American Express Exceeds Q4 Revenue Expectations with Strong Holiday Spending

LOCAL MARKET COMMENTARY
The Top 40 Index rose 0.44% on Friday, closing at 75,976.8 points, while the All Share Index gained 0.41% to 84,291.0 points. Standard Bank faces a R13 million penalty from the South African Reserve Bank for non-compliance with the Financial Intelligence Centre Act. Richemont’s market value surpassed 100 billion Swiss francs (R2 trillion), driven by strong performance from Cartier and better-than-expected quarterly sales. SARB Governor Lesetja Kganyago was appointed Chancellor of Stellenbosch University. Meanwhile, the Democratic Alliance criticized the Government of National Unity for excluding coalition partners on key health and land reform bills.

EUROPEAN MARKET COMMENTARY
The FTSE 100 slipped on Friday as a stronger pound weighed on export-driven stocks. UK consumer confidence fell to its lowest level in over a year, with the sharpest January decline since 2011. Retailers reported weaker sales and limited expectations for improvement. In Germany, private sector activity showed signs of stabilization, with services growth offsetting continued manufacturing decline. However, the government reduced its 2025 growth forecast to 0.3%, citing economic stagnation. Russian businesses anticipate 10.7% inflation in 2025, driven by labor shortages.

US MARKET COMMENTARY
Wall Street ended lower on Friday, pressured by mixed economic data and corporate earnings. The tech sector, led by Nvidia, posted significant declines. Housing data exceeded expectations, while business activity slowed to a nine-month low, according to S&P Global. The University of Michigan’s consumer sentiment index fell to 71.1. Traders expect the Federal Reserve to maintain rates at its next meeting, with a potential rate cut forecasted for June. U.S. military equipment sales hit a record $318.7 billion in 2024, driven by Ukraine-related stock replenishment and broader defence preparations.

ASIA MARKET COMMENTARY
Asian markets traded mixed, digesting China’s industrial data. China’s January manufacturing PMI unexpectedly contracted to 49.1, below the forecast of 50.1. While industrial profits rose 11% in December, state-owned enterprises saw a minimal 0.4% profit increase in 2024, down from 7.4% growth in 2023. Markets in Australia, Taiwan, and South Korea were closed for holidays.

CURRENCY MARKET COMMENTARY
The South African rand strengthened on Friday, supported by a weaker dollar following Trump’s call for lower Fed rates. Attention now shifts to the South African Reserve Bank's rate decision this week. The dollar firmed slightly this morning as markets assessed the potential impact of Trump’s tariff policies, though it ended last week at its weakest since November 2023. These concerns resurfaced with Trump's announcement of sweeping measures on Colombia. The pound rallied against the dollar, poised for a weekly gain after three weeks of losses, pressured by the lack of concrete tariff policies from the U.S. administration

COMMODITY MARKET COMMENTARY
Gold prices climbed more than 1% on Friday, nearing October’s all-time high, supported by a weaker dollar amid U.S. President Donald Trump's call for lower interest rates and tariff uncertainty. Oil prices dropped over 1% after Trump urged OPEC to cut prices, following initiatives to boost U.S. oil and gas production. Additionally, China imposed a ban on livestock imports from several countries due to outbreaks of sheep pox, goat pox, and foot-and-mouth disease.

BHP Group Limited (BHG) -2.88%

BHP achieved strong operational results in the first half, with standout performances across key assets driving a 10% increase in copper production. Escondida delivered its highest output in a decade, offsetting weather-related disruptions at Copper SA. Western Australia Iron Ore (WAIO) shipped record half-year volumes, supported by supply chain enhancements and the successful completion of major port debottlenecking projects. Steelmaking coal production from BMA operations also grew significantly, up 14% year-on-year. Progress continued on future-facing commodities, highlighted by the establishment of Vicuna Corp. in collaboration with Lundin Mining to advance the Filo del Sol and Josemaria copper projects in Argentina, regarded as among the most significant global copper discoveries in decades. In Canada, the Jansen Stage 1 potash project reached 63% completion, with first production on track for late 2026, alongside concurrent work on Stage 2. In Brazil, a comprehensive settlement agreement was signed between Samarco, BHP Brasil, Vale, and Brazilian authorities, demonstrating BHP Brasil’s commitment to addressing the impacts of the Fundão dam failure. Additionally, the WA Nickel operations entered a period of temporary suspension, with employees redeployed to other roles across the organization. Looking ahead, BHP expects several key assets to achieve production in the upper range of their guidance for the second half, supported by disciplined cost management. With a clear growth pathway and strong momentum, BHP remains well-positioned for continued operational and strategic success.

Clicks Group Limited (CLS) -3.67%

Clicks Group achieved an 8.1% increase in turnover for the first 20 weeks of the 2025 financial year, reaching R18.2 billion, compared to an 8.0% increase during the corresponding period in 2024. Retail sales, encompassing Clicks, The Body Shop, and Sorbet corporate stores, rose by 8.7%. To ensure comparability, turnover from Unicorn Pharmaceuticals, sold effective 1 August 2024, was excluded from both the current and prior periods, with no impact on group turnover or the distribution segment. Comparable store sales grew by 5.9% (2024: 8.4%), with selling price inflation averaging 3.5% (2024: 7.5%) and volume growth of 2.4% (2024: 0.9%). Growth in Clicks was driven by strong health and pharmacy sales, higher private-label product penetration, and record-breaking promotional activity during Black Friday, resulting in market share gains across all categories in the first quarter. However, non-promotional sales growth slowed, and Christmas gifting, paperware, and home and electrical categories underperformed relative to the prior period. Since resolving the Unicorn Pharmaceuticals licensing issue in August 2024, the Department of Health has resumed granting pharmacy licenses, with Clicks receiving 27 new licenses to date. The group opened 11 new pharmacies in November and December 2024, with plans to accelerate expansion further. UPD’s performance also improved, with wholesale turnover growing by 9.5% (2024: -0.8%) and total managed turnover, combining wholesale and bulk distribution, increasing by 3.6%, a significant recovery from the 6.3% decline in the prior period. This was supported by momentum from the prior year's large-scale systems implementation. The group’s interim results for the six months ending 28 February 2025 are expected to be released on SENS around 16 April 2025. The financial information provided in this update has not been reviewed or audited by the group’s independent auditor.

American Express (AXP) -1.39%

American Express surpassed fourth-quarter revenue expectations on Friday, driven by increased consumer spending during the holiday season, particularly in travel and online shopping. Travel and entertainment spending, especially airline travel, performed strongly. Billed business grew by 8% to $408.4 billion, and revenue increased 9% to $17.18 billion, beating estimates of $17.16 billion. On a per-share basis, earnings matched expectations at $3.04. CEO Stephen Squeri noted that spending momentum continued into January, supported by improved small-business sentiment. AmEx forecast 2025 earnings per share between $15 and $15.50, with expected revenue growth of 8%-10%.

LG Energy Solution (373220) 0.00%

LG Energy Solution announced plans to cut capital expenditure by up to 30% in response to slowing electric vehicle demand, marking its first quarterly loss in three years. The company, a key supplier of batteries to Tesla, General Motors, and Volkswagen, reported an operating loss of 226 billion won ($158 million) for Q4. Revenue for the quarter fell 19% year-on-year to 6.45 trillion won. Despite the loss, LG Energy Solution aims for 5%-10% revenue growth in 2025, driven by joint battery production ventures with Stellantis and Honda in North America, expected to begin in the second half of the year.

Anhui Jianghuai Automobile Group (600418) +2.13%

Anhui Jianghuai Automobile Group (JAC) expects a net loss for 2024, primarily due to the weak performance of its joint venture with Volkswagen, Volkswagen Anhui. JAC forecast a net loss of 1.8 billion yuan ($249 million), reversing a 1.5 billion yuan profit in 2023. JAC's investment in Volkswagen Anhui is expected to result in a 1.4 billion yuan loss, along with a 1.1 billion yuan provision for asset impairment. Volkswagen confirmed the financial result, stating it was anticipated.

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