Taking Stock - German carmakers fined over emissions 'cartel'.

In today's taking stock we discus, VW group and BMW have been fined €875m (£752m) by the European Commission for colluding to curb the use of emissions cleaning technology.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

Local stocks traded sharply lower yesterday as investors fear the impact of the Covid-19 Delta variant on the economic recovery. The JSE All Share index posted a 2.34% decline (to 65,244 index points) while the blue-chip Top 40 index was 2.63% lower. Resources were the worst performing group, shedding 4.09% for the day. Excess deaths, seen as a more precise way of measuring total fatalities from the coronavirus, rose to their highest level since January in South Africa as the delta variant spread to all of the country’s nine provinces. In the week ended June 27, the country recorded 5 228 deaths compared with 1 729 official deaths from the virus, the South African Medical Research Council said.

 

EUROPEAN MARKET COMMENTARY

European stocks fell sharply on Thursday amid a global sell-off as concerns about the economic recovery resurfaced. The pan-European Stoxx 600 provisionally closed down 1.8%, with retailers dropping 3.2% to lead losses as all sectors and major bourses slid deep into negative territory. The European Central Bank revised its inflation target to 2% and said it would allow consumer prices to overshoot when deemed necessary.

 

US MARKET COMMENTARY

The major US stock indices fell Thursday on concerns about the global economic comeback from Covid-19. The losses came as Japan declared a state of emergency in Tokyo for the upcoming Olympics and as countries deal with a rebound in cases due to Covid variants. The Labour Department’s latest jobless claims data came in unexpectedly higher at 373,000, signalling a possible slowdown in the labour picture amid the Covid recovery. Economists expected to see 350,000 first-time applicants for unemployment benefits for the week ended July 3.

ASIAN MARKET COMMENTARY

Shares in Asia-Pacific fell in this morning as Covid worries resurfaced in the region. Olympics organizers will ban spectators from the upcoming summer games in Tokyo, after a state of emergency for the city was declared by Japan on Thursday as the country sees rising Covid-19 cases. The state of emergency will last till August 22. South Korea announced Friday that the greater Seoul area will be placed under the toughest social distancing rules of Level 4, according to local news agency Yonhap.

 

CURRENCY MARKET COMMENTARY

The rand weakened early on Thursday, weighed down by a stronger dollar after minutes from the US Federal Reserve's latest meeting confirmed the world's biggest central bank is moving toward tapering its asset purchases as soon as this year. At the close, the rand was trading around R14.34 to the dollar or 0.2% weaker. Fed officials last month felt the US economic recovery was taking hold but was surrounded with risks.

 

COMMODITIES MARKET COMMENTARY

Gold prices on Friday were set for the third straight weekly gain, as a slight pullback in the dollar made bullion less expensive for other currency holders, while a drop in US Treasury yields also offered support to the safe-haven metal. Oil prices were mixed on Friday after a boost from a drop in U.S. crude and gasoline inventories but were still set for a weekly decline on concerns that an OPEC+ impasse could swell global crude supplies.

LOCAL COMPANIES

Imperial Logistics (IPL) +33.7%

DP World plans to buy South Africa’s Imperial Logistics for $890 million (R12.8 billion), in what the port operator said would be its most significant acquisition in Africa so far. “Imperial’s business strongly complements DP World existing footprint in Africa and Europe,” the Dubai-based company said, adding that the deal demonstrates long-term confidence in the South African economy and the wider regional market despite recent challenges. The privately-held company offered R66 ($4.60) per share, a 40% premium to Imperial’s last close. DP World is one of the world’s largest operators of marine ports and inland cargo terminals, stretching from gateways in London and Antwerp to hubs in Africa, Russia, India and the Americas. It has been on an acquisition spree as it attempts to become a more diversified, integrated logistics company. The company bought supply chain solutions provider Syncreon Holdings last week for an enterprise value of $1.2 billion. DP World also continues to look for ways to cut debt and is considering offering international investors a chance to buy into the Jebel Ali Free Zone, a prized asset that helped transform Dubai into a hub of global trade, people familiar with the matter have said. Imperial, meanwhile, started as a small motor dealership in 1940s Johannesburg and now employs more than 25 000 people around the world. Under chief executive officer Mohammed Akoojee, the firm has been looking to dispose of non-core assets and position itself as the gateway to Africa for transporting goods. The company has also been awarded contracts by South Africa to import an unspecified quantity of coronavirus vaccine doses as the country battles one of the worst outbreaks on the continent. The deal is expected to close by the first quarter of 2022.

 

Mr Price Group (MRP) +1.2%

JSE-listed clothing and homeware retail giant Mr Price Group is a step closer to scooping online retail kitchenware pioneer Yuppiechef, after the Competition Commission of South Africa (CCSA) on Thursday announced it’s backing of the acquisition. The CCSA said in a statement that it “has recommended that the Competition Tribunal approve the proposed transaction” without conditions. “The commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets. The commission further found that the proposed transaction does not raise any public interest concerns,” it added. The CCSA noted in its statement that while Mr Price is an “omni-channel” retail business, it “sells a small percentage of its products through online sales channels [online stores, the MRP app and Facebook]”.

INTERNATIONAL COMPANIES

VW and BMW

VW group and BMW have been fined €875m (£752m) by the European Commission for colluding to curb the use of emissions cleaning technology. Daimler, which was part of the talks but blew the whistle on them, escaped without a fine. The companies had agreed not to implement more than basic EU standards, the Commission said. However, VW said that the contents of the discussions were not implemented, and that customers were not harmed. The carmaker said it was considering appealing against the decision. This type of fine is a first for the European Commission, which normally imposes competition penalties for price fixing and market sharing, rather than technical cooperation. The Commission said BMW, Daimler and three VW group brands - Audi, Porsche, and VW - had "illegally colluded to restrict competition" in diesel emissions cleaning. Specifically, it said the firms had regular meetings for five years on how to reduce emissions of nitrogen oxide, an exhaust gas harmful to people and the environment. The firms developed 'AdBlue', a liquid additive to turn nitrogen oxide into harmless water and nitrogen. However, while the carmakers knew that injecting more AdBlue into streams of exhaust gas could lead to more effective cleaning, they indicated to each other that none of them would aim above the minimum legal standards, the Commission said.

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Media, Sasfin Wealth

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