Trump Delays TikTok Ban by 75 Days, Allowing Further Review

LOCAL MARKET COMMENTARY

The JSE Top 40 index rose by 0.12% to close at 76,326.7 points, while the All Share index edged up 0.04% to 84,733.2 points yesterday. This week, investor attention shifts to crucial domestic economic indicators, including November mining production data, set for release today, the December consumer inflation report on Wednesday, and November retail sales figures on Thursday. On the policy front, South Africa’s finance minister reiterated that the government’s primary focus is on implementing structural reforms to drive economic growth rather than regaining an investment-grade credit rating, a process that could take over two years. The country remains in sub-investment grade status with all three major credit ratings agencies. However, S&P Global’s decision in November to upgrade South Africa’s outlook to “positive,” citing improved reform potential under the current coalition government, has sparked speculation about possible ratings upgrades in the future.

EUROPEAN MARKET COMMENTARY

European markets closed flat on Monday, despite earlier touching a three-month high. Data out of Germany showed producer prices rose 0.8% year-on-year in December, falling short of analysts’ expectations of a 1.1% increase, according to the federal statistics office. Meanwhile, Greece reported a slight reduction in its current account deficit for November, supported by strong tourism revenue. Data from the Bank of Greece showed the deficit narrowed to €3.15 billion from €3.18 billion in the same period in 2023. In Spain, the government announced additional subsidies totalling €150 million aimed at increasing the adoption and integration of artificial intelligence technologies, as confirmed by Prime Minister Pedro Sanchez on Monday.

US MARKET COMMENTARY

U.S. markets were closed yesterday in observance of the Martin Luther King Jr. Day holiday. However, headlines focused on potential developments surrounding trade policy, as President Donald Trump suggested the possibility of imposing 25% tariffs on imports from Canada and Mexico starting February 1, citing concerns about illegal immigration and fentanyl trafficking into the U.S. No official announcements were made regarding the implementation of these tariffs, leaving markets waiting for further details.

ASIA MARKET COMMENTARY

Asian markets displayed a mixed performance this morning as investors awaited greater clarity on U.S. trade and fiscal policy under President Donald Trump’s administration. In China, government data revealed the creation of 12.56 million new urban jobs in 2024, meeting the annual target of over 12 million jobs, according to state media. Meanwhile, South Korea’s economy showed minimal growth in the final quarter of 2024, with a Reuters poll forecasting seasonally adjusted GDP growth of 0.2% for Q4, following 0.1% growth in Q3. On an annual basis, the South Korean economy grew 1.4% in Q4, slightly down from 1.5% in the previous quarter. Analysts expect the Bank of Korea to implement an interest rate cut next month following its unexpected decision to hold rates steady last week.

CURRENCY MARKET COMMENTARY

The South African rand strengthened on Monday as global markets awaited further clarity on U.S. trade and fiscal policies under President Donald Trump. In Asian trade, the dollar saw a slight rebound today after Trump hinted at potential tariffs on Canada and Mexico, although specific details remain unclear. In Japan, currency officials underscored that a weaker yen could elevate inflation by increasing import costs. The Bank of Japan is widely expected to raise interest rates on Friday, barring unexpected disruptions linked to U.S. trade policies. This would mark the first significant increase in short-term borrowing costs since the 2008 global financial crisis.

COMMODITY MARKET COMMENTARY

Gold prices continued their upward trend for a second consecutive session, supported by a weaker dollar, as investors assessed the potential implications of President Donald Trump’s proposed energy policies. In the oil market, prices dipped during Asian trading hours following Trump’s announcement of a comprehensive strategy to maximize U.S. oil and gas production. His plan includes declaring a national energy emergency to expedite permitting, easing environmental regulations, and withdrawing from international climate agreements. These measures mark a significant policy shift aimed at bolstering fossil fuel production, contrasting with the green energy initiatives of the prior administration.

South32 (S32) +1.22%

South32 CEO Graham Kerr announced a robust start to FY25, maintaining production guidance across all operations except Mozal Aluminium, which has been impacted by civil unrest in Mozambique. The company delivered impressive results for the December 2024 quarter, with higher base metals production and a 14% increase in alumina output, benefitting from favourable market prices. Shareholders received US$169 million in returns through fully-franked dividends and ongoing share buy-backs, with US$171 million remaining under the capital management program. Following the divestment of Illawarra Metallurgical Coal in September 2024, South32 now boasts a strong balance sheet, ready to drive growth in minerals essential for the global energy transition. Milestones included commencing shaft sinking at the Hermosa zinc-lead-silver Taylor deposit, advancing an exploration decline at the Clark battery-grade manganese deposit, and conducting exploration drilling at the Peake copper site to unlock additional value. The company also increased its focus on greenfield exploration, investing US$18 million across projects in regions such as Australia, the USA, and Canada, including acquiring a 19.9% stake in American Eagle Gold Corp. Operational highlights included a 5% increase in aluminium production, strong zinc and copper results, and significant progress in recovering and ramping up Australia Manganese operations. Financially, South32 made substantial capital investments, including US$250 million at Hermosa, and achieved higher sales volumes in the aluminium value chain, despite a temporary working capital increase. Additionally, exploration efforts targeted critical minerals, with an eye on unlocking further value in their portfolio. With ongoing strategic investments and robust operational performance, South32 remains well-positioned to support the global transition to a low-carbon future while delivering sustained value to its shareholders.

Trustco (TTO) -6.25%

Trustco shareholders are informed that the Board of Directors is evaluating a potential delisting of the company from the Johannesburg Stock Exchange (JSE), Namibian Stock Exchange (NSX), and OTCQX Market in the United States. As part of this process, the Board is taking several key steps. First, an independent expert will provide an updated fairness opinion on the proposed delisting, as required by JSE Listings Requirements. Second, management will engage with the JSE to discuss the formal delisting proposal and request a suspension of share trading under Section 1.10 of the Listings Requirements. This suspension aims to prevent market information asymmetry while audit processes in South Africa, Namibia, and the United States (PCAOB) are finalized. Third, a formal offer will be communicated to shareholders under Section 1.15 of the Listings Requirements, detailing the impact of previously announced transactions, post-delisting implications under Namibian Company Law, and plans for a direct listing on Nasdaq, as announced on 21 November 2024. The Board anticipates that the proposed delisting could significantly affect the company’s share price. Shareholders are urged to trade cautiously and await further updates on the company’s future direction.

ByteDance

On Monday, U.S. President Donald Trump signed an executive order delaying the enforcement of a TikTok ban by 75 days, originally set for January 19. The order allows the administration more time to determine the appropriate course of action regarding the popular short-video app. It also instructs the Department of Justice to issue letters to companies like Apple, Alphabet's Google, and Oracle, affirming no legal violations occurred during this period and confirming they will not face liability for their engagements with TikTok. This move appears to provide temporary relief to TikTok as the administration reviews its stance.

Country Garden (2007) 00.00%

Shares of embattled Chinese property developer Country Garden surged up to 30% on Tuesday as trading resumed following a nearly 10-month suspension. The suspension was initiated in April 2024 due to delays in releasing the 2023 annual and 2024 interim financial reports, exacerbated by the company’s $11 billion default on offshore bonds in late 2023. The default worsened the ongoing debt crisis in China’s critical property sector, which had already seen significant fallout from other players like China Evergrande Group. Country Garden, currently restructuring $16.4 billion in offshore debt with plans for a 70% reduction, recently informed a Hong Kong court that it expects to finalize restructuring terms with creditors by next month. Consequently, the court granted an adjournment until May 26 for a liquidation hearing filed by a creditor. Meanwhile, Country Garden has forecast a reduced annual loss for 2024, following its record-breaking 178.4 billion yuan ($24.33 billion) loss for 2023.

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