ($80.42 million) to group turnover, group third-quarter sales fell by 4.8% to R11.1 billion.

 

MTN Group (MTN) -0.5%

The Supreme Court of Appeal this week threw out MTN’s appeal against a judgment ordering it to pay R11.4 million in damages, plus interest, to a dealer whose business was shut down in 2011 for breach of contract. MTN had accused the dealer, Belet Industries, of dishonesty after an internal auditor arrived at one of the two stores operated by the company. The general manager of the store instructed shop assistants to place 15 obsolete items considered unnecessary to the audit in black bags and keep them outside the shop until the audit was complete. Based on the Supreme Court judgment, this seems to have been a rather expensive audit for MTN. The auditor may have been looking for something that wasn’t there to be found. MTN claimed the 15 “hidden” items were grey goods that the shop was not authorised to stock in terms of the contract with the network provider, and that by placing them outside, the store was obstructing the audit process. MTN felt it could no longer trust the dealer and cancelled its agreement with Belet in September 2011.

INTERNATIONAL COMPANIES

Halliburton -1.0%

Haliburton reported on Tuesday quarterly results that topped analyst expectations amid strong revenue from its North America business. The oilfield services company posted a profit of 18 cents per share on revenue of $3.24 billion for the fourth quarter. Analysts expected earnings per share of 15 cents on revenue of $3.21 billion. Shares of Halliburton rose as much as 2.9% on the back of the news. Around mid-day however, they were down 1.3%. The company’s North America revenue grew by 26% to $1.4 billion when compared to the previous quarter due to increased drilling activity in the region. That increase offset lacklustre growth from Halliburton’s international markets. CEO Jeff Miller said in a statement he was “optimistic about the activity momentum” in North America, adding he expects international drilling to recover later this year. “I believe our strategic priorities will allow us to continue generating industry-leading returns and strong free cash flow and solidify Halliburton’s role in the unfolding energy market recovery,” said Miller. However, the company’s adjusted operating income for 2020 fell to $1.4 billion from $2.1 billion a year earlier.

 

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