In today's Taking Stock, Starbucks has denied that it is currently pursuing a full sale of its China operations, countering a report by Caixin which suggested a formal divestiture process was underway.
Local Market Commentary
South African equities closed higher on Monday, with the Top 40 rising 0.63% to 87,683.8 points and the All Share index up 0.44% at 95,128.2. Sentiment was buoyed by the announcement of a US$1.5 billion (R27.2 billion) World Bank loan to support critical structural reforms, particularly in energy and freight transport infrastructure. The National Treasury highlighted this funding as pivotal in addressing systemic issues such as persistent low growth and high unemployment. Additionally, the Public Investment Corporation and British International Investment unveiled a partnership aimed at scaling climate finance and private credit across the continent, further reinforcing investor confidence in infrastructure-led growth in Africa.
European Market Commentary
European equities edged lower on Monday, with the STOXX 600 index down 0.3% as investors remained cautious amid heightened geopolitical risk following U.S.-Israeli strikes on Iranian nuclear facilities. Economic data painted a mixed picture: eurozone growth stagnated for a second consecutive month, driven by a sluggish services sector and weak manufacturing performance. Spain’s trade deficit widened nearly 49% year-on-year, reflecting higher import costs outpacing modest export growth. In contrast, Germany's economy showed signs of recovery, with the composite PMI rising to 50.4 in June on the back of strong manufacturing orders—the fastest pace in over three years—signalling potential stabilisation in the bloc’s largest economy.
U.S. Market Commentary
Wall Street posted robust gains on Monday, as dovish rhetoric from senior Federal Reserve officials bolstered expectations for rate cuts, despite mounting geopolitical uncertainty. The S&P 500, Dow Jones, and Nasdaq all closed sharply higher, led by strength in consumer discretionary stocks—particularly Tesla. Fed Vice Chair Michelle Bowman’s comments signalled a readiness to ease policy in response to softening labour market risks, while Chicago Fed President Austan Goolsbee downplayed inflationary concerns from tariffs. Markets are now pricing in two 25-bps cuts by year-end, with the first expected as early as September. Economic data also surprised to the upside, with flash PMIs indicating stronger-than-expected expansion and new home sales rising in May despite elevated mortgage rates.
Asia Market Commentary
Asia-Pacific equities rallied on Tuesday, driven by relief over U.S. President Trump's announcement of a ceasefire agreement between Iran and Israel, which reduced regional risk and improved investor sentiment across the region. In macroeconomic developments, the IMF approved a combined US$1.33 billion in funding for Bangladesh under its Extended Credit Facility, Extended Fund Facility, and Resilience and Sustainability Facility. The immediate disbursement of US$884 million aims to bolster the country’s economic resilience and green transition efforts, providing a backstop amid a challenging global environment.
Currency Market Commentary
The rand fell to a one-month low on Monday, pressured by broader risk-off sentiment and oil market volatility following U.S. military actions in the Middle East. Despite a return to risk-on positioning globally after news of a ceasefire between Iran and Israel, the local unit lagged its peers, reflecting domestic vulnerabilities. In contrast, the Australian and New Zealand dollars strengthened amid improved global risk appetite. Meanwhile, ECB President Christine Lagarde urged European lawmakers to accelerate legislative progress on the digital euro, highlighting ongoing delays that could hamper the central bank’s efforts to modernise the eurozone’s monetary system through a secure digital currency framework.
Commodity Market Commentary
Safe-haven commodities declined on Tuesday as risk sentiment improved following the announcement of a full ceasefire between Israel and Iran. Gold prices fell to their lowest in nearly two weeks, while Brent crude and WTI oil benchmarks dropped to their lowest levels in over a week. The de-escalation in the Middle East eased concerns about oil supply disruptions, leading to reduced demand for defensive assets. Market participants are now re-evaluating geopolitical risk premiums, particularly as the ceasefire is set to conclude a 12-day conflict that had triggered volatility across commodity markets.
Harmony Gold Mining Company Limited (HAR) +4.18%
Harmony Gold Mining is on track to deliver on its FY25 production, grade, and cost targets, supported by strong operating free cash flow, higher-than-guided recovered grades, and disciplined capital deployment. Output is expected between 1.4 and 1.5 million ounces, with all-in-sustaining costs within the R1.02m–R1.1m/kg range and underground grades above 6g/t. Key milestones include a record R1.4 billion interim dividend, a share price peak in April, and advancement of the MAC Copper acquisition. Harmony continues to enhance portfolio quality through sustainability-led growth, earning an MSCI ESG rating upgrade to BB and progressing strategic copper-gold projects.
Goldrush Holdings Limited (GRSP) 0.00%
Goldrush Group anticipates a sharp earnings rebound for the year ended 31 March 2025, with Group HEPS and EPS estimated between 130 and 150 cents, reflecting its first year of consolidated reporting following the end of investment entity classification. On a Company level, HEPS and EPS are projected at 4 to 6 cents per share, a marked turnaround from the 51.42 cents loss in FY24. The audited results are expected on or around 25 June 2025.
Starbucks Corporation (SBUX) -0.84%
Starbucks has denied that it is currently pursuing a full sale of its China operations, countering a report by Caixin which suggested a formal divestiture process was underway. While the coffee chain has reportedly held exploratory talks with over a dozen parties and circulated detailed due diligence questionnaires—with Goldman Sachs advising—the company has yet to decide whether to sell a controlling or minority stake. This strategic review follows a sharp decline in Starbucks’ Chinese market share, which fell from 34% in 2019 to 14% in 2024, amid growing competition from low-cost domestic rivals. Starbucks’ recent investments, including its ¥1.5 billion Coffee Innovation Park near Shanghai, suggest a longer-term view remains under consideration.
Virgin Australia Holdings Limited (VGN) --%
Virgin Australia shares surged 8.3% on debut following its A$685 million IPO, marking a key milestone in its return to public markets after a 2020 delisting. Priced at A$2.90 per share and valuing the airline at A$2.32 billion fully diluted, the offering drew strong institutional demand, aided by a nearly 30% discount to Qantas. Bain Capital’s stake will fall to 39.4%, while Qatar Airways retains 23%. Despite ongoing regional flight disruptions, Virgin reaffirmed fuel cost stability through robust Brent hedging. With a 34.4% domestic market share, Virgin remains a competitive challenger to Qantas (37.5%) in Australia’s aviation sector.
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