Markets LIVE: Rand closes at R14.20/$
The rand strengthened on Wednesday afternoon on the prospect that that US President Donald Trump will delay imposing tariffs on auto imports.
"The rand liked this change of stance by President Trump," said TreasuryONE in a snap note to clients.
At 16:30 the local currency was trading at R14.21/$, up 0.23% on the day.
Bond investors cheer near-completion of Sasol's US Project
Colleen Goko and Paul Burkhardt, Bloomberg
For investors with nerves strong enough to stomach swings in oil prices and delay upon delay in a multi-billion dollar project, Sasol’s bonds have given ample reward.
The Johannesburg-based petro-chemical company’s $750 million of notes due 2028 have returned 11.7% in the year to date, more than the 6.7% gain in the ICE Bank of America Merrill Lynch Emerging Markets Corporate Plus Energy Index and the 6% average across emerging-market corporate debt.
The bonds have also beaten returns on the shares, which have added less than 1%. Revenue from Sasol’s main coal-to-liquid-fuel business depend on the price of crude oil, which has climbed 32% this year.
The company recently said its $11.4 billion Lake Charles plant in Louisiana was 96% complete, allaying concerns about continuing cost overruns.
The rand’s stability has also helped contain capital and debt-service costs.
“Ultimately, that has enabled Sasol to be in a better position to service debt,” said Bronwyn Blood, a fixed-interest portfolio manager at Granate Asset Management.
Yields on the 2028 bonds have dropped 132 basis points this year, narrowing the premium over comparable U.S. Treasuries to 227 points, from a high of 386 points in January.
SA retail sales rise at slowest pace in four months
David Malingha, Bloomberg
South African retail sales rose at the slowest pace in four months in March. Retail sales expanded 0.2% from a year earlier, compared with a revised 1.4% increase in February, Statistics South Africa said in a statement on Wednesday.
The median of seven economists’ estimates was for 0.6% growth. Sales contracted 0.7% from a month earlier, it said.
Confidence in the retail industry fell to the lowest since the end of 2013 in the first quarter, Rand Merchant Bank said in March.
President Cyril Ramaphosa’s rise to power boosted business confidence in early 2018 but sentiment has slumped as trading conditions remain depressed.
US futures, Europe stocks dip as Asia advances
Todd White, Bloomberg
European stocks turned lower on Wednesday alongside US equity futures as the rebound in global shares struggled to maintain its momentum.
Oil slipped, while Treasuries advanced with German bonds. Contracts on the S&P 500, Dow and Nasdaq swung between gains and losses, while the Stoxx Europe 600 edged lower as drops in carmakers offset gains in construction companies.
The bright spot was Asia, where a regional equities gauge headed for its biggest one-day increase in six weeks. Mainland China led gains as speculation increased that Beijing will boost stimulus after data showed the economy lost steam.
Treasury yields sank to the lowest level since March, with investors still reeling from the breakdown in trade negotiations in the past week. Yields on 10-year German bunds slipped to the lowest since 2016, but they jumped for Italy’s debt, as the nation’s deputy premier Matteo Salvini racheted up tensions over the country’s deficit.
Sustained appetite for risky assets is missing as investors remain on edge following a trade-induced roller coaster for markets. The White House is preparing duties on the remaining $300 billion of Chinese imports, and economists warn the new penalties will eventually weigh heavily on the American economy.
President Donald Trump is preparing to meet his Chinese counterpart, Xi Jinping, at next month’s G-20 summit, an encounter that could prove pivotal in the deepening clash over trade. “It’s just too early to tell if this is a buy, on slightly oversold conditions, or if it’s the start of stabilisation,” Gina Martin Adams, chief equity strategist at Bloomberg Intelligence, told Bloomberg TV in Hong Kong. “Our working thesis is that we’re going to be in for a period of volatility for most of the next month as we await the G-20 meeting.”
Elsewhere, oil fell as an industry report signaling a jump in US stockpiles eased concerns over a supply crunch, after a drone attack in Saudi Arabia had highlighted the vulnerability of the country’s energy infrastructure.
Goldman partners with Investec in African capital-markets push
Vernon Wessels and Roxanne Henderson, Bloomberg
Goldman Sachs Group is expanding in South Africa as the US investment bank seeks to tap into fast economic growth on the continent.
The lender is partnering with Investec on equity trading, which will allow both firms to extend their trading operations from Johannesburg to the rest of Africa, New York-based Goldman Sachs said in a statement on Wednesday.
Goldman Sachs, which has had a presence in South Africa for 20 years, will offer fixed-income products, including foreign exchange and South African government securities, to corporate and institutional investors in the country.
The firm already provides advisory, wealth- and asset-management services to corporations, investment firms, government institutions and individuals in South Africa.
MTN Nigeria plans Nigerian Stock Exchange listing, at about R3.55 per share
MTN on Wednesday issued a notice to shareholders indicating it intends to recommend to the MTN Nigeria Board to approve the listing of its subsidiary, MTN Nigeria on May 16.
The commencement price of the listing is to be 90 naira or about R3.55 per ordinary share.
"The listing of MTN Nigeria deepens the equity capital markets base of the country, which makes it possible to broaden the shareholding base of MTN Nigeria over time.
"The listing by introduction means that the existing shares of MTN Group (78.8%), the Nigerian investors (19.4%) and other investors (1.8%) will be listed without an additional public sale of shares," the notice read.
MTN is raising R8bn in Nigeria for expansion
eMedia releases trading statement
eMedia Holdings which owns broadcast news channels eNCA and Open View as well as entertainment channel e-tv on Wednesday released it trading statement, providing an update on its expectations for the March 2019, 31 year-end earnings.
According to the trading statement, earnings per share is expected to range between 9 and 12 cents per share, an improvement from the 355.20c loss per share reported in March 2018.
Earnings per share from continuing operations is expected to range between 15 and 17c per share, compared to the 2018 351.03c loss per share. The loss per share from discontinuing operations is expected to range between 4 and 6c per share compared to the 2018, 4.17c loss per share.
Headline earnings per share is expected to range between 13.50 and 14c per share, compared to the 2018, 2.81c loss per share.
Headline earnings from continuing operations is expected to range between 15 and 17cper share, compared to the 2018, 1.97c earnings per share.
Headline loss from discontinuing operations is expected to range between 2 and 3c per share, compared to the 2018, 4.78c loss per share.
"The losses per share in the prior year can be significantly attributed to the impairment of goodwill recognised upon the acquisition of eMedia Investments Proprietary Limited in the year ended 31 March 2014," eMedia Holdings said.
The group expects to release its results for the financial year ending March 31, 2019 on or about May 23, 2019.
RECAP: Rand second-best performer on Tuesday
The rand strengthened by 0.6% against the US dollar to close Tuesday at 14.24. This made the rand the second-best performing emerging market currency after the Russian ruble, which appreciated by 0.7% against the US dollar, RMB Global Markets Research economist Mpho Tsebe noted in a report.
Analysts from NKC economics expects the rand to trade within a range of R14.00/$ to R14.35/$ on Wednesday.
NKC also expects retail sales data for March to register year-on-year growth of 0.4%. NKC also expects US retail sales to moderate in April after its strong showing in March.
SPAR releases interim results
The retail group on Wednesday releed its financial statements for the six months ended March 31, 2019.
Salient features show:
Group turnover increased 8.6% to R54bn.
Southern Africa turnover increased 7.7% to R37.3bn.
Operating profit increased 5.1% to R1.4bn.
Normalised diluted HEPS increased 7.4% to 525.9c.
Headline earnings peer share is down 3.4% to 532.6c
Interim dividend per share declared increased by 5.2% to 284c.
The net asset value per share is up 10.1% to R3.7bn.
Dollar rebounds on positive trade comments
Trump’s positive remarks on the Sino-US trade negotiations has seen a rebound in the dollar as well as global stock markets, according to TreasuryONE.
The dollar has firmed to 1.1210 against the euro and 1.2912 against the pound.
The rand is stable in a 14.2000-14.3500 range as emerging markets look for fresh direction.
Wall Street recovered yesterday with all three indices closing up around 1.0%. Asian stocks are also up this morning as markets stabilise. Gold has slipped due to the calmer markets and is trading at $1 295.20.
Opening indicators, from TreasuryONE:
Gold 1 295.26
Plad 1 336.40
Rhod 2 915.00
Irid 1 470.00
Copp 5 997.00
Gold ZAR 18 439.48
Plat ZAR 12 129.16
Rand steady amid trade talks
The local unit opened at R14.24/$ on Wednesday morning.
Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions expects the currency to trade between a range of R14.15 and R14.38.
Commenting on the rand's movements in a market update Botes noted that the rand had been holding steady, despite developments in trade talks between the US and China. Over the weekend each of the countries imposed steep tariffs.
"The rand has remained surprisingly steady, trading in a fairly tight range. Some relief coming from the continuing trade talks is likely to provide the local unit with some breathing room, at least in the short term," Botes said.
Earlier on Wednesday data on China's retail sales and unemployment dropped, but market reaction was mainly dominated by trade talks, Botes said.
Later on Wednesday data on local and US retail sales data is expected to be released. The EU will also release GDP figures. "We expect the data to cause some added turbulence to the currency market," Botes added.WATCH: Trump threatens more action in China trade fight