In today's taking stock we discuss, Woolworths has announced the launch of its online shopping platform to shoppers in Mauritius, making it the first South African retailer to launch an online shopping platform in the country.
SOUTH AFRICAN MARKET COMMENTARY
Tech investor giants Naspers and its unit Prosus slumped 7.82% and 6.30% respectively after online gaming chiefs, including Tencent Holdings, were summoned by Chinese authorities to check they are sticking to strict new rules for the sector. Prosus holds close to 29% of Tencent. Overall, the Johannesburg All-share index fell 2.06% (to 64,177 index points) while the Top 40 index declined 2.29%.
EUROPEAN MARKET COMMENTARY
European stocks closed mixed on Thursday as investors in the region reacted to announcements from the European Central Bank. The pan-European Stoxx 600 ended the session barely below the flatline, having fallen as much as 0.8% earlier in the day. Industrials added 0.6% while basic resources slumped 0.8%. The European Central Bank kept its monetary policy unchanged on Thursday but opted to slow down the pace of net asset purchases under its pandemic emergency purchase program.
US MARKET COMMENTARY
The Dow Jones Industrial Average fell more than 150 points on Thursday, the 30-stock average’s fourth day of losses. Investors remained cautious as they try to discern what’s next to happen with the delta variant, the economic reopening and the Federal Reserve. Several airlines on Thursday lowered their forecasts because of the resurgence in Covid. United Airlines, American Airlines and Southwest Airlines each gave cautious comments.
ASIAN MARKET COMMENTARY
Shares in Asia-Pacific edged higher in early morning trade today, as investors monitored Hong Kong-listed stocks of firms in regulation-hit sectors such as video games. Shares of Tencent in Hong Kong jumped 2.33% while Netease gained 3.96% — a partial recovery after the heavy losses seen Thursday. The South China Morning Post on Thursday reported that the Chinese government will suspend approvals for new online games in the country, sending gaming stocks tumbling. After the market close, however, the media outlet corrected the report to instead say regulators will slow the approvals process.
CURRENCY MARKET COMMENTARY
The rand strengthened slightly on Thursday thanks to current account data recording its largest surplus ever in the second quarter, while stocks were hammered as investors exited tech companies after China's government summoned gaming firms. At the close of the session, the rand was trading around R14.20 to the dollar or 0.01% softer. A major driver of the record Q2 current account reading was that the trade balance notched up a surplus of 613.7 billion rand ($43.39 billion), up from 450.8 billion rand previously and also an all-time high, on higher key commodities prices and buoyant global demand.
COMMODITIES MARKET COMMENTARY
Gold prices were steady this morning, caught between a pullback in the dollar and growing uncertainty over the U.S. Federal Reserve’s timeline to start tapering stimulus, with the precious metal heading to record a weekly decline. Oil prices dipped earlier today, heading for weekly losses of nearly 2%, after China announced it would release oil from it strategic reserve and some U.S. airlines, key to a recovery in jet fuel demand, warned of a slowdown in ticket sales.
Sanlam (SLM) -1.0%
Sanlam is planning to exit several of its UK-based operations, including its life insurance and wealth management units, in order to free up capital for its expansion in various African markets and in India. Africa’s largest insurer is buying a further stake in Morocco-based Saham Assurance SA for about R2 billion ($141 million) to boost its presence on the continent, where it already operates in over 30 countries. “We will maintain an asset management business in the UK,” chief executive officer Paul Hanratty said by phone. “Our other domestic businesses we’re exiting as they don’t form part of our strategy.” The Cape Town-based firm has already received 75 million pounds ($103 million) for Nucleus Financial Group Plc after finalising its sale in August and is exploring the disposal of its insurance, pensions and wealth businesses in the UK. The move falls in line with the insurer’s African focus, started three years ago when it paid $1.1 billion for Saham Finance. The CEO declined to disclose the value of the businesses Sanlam is exiting. It’s also focusing on growing its market share in South Africa where it still makes most of its money. The nation has been hit hard by the pandemic, with Sanlam and its peers reporting record mortality claims. The company is raising life premiums to protect its income base from the ongoing effects of Covid-19. It has also been recording increasing claims out of its markets in East and West Africa, Hanratty said. The firm, which does not declare an interim dividend, reported a 16% increase in its net result from financial services for the six months ending in June, compared with the same period last year. It’s appointed Carl Roothman, currently the head of Sanlam Private Wealth, to the role of CEO of Sanlam Investment Group with effect from January next year after the retirement of Robert Roux.
Woolworths (WHL) -0.6%
Woolworths has announced the launch of its online shopping platform to shoppers in Mauritius, making it the first South African retailer to launch an online shopping platform in the country. In a statement on Thursday, Woolworths said Mauritian shoppers will have access to over 30 000 of its fashion, beauty and homeware items. The retailer currently has six stores on the island, but the new service will be supported from its Bagatelle Mall store in the Moka district, which has a wider variety of products. “We are always looking for ways to make life easier for our customers, and we are excited to be able to introduce new services to enhance their shopping experience,” Woolworths divisional executive for Rest of Africa Yobe Mvula said in the statement. The launch of the pilot service comes as Woolworths celebrates a decade of trading in the country. Customers will enjoy a free gift wrapping service and free deliveries for the month of September.
Wells Fargo (WFC) +1.2%
Wells Fargo was hit with a $250 million fine from a banking regulator after it failed to properly execute a mortgage loss mitigation program. The Office of the Comptroller of the Currency said Thursday that the bank engaged in “unsafe or unsound practices” tied to its loan modification program and violated the terms of a 2018 consent order that was critical of its risk management systems. In its own release, Wells Fargo acknowledged the OCC’s regulatory action and said that a separate issue, a Consumer Financial Protection Bureau consent order from 2016, had expired. Shares of the bank climbed 1.6% on the news.
Ford (F) -2.1%
Ford Motor is ending vehicle production in India, shutting down its two large plants there and terminating thousands of employees, as CEO Jim Farley restructures the automaker’s operations as part of a turnaround plan. The company said Thursday the actions will cost about $2 billion, including pretax special charges of about $600 million in 2021 and $1.2 billion in 2022. About $300 million of the $2 billion will be non-cash charges, including accelerated depreciation and amortization, according to the company. About 4,000 people will lose their jobs due to the plans.
In todays market in a minute, Andrew discusses how the JSE fell 2% however Aspen hit a 3 year high. They have received offers for parts of their business. Lululemon hit all time high and surged 10% after exceptional set of results.