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Port Elizabeth - Shares ended the week higher by the grace of a strong spurt in the price of Naspers [JSE:NPN] shares, a rebound in retail shares and a bit of renewed strength among food companies – mostly neutralising the sharp falls of the value of mining shares.
Naspers ended the week nearly 12% higher after an announcement that the international media conglomerate will merge its South American assets with that of the other big player in the area to dominate the market in Brazil and open opportunities for aggressive growth in neighbouring countries.
Naspers’ latest results also showed its high capital expenditure of the last few years is already starting to pay off, and the share climbed to touch its record high.
Bank shares shrugged off rating agency Moody’s cutting of the large commercial banks’ credit ratings as investors are confident that SA banks will continue to deliver steady growth. Latest results from banks show bad debt has not increased significantly, while Reserve Bank figures have shown recently that credit extension is growing steadily. Bank shares increased by around 4% during the week.
Statistics SA announced last week that retail sales are holding up well, showing there are enough people with enough money to continue to buy stuff even if aggregate figures show that consumers are – on average – suffering. Recent results of Clicks Stores [JSE:CLS] have shown some resilience among consumers, as did numbers from Spar [JSE:SPP] last week and those of Pick n Pay [JSE:PIK] a few weeks ago.
Spar announced last week that headline earnings grew at 12.6% in the year to September. This good news pushed the share price up by more than 17%, with Pick n Pay adding 10%.
Food producers are still strong. Astral Foods [JSE:ARL] increased by 8.5%, AVI [JSE:AVI] rose 8.7% and Pioneer Foods [JSE: PFG] added nearly 5%.
Other retail shares ended the week strong as well. Lewis [JSE:LEW] added nearly 17% and JD Group [JSE:JDG] added 14%. Clothing retailers like Mr Price [JSE:MPC] and Woolworths [JSE:WHL] also attracted investors’ attention and ended the week 7.3% and 6.1% higher respectively.
The last bit of good news for the week was that manufacturing production increased by some 8% during September (year-on-year) compared to the previous disappointing figure of only 1% in August. The rest is all bad news.
SABMiller [JSE:SAB] announced that earnings increased by only 3% during the past quarter to September with very little in the results to make investors excited. The share price dropped 2%.
Vodacom [JSE:VOD] fell more than 5% as investors took a dim view on its interim results which showed that headline earnings per share dropped 5% during the 6 months to September. Vodacom blamed the decreased in the so-called termination rate forced onto cellular providers by the Independent Communications Authority of SA a few months ago.
Miners take a tumble
Then things got even worse: mining shares suffered a vicious sell-off with seemingly all commentators and investors focusing on the slump in commodity markets during the last few months. The gold price is entrenched below $1 200 per ounce for the time being and platinum hit a five-year low of $1 180 last week. Base metals and other commodities have all declined by some 30% to 40% over the last year.
The change of sentiment was clearly seen in the prices of commodity shares. Gold shares such as AngloGold Ashanti [JSE:ANG] dropped 8.6% and Durban Deep [JSE:DRD] fell 6.5%. Platinum counters Impala Platinum [JSE:IMP] and Anglo American Platinum [JSE AMS] chalked up losses of around 4% and Lonmin fell 5.7% as the lower platinum price is set to add to their troubles.
Kunba Iron Ore [JSE:KIO] declined more than 8% and Assore [JSE:ASR] fell 9.1%. Diversified mining giants Anglo American [JSE:AGL] and BHP Billiton [JSE:BIL] declined some 3.4% each.
The lower oil price and steady rand knocked another 3% off the Sasol [JSE:SOL] share price to levels where investors would be starting to nibble soon.
The week ahead
The most important event in the coming week will be the SA Reserve Banks’ regular monetary policy committee meeting, as usual scheduled for Wednesday with an announcement of any changes in interest rates on Thursday afternoon.
The best guess is that the new governor will leave interest rates unchanged if he read newspapers about his other new friend, the Minister of Finance Nhlanhla Nene, who has plans to increase tax rates within the next few months.
The coming week will see a lot of companies announce their results. Telkom [JSE:TKG] and Investec Bank [JSE:INP] will announce interim results. Gold Fields [JSE:GFI] will announce results for the third quarter of its financial year.
Annual results are due from Barloworld [JSE:BAW], PPC [JSE:PPC], Reunert [JSE:RLO], Nampak [JSE:NPK] and Tiger Brands [JSE:TBS].
Naspers ended the week nearly 12% higher after an announcement that the international media conglomerate will merge its South American assets with that of the other big player in the area to dominate the market in Brazil and open opportunities for aggressive growth in neighbouring countries.
Naspers’ latest results also showed its high capital expenditure of the last few years is already starting to pay off, and the share climbed to touch its record high.
Bank shares shrugged off rating agency Moody’s cutting of the large commercial banks’ credit ratings as investors are confident that SA banks will continue to deliver steady growth. Latest results from banks show bad debt has not increased significantly, while Reserve Bank figures have shown recently that credit extension is growing steadily. Bank shares increased by around 4% during the week.
Statistics SA announced last week that retail sales are holding up well, showing there are enough people with enough money to continue to buy stuff even if aggregate figures show that consumers are – on average – suffering. Recent results of Clicks Stores [JSE:CLS] have shown some resilience among consumers, as did numbers from Spar [JSE:SPP] last week and those of Pick n Pay [JSE:PIK] a few weeks ago.
Spar announced last week that headline earnings grew at 12.6% in the year to September. This good news pushed the share price up by more than 17%, with Pick n Pay adding 10%.
Food producers are still strong. Astral Foods [JSE:ARL] increased by 8.5%, AVI [JSE:AVI] rose 8.7% and Pioneer Foods [JSE: PFG] added nearly 5%.
Other retail shares ended the week strong as well. Lewis [JSE:LEW] added nearly 17% and JD Group [JSE:JDG] added 14%. Clothing retailers like Mr Price [JSE:MPC] and Woolworths [JSE:WHL] also attracted investors’ attention and ended the week 7.3% and 6.1% higher respectively.
The last bit of good news for the week was that manufacturing production increased by some 8% during September (year-on-year) compared to the previous disappointing figure of only 1% in August. The rest is all bad news.
SABMiller [JSE:SAB] announced that earnings increased by only 3% during the past quarter to September with very little in the results to make investors excited. The share price dropped 2%.
Vodacom [JSE:VOD] fell more than 5% as investors took a dim view on its interim results which showed that headline earnings per share dropped 5% during the 6 months to September. Vodacom blamed the decreased in the so-called termination rate forced onto cellular providers by the Independent Communications Authority of SA a few months ago.
Miners take a tumble
Then things got even worse: mining shares suffered a vicious sell-off with seemingly all commentators and investors focusing on the slump in commodity markets during the last few months. The gold price is entrenched below $1 200 per ounce for the time being and platinum hit a five-year low of $1 180 last week. Base metals and other commodities have all declined by some 30% to 40% over the last year.
The change of sentiment was clearly seen in the prices of commodity shares. Gold shares such as AngloGold Ashanti [JSE:ANG] dropped 8.6% and Durban Deep [JSE:DRD] fell 6.5%. Platinum counters Impala Platinum [JSE:IMP] and Anglo American Platinum [JSE AMS] chalked up losses of around 4% and Lonmin fell 5.7% as the lower platinum price is set to add to their troubles.
Kunba Iron Ore [JSE:KIO] declined more than 8% and Assore [JSE:ASR] fell 9.1%. Diversified mining giants Anglo American [JSE:AGL] and BHP Billiton [JSE:BIL] declined some 3.4% each.
The lower oil price and steady rand knocked another 3% off the Sasol [JSE:SOL] share price to levels where investors would be starting to nibble soon.
The week ahead
The most important event in the coming week will be the SA Reserve Banks’ regular monetary policy committee meeting, as usual scheduled for Wednesday with an announcement of any changes in interest rates on Thursday afternoon.
The best guess is that the new governor will leave interest rates unchanged if he read newspapers about his other new friend, the Minister of Finance Nhlanhla Nene, who has plans to increase tax rates within the next few months.
The coming week will see a lot of companies announce their results. Telkom [JSE:TKG] and Investec Bank [JSE:INP] will announce interim results. Gold Fields [JSE:GFI] will announce results for the third quarter of its financial year.
Annual results are due from Barloworld [JSE:BAW], PPC [JSE:PPC], Reunert [JSE:RLO], Nampak [JSE:NPK] and Tiger Brands [JSE:TBS].
