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Markets WRAP: Rand closes at R14.14/$

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19 Feb 2019

The rand closed at R14.14 to the greenback on Tuesday afternoon. The day's range was between R14.09 and R14.20.

TreasuryONE said earlier that the rand was likely to remain under pressure as all eyes turned to Finance Minister Tito Mboweni's Budget address tomorrow.

19 Feb 2019

Multinational grocery and general merchandise retailer Choppies has announced the resignation of one of its directors and Chairman of its Audit and Risk Committee, Robert Matthews. Matthews has resigned from both posts with immediate effect.

In a SENS statement, the company - which is listed on the Botswana Stock Exhange and the Johannesburg Stock Exchange - said Matthews had initially planned to resign from the Board on March 31.

"However, his unavailability over the course of the remainder of this month (February 2019) and much of next month (March 2019) for reasons relating, in part, to out of country travel, has brought forward his resignation date.

"Mr. Wilfred Mpai, a director of the Company, and a member of the Audit and Risk Committee, immediately assumes chairmanship of that committee," it said.

19 Feb 2019

Honda said it plans to close its factory in the UK in the biggest blow yet to the British auto industry already buckling under thousands of job cuts and the loss of key models in the run-up to Brexit.

The site in Swindon, about 80 miles west of London, is the nation’s fourth-largest auto plant and employs about 3 500 workers where the Honda Civic hatchbacks are made.

The facility will be closed in 2021, the company said Tuesday.

Honda also plans to cease producing Civic sedans at a facility in Turkey. Britain has long been a Japanese hub for European auto production, with Honda, Nissan and Toyota owning three of the country’s six largest factories.

With demand stagnant and new technology claiming more cash, carmakers in Japan and elsewhere are under pressure to tighten spending.

Brexit adds another layer off uncertainty: Nissan this month reneged on plans to build the X-Trail sport utility vehicle in Sunderland, citing the unresolved status of EU-UK trade after Brexit.

Honda said the move comes as it “accelerates its commitment to electrified cars, in response to the unprecedented changes in the global automotive industry.”

Brexit is one factor in slowing demand in Europe, but major markets including China are also declining. Looming trade conflicts are adding to the drag, with European automakers bracing for potential US import duties.

UK-made products separately risk being disadvantaged by a new treaty that will gradually eliminate tariffs on Japanese imports to the EU. Still, Chief Executive Officer Takahiro Hachigo said the UK’s divorce from the EU wasn’t a factor in Honda’s move, but the company changing its production as the industry moves toward electric cars.

Honda plans to import electric vehicles to Europe from Japan and China, Hachigo told reporters in Tokyo. The company will also boost manufacturing of the Civic in North America, where 55% of the models made in the UK are currently exported to.

The company’s European headquarters will remain in Britain.

Honda shares rose 0.4% in Tokyo on Tuesday. The plant closure will boost Honda’s operating profit by more than 30 billion yen ($271 million) annually from 2023, according to an estimate by Koichi Sugimoto, an analyst at MUFJ Morgan Stanley in Tokyo.

Under Hachigo, Honda is undergoing a sweeping restructuring of its global footprint. In Japan, it’s planning to end car production at a major plant for the first time in the company’s history, concentrating output to a new facility from 2022. The company’s Swindon plant was established in 1985. It has operated at less than full capacity in recent years as demand in Europe slumped, prompting Honda to suspend a production line with a capacity of 100 000 units in 2014.

The decision was “deeply disappointing,” UK Business Secretary Greg Clark said. The EU-Japan Economic Partnership Agreement, in force since February 1, ensures that the bloc’s 10% tariff on Japanese car imports will be reduced to zero over the next 10 years. The treaty makes it easier for Japanese automakers to localise production at home for sale in the EU, consulting firm LMC Automotive said in a report this month.

The UK is most at risk because almost half of the cars made in the country are Japanese branded, and Japanese automakers want to increase utilisation of plants at home.

“Should Britain leave without a deal and WTO tariffs are applied to UK vehicle exports, the same cars made in Japan may well end up costing less to import into the EU than those produced just over the Channel in England,” LMC’s director of global production forecast, Justin Cox, said in the February 11 report. - Bloomberg


19 Feb 2019

Comair says its revenue growth was offset by elevated fuel prices and unforseen short-term aircraft leasing costs.

In a SENS statement on its interim results for the six months ended December 31, it said its earnings per share and headline earning per share decreased by 38% to 27.2 cents per share (prior period: EPS and HEPS of 43.6 cents per share).

"The non-airline businesses continued to perform well nevertheless, maintaining an overall contribution to Net Profit Before Taxation of 27% (prior period:19%) and sustained prospects for further growth. Cash generated from operations declined by R187 million to R436 million versus R623 million in the comparative period.

"The decline in cash generated from operations arose primarily as a result of elevated fuel prices.

"Investing activities included R89 million that was paid towards predelivery payments on the Boeing 737-8 MAX aircraft order and R253 million was invested in aircraft heavy maintenance. This resulted in a closing cash balance of R331 million(prior period: R777 million)."

19 Feb 2019

Bianca Botes, Corporate Treasury Manager at Peregrine Treasury Solutions said the rand retreated against major currencies on Monday in anticipation of the 2019 Budget Speech.

"The composition of Eskom’s rescue package is of particular significance to markets and what its effect will be on the local fiscus.

"The economic data calendar remains fairly benign, with a handful of statements from members of the ECB and Fed due out today. 

"The rand is expected to come under pressure as uncertainty surrounding the budget mounts."

Botes said the rand is expected to trade in a range of R14.08 to R14.20.


19 Feb 2019

Asian stocks trade mixed, dollar pushes higher

Cormac Mullen, Bloomberg

Asian stocks traded mixed Tuesday with little direction after a muted session in Europe and a US holiday.

The dollar edged higher and Treasury yields steadied.

Shares in Hong Kong, China and Korea slipped, while Japanese and Australian equities posted modest gains. US and European futures were little changed.

Global trade remained in focus as the European Union vowed prompt retaliation if the US imposes tariffs on imported vehicles, with trans-Atlantic trade tensions showing no signs of easing.

Bank of Japan Governor Haruhiko Kuroda told parliament the central bank would consider extra monetary easing if required, sending the yen lower and Topix index higher.

Oil advanced to trade close to its highest in almost three months.

Trade deal 

Trade continues to dominate global markets as the US and China race to reach a deal that would avert a tariff increase on Chinese goods by March 1, a deadline US President Donald Trump has said he may extend.

With Trump receiving the findings of a probe into whether imported vehicles pose a national security threat, the possibility of auto tariffs has been revived. 

19 Feb 2019

Tegeta wants Oakbay liquidated over non-payment of rent

Business rescue practitioners responsible for Tegeta Exploration and Resources have applied to have Oakbay Investments liquidated.

As first reported by Netwerk24, this comes as Oakbay is struggling to pay Tegeta. 

Tegeta business rescue practitioner Louis Klopper confirmed to Fin24 on Tuesday morning that Tegeta had applied to initiate a process of liquidating Oakbay, which was the flagship SA company of the Gupta family. 

The application was lodged in the Johannesburg High Court. 

“We have made [the] application. We issued the papers last night. Obviously Oakbay will have to apply their opposing papers and it must go to the courts,” said Klopper.

According to court documents Oakbay owes Tegeta R2.4m in back rent. 

Fin24 could not immediately reach Oakbay for comment. 

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