MONEY LIVE | Gold holds worst loss this month ahead of Fed meeting outcome

Gold held its worst daily loss since late November as investors considered the latest US inflation data and counted down to the conclusion of the Federal Reserve’s last meeting of the year later Wednesday.

Prices paid to US producers posted a record annual increase of almost 10% in November, a surge that will sustain a pipeline of inflationary pressures well into 2022. That’s boosting the case for the Fed to tighten monetary policy, which is weighing on non-interest bearing assets such as precious metals. 

All eyes are now on the central bank’s meeting, the results of which are released later Wednesday. The Fed could announce a doubling of the pace of its bond-buying taper and lay out a steeper path of interest-rate hikes, according to Bloomberg Economics. Bullion is heading for its first annual loss in three years amid diminishing monetary support from central banks, although uncertainties surrounding the impact of the new virus variant could stoke demand for haven assets.

The World Health Organization is concerned that omicron is being dismissed as mild, even as it spreads at a faster rate than any previous strain of Covid-19.Spot gold fell 0.1% to $1 768.43 an ounce at 11:16 a.m. in London after dropping 0.9% Tuesday.

The Bloomberg Dollar Spot Index was little changed after advancing 0.3% in the previous session. Silver and platinum declined, while palladium fell to trade near the lowest since March 2020. Also due later are data on US retail sales and mortgage applications. - Bloomberg

China developers tumble on Shimao ‘red flag’

Chinese property developer shares and bonds plunged after a deal between units of Shimao Group Holdings Ltd. heightened governance concerns in an industry already grappling with a liquidity squeeze.

JPMorgan Chase & Co. analysts said a connected-party acquisition announced by the developer late Monday “not only implies tight liquidity conditions for Shimao, but is also a corporate governance red flag.”

The latest crisis comes as economic activity in China likely slowed in November partly due to the worsening downturn in the property sector.Shimao’s shares sank 20% Tuesday, their biggest drop ever, after plunging 12% a day earlier.

The property firm’s dollar and yuan bonds also tumbled again, pushing down other Chinese high-yield notes with them.

A gauge of property developer stocks fell to the lowest since early 2017, and China Evergrande Group’s shares dropped as much as 9.3% to a record low. - Bloomberg

Saudi Arabia boosted its revenue forecast for next year, with higher oil prices and production volumes poised to deliver the first budget surplus in eight years and the fastest economic growth since 2011. 

It’s a sharp turnaround after energy market turmoil and the pandemic combined to crater the kingdom’s nascent economic recovery from the last oil price rout. But it also underscored that despite years of efforts by Crown Prince Mohammed bin Salman to diversify the Group of 20 economy — including progress in new sectors like entertainment — the fortunes of the world’s largest crude producer still rise and fall with the price of oil.

To help mitigate that volatility, the kingdom is pushing ahead with plans to spend less. Excess government revenue will be "used as a buffer for the future," Finance Minister Mohammed Al-Jadaan said. 

Northam has a 10-year agreement for PGM concentrate with Ivanplats

Northam Platinum has concluded a ten-year agreement for the purchase of platinum group metal (PGM) concentrate with Ivanplats, a subsidiary of Ivanhoe Mines.

In terms of the agreement, Northam will purchase 50% of concentrate from Ivanplats’ Platreef mine in Limpopo, equating to some 20 000 tonnes of PGM concentrate per year.

Ivanplats’ first production from phase 1 of the project is anticipated in 2024.

In a statement Northam CEO Paul Dunne said the properties of the concentrate are especially favourable to Northam’s operational and processing requirements.

The transaction meanwhile serves to de-risk Northam’s operations from a mine to market perspective, providing additional diversification of supply over a ten-year period. 

Asian stocks rise as traders bet that global recovery is resilient to Omicron

Most Asian stocks rose Thursday as traders bet the global recovery will be resilient to the new virus strain.

Treasuries were stable after declining.MSCI Inc.’s gauge of Asia Pacific equities advanced for a third day, led by Hong Kong. U.S. contracts fluctuated after the S&P 500 and the technology-heavy Nasdaq 100 extended a rally. 

China’s central bank set its reference rate for the yuan at a weaker-than-expected level against the dollar after the currency’s advance to the highest since 2018. The British pound dropped to the lowest this year after fresh restrictions as the omicron strain spreads.

The dollar and crude climbed, while the 10-year Treasury yield held above 1.50% and the curve steepened.

Pfizer Inc. and BioNTech SE said initial lab studies show a third dose of their Covid-19 vaccine may be needed to neutralize the omicron variant. Pfizer will have data telling how well its vaccine prevents infections with the omicron before the end of the year, Chief Executive Officer Albert Bourla said, adding he expects a third booster dose will “do the job” in restoring high levels of protection.

The global equity rally will be tested as traders expect more volatility until there is more clarity on the omicron variant’s threat to the economy, and ahead of U.S. consumer inflation numbers this week and a Federal Reserve meeting next week that may provide clues on the pace of tapering and interest rate increases.

“We are looking to potentially have a rise in volatility even if the market continues higher around those events next week,” said Frances Stacy, Optimal Capital portfolio strategist, on Bloomberg Television.

“Many of the catalysts that gave us this boom out of Covid are slowing. And then you have the Fed potentially tapering into a decelerating economy.” In China, consumer prices rose at the fastest pace since August 2020.

Meanwhile, the nation’s indebted developers remain under scrutiny. A group of Kaisa Group Holdings Ltd. bondholders is close to signing non-disclosure agreements with the developer in a move that would pave the way for discussions around a potential financing deal for the beleaguered firm.

On the virus front, the U.K. tightened rules advising people to work from home and mandating the use of so-called vaccine passports in large venues. Denmark introduced a light version of the lockdown it had last winter. 

Bloomberg

Stocks and futures gain on virus hopes as the dollar dips

Stocks and U.S. futures rose along with Asian dollar bonds as optimism about vaccines eased concerns about the omicron variant and China policies helped buffer against fallout from mounting property debt distress.

MSCI Inc.’s Asia Pacific benchmark advanced for a second day. The onshore yuan strengthened to its strongest level since 2018. Pfizer Inc.’s shot has been shown to provide a partial shield against the omicron variant in a South African study. European futures climbed.

Steps by Chinese authorities to limit the fallout from property market woes lifted some risk assets in Asia even as key debt deadlines at China Evergrande Group and Kaisa Group Holdings Ltd. passed without any sign of payment. Asia dollar bonds and Chinese junk notes rallied the most in a month, extending a rebound this week after China’s central bank cut the reserve requirement ratio for most banks on Monday.

Treasury yields fell slightly after rising across the curve Tuesday, when the two-year yield reached the highest since March 2020 and the 10-year yield moved back toward 1.5%. The dollar dipped against most of its major peers. Crude was steady after surging past $72 a barrel in New York. Bitcoin climbed back above $50,000. 

Risk assets are recovering after a bout of turbulence sparked by the emergence of the new virus variant. So far, omicron cases haven’t overwhelmed hospitals and vaccine developments are promising.

The S&P 500 and the Nasdaq 100 chalked their biggest gains since March Tuesday. Gauges of volatility retreated, with the Cboe Volatility Index sliding.“This anecdotal evidence appears to have calmed financial markets, for now, as evidenced by the recovery in risk assets,” Carol Kong, a strategist at the Commonwealth Bank of Australia, said in a note.

“But we caution against drawing conclusions from these early reports.” Unless the variant proves resistant to vaccines, “we expect the global economy will largely continue with its pre-omicron recovery path,” she said.

Markets may not be clear of further turbulence amid lingering worries about central banks’ response to elevated price pressures, new restrictions to stem the spread of omicron and ratcheting up of geopolitical tensions.

U.S. President Joe Biden warned his Russian counterpart Vladimir Putin of “strong” measures if Ukraine was invaded.

Jeffrey Gundlach sees “rough waters” ahead for financial markets as the Federal Reserve is poised to accelerate the end of quantitative easing and then turn toward raising interest rates.

Goldman Sachs Group Inc. is warning dip buyers to proceed with caution amid the Fed’s hawkish tilt just as omicron spreads. Meanwhile, the list of Chinese developers warning they may not be able to meet upcoming financial obligations is growing. Trading in Kaisa Group’s shares was halted in Hong Kong pending an announcement containing inside information. 

Bloomberg

 Asian markets up as Omicron fears ease

Asian stocks opened higher on Tuesday as investors took heart from strong rebounds on Wall Street on hopes that the newest coronavirus variant will prove less dangerous than previously feared.

The Omicron variant has been detected across the globe but no deaths have yet been reported, with authorities worldwide racing to determine how contagious it is and how effective existing vaccines are.

Top US pandemic adviser Anthony Fauci said over the weekend that while more information was needed, preliminary data on the variant's severity was "a bit encouraging".

Hong Kong's Hang Seng Index was sharply up at the open, while Shanghai was slightly higher.

In Japan, the benchmark Nikkei 225 index gained 1.25 percent in early trade."

Japanese shares are seen gaining, as US stocks rallied, led by sectors which are sensitive to business cycles after strong concerns about the Omicron variant receded," Okasan Online Securities said in a note.

"The economic data looks very good," Sylvia Jablonski, Defiance ETFs chief investment officer & co-founder, told Bloomberg Television, noting that even long-term worries about the US Federal Reserve ending its ultra-loose monetary policy were not weighing on sentiment for the time being.

"We don't need the same sort of monetary stimulus that we had before so maybe the tapering isn't so bad -- we don't expect it to be too out of control or too quick so there is some good news for buying on the dip," she said.

Singapore, Jakarta, Wellington and Seoul were all slightly up, while stocks in Bangkok and Manila dipped slightly.

On Monday, European and US equities had rebounded on the Omicron news.

London's blue-chip FTSE 100 index rose 1.5 percent, with similar gains recorded in Frankfurt and Paris.Wall Street also had a strong day, with the Dow up 1.9 percent.

"It's been a positive start to the week for the FTSE 100, and European markets more generally, as concerns over the Omicron variant continue to diminish on further evidence of mild symptoms and so far no deaths reported because of getting the virus," said CMC Markets analyst Michael Hewson.

In China, however, the spectre of potential debt defaults by major property developers loomed.

Sunshine 100 China Holdings said it had missed a repayment deadline, adding to deep concerns over the property market that have been stoked by massive debt at Evergrande Group, as well as worries for Kaisa Group.

In response to the crisis, China's central bank said Monday it would cut the reserve requirement ratio by 0.5 percentage points for most banks, effective December 15.The move reduces the amount of cash the banks must hold in reserve, which will allow 1.2 trillion yuan ($188 billion) to be injected into the economy over the long term, the central bank said in a statement.

China's real estate industry -- a key growth driver in the world's second-largest economy -- has cooled in recent months after Beijing tightened home-buying rules and launched a regulatory assault on speculation.

AFP

More board changes at Absa

Absa announced a number of board changes on Monday, in the wake of the axing of former chair Sipho Pityana.

On Monday, Absa said in a notice to shareholders that businessperson Sello Moloko had joined the Group Risk and Capital Management Committee (GRCMC), Remuneration Committee (RemCo), Social and Ethics Committee (SEC) and Directors Affairs Committee (DAC), with immediate effect.

Moloko was appointed to the board as independent non-executive director and chairman designate of Absa Group and Absa Bank with effect from 1 December. He is set to take over from current chair Wendy Lucas-Bull in April 2022.

Alex Darko joined the Absa Bank board and Directors Affairs Committee, effective immediately. He has been an independent non-executive director since 2014.

Rene van Wyk will join the Absa Bank board on 1 February 2022, and will also become a member of the DAC on that day. Van Wyk is a familiar face at Absa, having served as interim CEO after Maria Ramos' retirement. Van Wyk rejoined the Absa Group board as a non-executive director from 1 August 2020.

Absa recently fired Pityana as a director after he failed to convince the board that his actions were not to the bank's detriment. In November, he had been axed as lead independent director of Absa Group and Absa Bank, and chair of the remuneration committee.  

Stocks rebound as Fauci says SA's Omicron data is 'a bit encouraging' 

S&P 500 index futures and European stocks rebounded from Friday’s selloff as investors took comfort in reports that cases of the omicron variant have been relatively mild. 

Oil rose after Saudi Arabia boosted the prices of its crude, signaling confidence in the demand outlook, which helped lift European energy shares.

The 10-year Treasury yield advanced to 1.40%, while the dollar was little changed and the yen weakened.

Nasdaq futures pared losses early in the U.S. morning, trading down 0.4%. In Asia, the losses were more severe. The Hang Seng Tech Index closed at the lowest level since its inception. SoftBank Group Corp. fell as much as 9% in Tokyo trading as the value of its portfolio came under more pressure.

"A wind of relief may blow the current risk-off trading stance away this week," said Pierre Veyret, a technical analyst at U.K. brokerage ActivTrades.

"Concerns related to the omicron variant may ease after South African experts didn’t register any surge in deaths or hospitalization."  

The mood across markets was calmer on Monday after last week’s big swings in technology companies and a crash in Bitcoin over the weekend. Investors pointed to good news from South Africa that showed hospitals haven’t been overwhelmed by the latest wave of Covid cases.

Initial data from South Africa are "a bit encouraging regarding the severity," Anthony Fauci, US President Joe Biden’s chief medical adviser, said on Sunday.

At the same time, he cautioned that it’s too early to be definitive. Meanwhile, China cut the amount of cash most banks must hold in reserve, acting to counter the economic slowdown in a move that puts the central bank on a different policy path than many of its peers.

The People’s Bank of China will reduce the reserve requirement ratio by 0.5 percentage point for most banks on Dec. 15, releasing 1.2 trillion yuan ($188 billion) of liquidity, according to a statement published Monday. 

Evergrande’s dollar bonds fell sharply and shares plunged 20% to a record low after the firm moved closer to a debt restructuring. The plan would include all its offshore public bonds and private debt obligations, people familiar with the matter said.

Attention this week turns to U.S. consumer prices, which are expected to show the largest annual advance in decades, keeping pressure on the Federal Reserve to deliver swifter policy tightening.   

Bloomberg        

No sugarcoating for Tongaat Hulett as it warns of over R200m loss

Embattled sugar producer Tongaat Hulett expects to report a loss of up to R249 million in the six months to end September due a number of factors including the July unrest and high inflation in Zimbabwe.

 "The interim period presented several additional obstacles to navigate, including hyperinflationary effects and higher input costs in Zimbabwe, disappointing milling performance in South Africa due to Covid-related maintenance delays, as well as significant challenges and losses related to the civil riots in South Africa, which also weighed on the revenue and profits of the property business," the company announced on Monday morning.

MTN makes Covid-19 vaccines mandatory for its employees

MTN has joined a growing number of South African companies that have implemented a vaccine mandate amid the battle with the fourth wave of Covid-19 and the new Omicron variant. 

Africa's largest mobile network operator said that those employees who refuse vaccinations, without a valid reason, will be fired. 

The policy will start in January. 

"The science is clear. Vaccination against Covid-19 reduces rates of serious infections, hospitalisation, and death," MTN group president and CEO Ralph Mupita said in a statement. 

Alexander Forbes and Sanlam in deal to buy each others' divisions 

Sanlam and Alexander Forbes have announced two transactions involving the companies buying divisions from each other. 

Sanlam will pay R200 million for for Alexander Forbes’ individual client administration business, which will become part of its Glacier subsidiary.

Alexander Forbes meanwhile is buying Sanlam's large stand-alone retirement fund administration operations for R154 million. 

Sanlam Group CEO Paul Hanratty said both transactions support Sanlam’s strategy to strengthen its position in South Africa.

"They will build on the acquisition of Alexander Forbes’ Group Risk business announced earlier this year and allow Sanlam to focus on providing sound advice and excellent products for customers backed by the strongest possible balance sheet. At the same time our administration clients can continue to look forward to excellent service from Alexander Forbes, whom Sanlam regard as market leaders in this area."

Alexander Forbes CEO  Dawie de Villiers said the group's board and executive are "excited by the opportunities that will be unlocked through the modernised digital capabilities now available to our financial advisers coupled with our larger retirement fund membership base."

 "The proposed transactions accelerate our transformation towards becoming the most impactful provider of financial advice to retirement fund members in South Africa."

The effective date of the transactions will depend on the fulfilment of certain conditions is expected to occur during the first half of 2022. 

Omicron uncertainty and the future of Chinese tech firms on Wall Street weigh on stocks

Asian markets broadly fell in morning trading Monday, tracking uncertainty over the Omicron variant of Covid-19 as well as disappointing US jobs data and the future of Chinese tech firms on Wall Street.

The Omicron variant has been detected in 38 countries but no deaths have yet been reported, with authorities worldwide racing to determine how contagious it is and how effective existing vaccines are at fighting it.

Top US pandemic advisor Anthony Fauci said Sunday that while more information was needed, preliminary data on the severity of the Omicron Covid-19 variant are "a bit encouraging."

Nevertheless, the new strain has sparked fears that the global recovery could be put in jeopardy, as governments reimpose restrictions that many had hoped would be a thing of the past.

IMF chief Kristalina Georgieva has warned the latest strain could slow the global recovery, noting that "a new variant that may spread very rapidly can dent confidence."

"Omicron-related uncertainty will linger while market participants wait to learn about the severity, infectiousness and resistance of the strain," Kim Mundy, a strategist at Commonwealth Bank of Australia, said in a note.

Tracking those fears -- as well as signs of a looming hawkish shift in US rates -- Tokyo, Seoul and Australia fell in morning trading.

Also down was Hong Kong, where news last week that Chinese ride-hailing giant Didi Chuxing would start the process of delisting from the New York Stock Exchange has sent shares in tech firms tumbling.

Shares in Chinese e-commerce giant Alibaba -- still reeling from the impacts of a broad regulatory crackdown on big tech by Beijing -- fell up to 8.3 percent in early trading, as the firm announced the biggest reshuffle of its top management since a massive fine for antitrust violations.

Losses in the US were also dragging markets down, after a week that saw the Federal Reserve signal a plan to accelerate the withdrawal of its monetary stimulus and potentially hike rates sooner.Dis

appointing US jobs data on Friday contributed to the pessimism, showing the world's largest economy added just 210,000 jobs last month -- fewer than half the increase forecasters expected.

Analysts have characterised the report as better than the headline figure, noting the unemployment rate dropped to 4.2 percent, a decline of four-tenths of a point from the prior month. The labour force participation rate also rose to its highest level since the pandemic.

AFP

Big tech sinks stocks as traders rush into havens

Stocks extended their weekly slide as traders weighed a mixed jobs report against prospects for stimulus unwinding by the Federal Reserve. The dollar and Treasuries rose.

The Nasdaq 100 tumbled, with electric-vehicle maker Tesla Inc. sinking about 6% and Facebook parent Meta Platforms Inc. poised for a bear market after a 20% plunge from a recent peak. Apple Inc. fell after a news report that iPhones of at least nine U.S. State Department employees were hacked.

China’s companies listed in the U.S. slid amid ride-hailing giant Didi Global Inc.’s preparations to leave American exchanges and regulators’ plans to force foreign firms to open their books or risk delisting. Haven assets like the Japanese yen, the Swiss franc and gold climbed.

Volatility across assets remained elevated, reflecting Fed Chair Jerome Powell’s hawkish tilt and uncertainty about how the omicron coronavirus outbreak will affect the global reopening. U.S. job growth had its smallest gain this year, while the unemployment rate fell by more than forecast to 4.2%.

Several analysts said the data wouldn’t necessarily be a game changer as policy makers would likely follow through with a faster tapering of asset purchases amid hot inflation.

The US Treasury again stopped short of labeling any foreign economies as manipulators of their exchange rates, while continuing to say that Taiwan and Vietnam met all three criteria for the designation.

Switzerland dropped off the list, last published in April, of countries exceeding the three thresholds, with officials saying it violated two of the criteria while narrowly missing a third.

The Fed’s march toward higher rates presents greater risk for stock investors, and the likelihood of a correction in the S&P 500 next year is “elevated,” according to Bank of America’s Savita Subramanian.

“We are in an environment where the dividend yield on the S&P 500 is below where cash yields are likely to be in a year or two,” the strategist told Bloomberg TV.

Bloomberg

Old Mutual unit wants to buy owner of Sportsmans Warehouse, Sorbet

Old Mutual’s private equity business has made an offer to buy out shareholders in Long4Life, which owns Sportsmans Warehouse, Sorbet and other assets.

Old Mutual Private Equity is making a cash bid of R5.80 per Long4Life share. If the bid succeeds, the company will be delisted the Johannesburg Stock Exchange. The Long4Life board of directors has constituted an independent board to consider the bid.

Absa shares leap on strong update

Absa has seen strong credit growth in the 10 months ended 31 October 2021, and now expects headline earnings in its biggest business - the Retail and Business Banking division - to more than double from the previous year.

Absa Corporate and Investment Bank's earnings have also increased "considerably", the bank said.

Its share price was more than 4% higher in late trading on Friday, following the trading update. 

Gross customer loans rose by mid-single digits year-on-year, with stronger growth coming from home loans and vehicle and asset finance. The bank is increasing its lending market share, particularly in asset-backed lending. It reported lower growth in personal loans. 

Former Sasol exec Thabiet Booley is Astron Energy's new CEO.

Astron Energy has announced Thabiet Booley as its new CEO. 

Booley has 24 years of experience within the petroleum industry, at Sasol where he most recently was Senior Vice President of Sasol Base Chemicals. He has also served as director on numerous Sasol subsidiary boards and joint ventures, as well as the boards of the South African Petroleum Industry Association and Chemical and Allied Industries’ Association.

Booley takes up the post from interim CEO Braam Smit

Astron Energy owns the Milnerton refinery in the Western Cape as well as 850 Caltex service stations across South Africa and Botswana which it will next year begin to rebrand.

Astron is a subsidiary of Glencore, a multinational mining and commodity trading company. 

Former Sasol exec Thabiet Booley is Astron Energy's new CEO.

Astron Energy has announced Thabiet Booley as its new CEO. 

Booley has 24 years of experience within the petroleum industry, at Sasol where he most recently was Senior Vice President of Sasol Base Chemicals. He has also served as director on numerous Sasol subsidiary boards and joint ventures, as well as the boards of the South African Petroleum Industry Association and Chemical and Allied Industries’ Association.

Booley takes up the post from interim CEO Braam Smit

Astron Energy owns the Milnerton refinery in the Western Cape as well as 850 Caltex service stations across South Africa and Botswana which it will next year begin to rebrand.

Astron is a subsidiary of Glencore, a multinational mining and commodity trading company. 

Foschini owner makes a move on online shopping platform Quench

The Foschini Group (TFG) has entered into a deal to acquire online shopping platform Quench.The shopping and distribution platform was established in 2016, providing consumers with groceries, liquor, restaurants and bakeries.

In a statement on Thursday, TFG said the acquisition will help it cement itself as a major brick-and-mortar and online retailer in Africa. The company explained that the addition of Quench to its business will give it access to reliable quick delivery across South Africa. 

Claude Hanan, co-head of TFGLabs, said: "We will continue to service Quench’s existing partners and customers and, in fact, will immediately invest in improving our offering and service to both."TFGLabs is the group’s technology division that is spearheading its digital transformation. The retailer is focusing on growing its online presence and turnover.

Hanan explained that the TFGLabs team has considerable experience in last mile delivery and online platforms and can strengthen the business, together with the Quench team.

Only 16 000 Gautrain passengers a day - from 55 000 before Covid-19, Murray & Roberts says

In a business update, the engineering and construction group Murray & Roberts said it expects it has entered a "multi-year period of strong earnings growth" after its continuing operations returned to profitability in the past financial year. The group has a current order book of about R60 billion, which is expects to grow further.

It currently generates revenue from its order book of between R2 billion and R2.5 billion per month.

M&R expects to generate most of its revenue in the next three years from its two international business platforms: mining, and its energy, resources and infrastructure unit.

Its energy, resources and infrastructure unit had an order book of R37.2 billion, with Australian public and private sectors continuing to invest heavily in economic and resources infrastructure.

M&R expects order book growth in its mining business, especially from the Americas. This sub-Saharan focused power, industrial and waste business continues to face challenges due to a lack of infrastructure investment in this region.

"The platform continues to perform routine, relatively small maintenance and outage works at Medupi and Kusile respectively," M&R said. "Several transmission tenders invited by Eskom are under adjudication and it is anticipated that some of these projects will be secured in the short term.

"In addition, the imminent investment in the South African renewable energy sector, together with the urgent expansion required of Eskom’s transmission network, should provide potential for this business to return to profitability in the medium term."

M&R also owns a large stake in the Bombela Concession Company, which operates the Gautrain system. The Gautrain continues to see low numbers. "Passenger demand is anticipated to remain subdued until infection rates from the Covid-19 pandemic are curtailed."

The Gautrain carries around 16 000 passengers per day, compared to circa 55 000 passengers per day prior to the pandemic.

Domestic vehicle sales improve slightly, but exports still face challenges 

Vehicle exports continued on their five-month downward trajectory, falling 42.2% in November compared to the previous year.

The automotive business council - naamsa - on Wednesday released new vehicle sales statistics for November 2021.

Domestic new vehicle sales lifted slightly by 6.6% to 39 015 vehicles sold in November, compared to the previous year. But export sales recorded a 42.2% decline to 19 548 units in November. During the same month last year vehicle exports stood at 33 825.

The downward trend is linked to Covid-19-related supply chain disruptions impacting vehicle production and exports. A severe fourth wave of Covid-19 infections in Europe- a key export market for South Africa - is also weighing on exports.

According to the automotive business council, the outlook for the short to medium term is positive - exports are expected to benefit from new model introductions in 2021 and 2022 as well as increased demand linked to improved economic conditions abroad.

Overall vehicle exports for the year-to-date are 8.3% ahead of the same period last year.

Business conditions improve for retailers in Q4, but omicron and load shedding pose risks

Business conditions for retailers improved in the fourth quarter, as a result of less stringent lockdown restrictions and increased foot traffic to malls and shopping centres. The reinstatement of the social relief of distress grant and cash bonuses to government employees also boosted consumers' purchasing power, according to the Bureau for Economic Research (BER).

The BER on Thursday released the retail confidence index - which dipped slightly from 56 to 52 in the fourth quarter of 2021. Overall sentiment is still significantly higher than pre-covid levels and is above the historic average of 39 points.

But there are still constraints to the sector - such as the lingering impact of the civil unrest, supply chain disruptions, rising input costs and continuous bouts of load shedding.

The survey suggests that sales volumes picked up during the fourth quarter. But this is not broad-based - while non-durable goods retailers (of food and beverages) reported a deterioration in business conditions, weaker sales volumes, a decline in pricing power and lower profitability.

Food and beverage sales declined as a result of the services sector - restaurant, pubs, hotels and theatres - reopening. It is expected that consumers will continue to divert spending from non-durable retailers to the hospitality sector, given the third wave has passed. "Looking ahead, as the services sector journeys on the road to full recovery, the retail sector is expected to lose momentum," the report read.

Semi-durable and durable goods retailers expect to benefit from festive shopping and Black Friday sales. Semi-durable goods retailers in particular will likely take advantage of more people returning to work and increasing their spending on summer clothing and business attire.

However, the BER warns that the detection of the Covid-19 omicron variant, load shedding, escalating cost increases and global supply chain disruptions and a weak labour market to remain causes of uncertainty for the sector.  

Markets play 'Omicron tennis', rand back below R16/$

Asian markets were mixed Thursday and oil edged up with traders still trying to claw back their latest Omicron-induced losses but still full of uncertainty after Wall Street suffered a late plunge in response to the United States reporting its first case.

News that a patient had come down with the new variant sent shivers through US investors who fear authorities will be forced to reintroduce strict containment measures or even lockdowns, derailing the recovery in the world's top economy.

That comes on top of a widespread belief the Federal Reserve will end its vast bond-buying financial support programme quicker than expected and begin hiking interest rates next year to prevent inflation - now at a three-decade high - from running out of control.

Traders were already feeling uneasy in recent weeks on concerns about the sharp rise in prices around the world caused by supply chain snarls, a spike in energy costs and a labour shortage.

The announcement of Omicron - and warnings that vaccines may not be as effective against it - sent them over the edge on Friday.

Experts say it will take weeks to fully understand the true danger of Omicron, though the World Health Organisation said vaccines would probably fend off the worst of the variant while Australia's chief medical officer suggested it might not be as deadly as others.

Still, markets are highly sensitive to any negative headlines on the crisis, with the VIX gauge of volatility at its highest level since the start of February.

"Equity markets continue to play Omicron tennis, and traders looking for short-term direction should just wait for the next virus headline and then act accordingly," said OANDA's Jeffrey Halley. "Volatility, and not market direction, will be the winner this week."

Meanwhile, the OECD grouping of major industrialised nations warned the mutated strain threatens the global recovery and cut its growth outlook for this year.

The disquiet on trading floors was evident in New York Wednesday when the announcement of the strain sent all three main indexes into the red, having spent most of the day in positive territory.

"The Omicron variant is the number one uncertainty facing the US economic outlook," Kim Mundy of the Commonwealth Bank of Australia said.

The JSE's All Share Index edged higher in early trading on Thursday, with Old Mutual gaining almost 3%. After weakening to R16.05/$ late on Wednesday, the rand was last trading at R15.98. 

Tokyo, Shanghai, Sydney, Singapore, Wellington and Bangkok all fell but Hong Kong, Seoul, Taipei, Mumbai, Jakarta and Manila rose.

Eyes will be on the latest meeting of OPEC and other major suppliers later on Thursday as they discuss their plan to raise output each month to help quell prices, with the likely impact of Omicron on demand likely to be a major talking point.

The grouping has already raised the possibility it will pause the increases, having been upset by a decision by the United States and other major consumers including China to release some of their own reserves.

Both main crude contracts rose Thursday, though they remain well below their levels from a week ago before they tanked more than 10 percent in reaction to the Omicron announcement.

"The arrival of the Omicron variant and the ensuing sell-off obviously increases the odds that OPEC+ will opt to hit the pause button," Helima Croft of RBC Capital Markets said.

Investors are also awaiting the release of US jobs data on Friday, which will provide the latest snapshot of the state of the world's top economy.

- AFP

Rand rallies, markets rebound after Omicron turmoil

Global stock markets rebounded Wednesday and oil prices surged following Omicron-driven losses and on the eve of a key output meeting of OPEC and its allies.European equities advanced, mirroring most rebounding Asian bourses, as dealers temporarily set aside news of record-high eurozone inflation.

The JSE's All Share index gained a percent.Oil surged about five percent, while the dollar extended gains against major rivals as the Federal Reserve is seen removing its vast financial support measures at a quicker pace than first flagged.

But the rand strengthened 2% to trade at R15.77/$ - after weakening to R16.33 last week.  

Investors were facing a rollercoaster week as they track the mutant Omicron strain, whose emergence last Friday darkened the economic outlook, sparked fresh Covid restrictions and ravaged most markets.

Traders remain uncertain over its impact on the world economy and the likelihood of fresh lockdowns, as scientists rush to investigate the variant and urge speedy vaccination drives.

"An ugly combination of a Covid-related knock to growth, reduction in central bank support and sustained inflation is not a recipe for strong stock markets," said AJ Bell investment director Russ Mould.

"However, some traders appear to have decided the weakness has gone far enough for now as they emerged to bid up stocks and oil."

OPEC and the oil cartel's allies hold a key output meeting on Thursday, having resisted US-led pressure to step up production to bring down surging energy prices, while emergence of the new variant has complicated the equation.

The OECD grouping of major industrialised nations on Wednesday warned that Omicron threatens the global economic recovery, as it lowered the 2021 growth outlook and called for a swifter vaccines rollout.

- AFP

Santam appoints new CEO

Tava Madzinga has been appointed as the new CEO of Santam, and will succeed Lize Lambrechts in the position from 1 July next year.

Madzinga joins Santam from Britam Holdings, a diversified investment business listed on the Nairobi Securities Exchange, where he was the group managing director.A qualified actuary, he worked at Old Mutual for 16 years.

He then joined Swiss Re for four years, initially as chief executive for the Middle East and Africa and later chief executive for the UK and Ireland, based in London.Lambrechts will remain on as CEO until 30 June 2022. She was appointed in 2015.

Madzinga was born in Zimbabwe and studied at the University of Cape Town.

Santam's share price was down almost 1% in afternoon trading on Wednesday.

Asian markets up, oil rallies as Omicron holds attention

Asian markets mostly rose Wednesday while oil prices bounced as traders assess the outlook for the global economy after top drugs makers offered differing opinions on their vaccines' efficacy against Omicron and the Federal Reserve took a hawkish pivot on monetary policy.

A mild recovery from the previous two days' steep losses was turned on its head in the region on Tuesday after Moderna head Stephane Bancel told the Financial Times that existing vaccines might not be as effective against the new Covid strain owing to its multitude of mutations.

However, other drugmakers later said it was far too early to make a judgement, with the boss of BioNTech, which made a shot with Pfizer, said it was likely people would be protected against severe symptoms.

The less alarming outlook from the other firms helped settle nerves slightly while news that Moderna, Pfizer and the backers of Russian vaccine Sputnik V are already working on an Omicron-specific vaccine was also providing some solace.

With medical experts saying the full outlook for Omicron was still being assessed, analysts said markets would remain volatile.

"If by this time next week the medical gurus have concluded that existing vaccines are 'sufficient' and/or the Omicron virulence is milder than the current Delta variant, the market should bounce strongly," said strategist Louis Navellier.

"Conclusions the other way could weigh heavily on the current bullish outlook for 2022," he added.

"Such uncertainty will likely push some people to the sidelines who want to lock in the strong gains they've already booked for 2021".

Tokyo and Hong Kong, which both went south soon after the Bancel comments were released, saw much-needed gains in early trade, while Shanghai, Singapore, Seoul, Wellington, Taipei and Jakarta also rose.

Sydney, which closed before the interview was published Tuesday, slipped slightly though losses were pared by data showing Australia's economy shrank less than feared in the third quarter.

Crude -- which was pummelled Friday and again Tuesday on fears about possible new lockdowns and their impact on demand -- also enjoyed some advances with both main contracts up more than two percent.

The broadly positive performance across Asia came after Fed boss Jerome Powell put the central bank on the path to removing its vast financial support measures at a quicker pace than first flagged and lifting interest rates next year.

With prices surging at the fastest pace in three decades, Powell told lawmakers that "clearly the risk of more persistent inflation has risen".

Having for the best part of the year insisted inflation was "transitory" owing to supply chain snarls and high energy costs, he for the first time omitted the word and said it was "appropriate, in my view, to consider wrapping up the taper of our asset purchases... perhaps a few months sooner".With the bond-buying programme put in place at the start of the pandemic -- and key to the economic recovery -- likely to end sooner, analysts are now suggesting the bank could lift rates possibly twice by the end of 2022.

"In all likelihood the Fed will now ramp up their pace of tapering and possibly complete it by March, which leaves the potential for a rate hike to finally fend off inflation," said Matt Simpson at StoneX Financial.

AFP

Rand back below R16/$, but global markets and oil slump on Omicron vaccine warning

World stocks and oil prices slid Tuesday after Moderna warned current vaccines might be less effective at fending off the Omicron variant, and eurozone inflation spiked to a record high.

But the rand strengthened to below R16/$, and was last trading at R15.98 on Monday evening. On Friday, the rand almost reached R16.34 amid fall-out due to the Omicron variant.

The JSE's All Share Index was 0.7% higher, with sharp gains in gold shares, with Gold Fields up almost 9%.

Frankfurt, London and Paris followed Asia in closing sharply lower, with sentiment dogged by fears of fresh economic fallout from the long-running Covid crisis.

Oil slumped back in New York with WTI down 5.1 percent a barrel at $66.38 - a three-month low - while Brent crude was off 3.80 percent at $70.65.The tumble followed the Moderna remarks, which have reignited fears over how the Omicron variant spread could hit energy demand.

Analysts meanwhile reacted with concern after Federal Reserve Chair Jerome Powell said the threat of "persistently high inflation" had risen, meaning the US central bank would consider removing stimulus more quickly.

"Reading between the lines, it appears that Chairman Powell has grown dramatically more concerned with the risk of sustained inflation, and is therefore looking to end the central bank's asset purchases sooner than initially outlined," said Matt Weller, global head of research at StoneX.

"Powell's comments have already sent a tempest through major markets," Weller noted with the US central bank's preferred price gauge seeing a surge of five percent for the 12 months ending in October, well above its two percent goal.

On Wall Street, the Dow had drifted down 1.9 percent two hours into the session with the tech-heavy Nasdaq losing 2.0 percent.

The European markets selloff had earlier accelerated as data showed eurozone inflation rocketed on runaway energy prices to a record 4.9 percent.

"It only took one comment from the boss of drugs firm Moderna to derail markets once again," noted AJ Bell investment director Russ Mould.

"Markets hate uncertainty, and this is precisely what we have now. No one knows how much trouble the new variant is going to cause."Moderna chief executive Stephane Bancel's comments, in an interview with the Financial Times, sent traders running for cover."There is no world, I think, where (the effectiveness) is the same level ... we had with Delta," Bancel told the newspaper.

The high amount of mutations on Omicron and its swift spread in South Africa indicated the present jabs would need to be tweaked, he said.'Inflation drumbeat continues' "The inflation drumbeat continues to sound, providing another reason to worry for beleaguered investors," said IG analyst Chris Beauchamp.

In Britain, meanwhile, traders are reassessing hopes of a pre-Christmas interest rate hike.

Prior to Omicron, the Bank of England had been forecast to lift rates to dampen near decade-high British inflation.

- AFP, with additional reporting by Fin24

October trade surplus narrows to R19.8bn

The October trade surplus narrowed to R19.8 billion, below the Bloomberg consensus of R23 billion.

The trade balance has deteriorated compared to the surplus of R35.21 billion recorded a year ago. Total exports recorded was R147.92 billion, down 5.7% compared to September. The month-on-month decline in exports was much deeper than that recorded for imports. Imports declined 4.9% to R128.14 billion.

On a year-on-year basis, exports were marginally less than the R148.11 billion recorded in October 2020 and Imports were 13.5% more than the R112.90 billion recorded in October 2020.

The decline in exports was mainly broad-based - except for vehicles and transport equipment that recorded an increase, noted Investec economist Lara Hodes.

"Import activity continues to remain restricted by subdued investment and domestic consumption with consumers facing heightened levels of unemployment and rising administered costs which continue to dilute disposable incomes," said Hodes.

Hodes added that risks to the global growth trajectory remain - rising cases of Covid-19 are driving governments to reinstate lockdown measures and is weighing on confidence and impeding economic activity.

Aspen up 11% in two days,  strikes deal with J&J to launch own vaccine

Aspen will manufacture and sell its own branded Covid-19 vaccine in Africa, following an agreement with Johnson & Johnson.

Johnson & Johnson is granting Aspen an intellectual property licence to produce its vaccine under the new brand name "Aspenovax".

According to the deal, Aspen will manufacture the vaccine from drug substance supplied by Johnson & Johnson, and then sell the vaccine under Aspen branding to African governments.

The agreement runs until end-2026, and can include new versions of the Johnson & Johnson vaccine. These can include boosters or jabs created for new variants.

Aspen, the biggest medicine producer on the continent, Aspen has an agreement with Johnson & Johnson to package and fill vials of the American company’s vaccine at a plant in Gqeberha.

Aspen's share price has rallied by more than 11% over the past two days. 

Markets hit by Moderna vaccine warning over Omicron

Equities and oil sank again Tuesday after the head of Moderna warned current coronavirus vaccines might be less effective at fending off the Omicron variant, fuelling fears that countries could be forced back into economically painful lockdowns.

Stocks had mostly been edging up after a two-day sell-off that followed news Friday of the new variant, which some observers said was overdone as billions of people have been inoculated.

But Stephane Bancel's comments in an interview with the Financial Times sent shivers through markets again, as he said the high amount of mutations on Omicron and its swift spread in South Africa indicated the present jabs would need to be tweaked.

"There is no world, I think, where (the effectiveness) is the same level . . . we had with Delta," the Moderna CEO told the newspaper.

The JSE's All Share index was 0.3% weaker, while the rand strengthened to R16.16/$.Tokyo, Hong Kong, Singapore, Bangkok and Jakarta all lost more than one percent while Seoul sank more than two percent.

London, Paris and Frankfurt opened in the red and futures in New York were also sharply lower.

Sydney, Wellington and Taipei closed higher before the interview was published.

The selling also spread to oil markets where both main contracts plunged more than three percent, after slowly recovering from Friday's collapse of more than 10 percent as demand fears came flooding back.

Tourism-linked firms were among the worst hit with Cathay Pacific losing more than four percent in Hong Kong - having already been impacted by new restrictions on travel to the city - and Singapore Airlines off more than one percent.

"Information on the Omicron variant is sketchy, how drastic its symptoms will be and how easily it can spread is also unknown, as is the effectiveness of current vaccines," said Kelvin Wong at CMC Markets."I expect more downside risk for the next couple of weeks unless there's more clarity on the Omicron strain."

- AFP

Nampak back in the black

In an update for the year to end-September, Nampak expects that it will announce headline earnings of 55.1 cents and 64.9 cents a share, compared to a headline loss per share of 87.7 cents in the prior year.

The packaging group says that, after the net impairment loss of R4 billion in the previous year, no further impairment of goodwill and significantly reduced net impairments were seen.

There was also a significant reduction in costs related to retrenchments, restructuring and disposal of businesses.

FirstRand expects 30% profit bump

FirstRand, which owns FNB, expects headline earnings growth of more than 30% for the six months to end-December.

The group says "a modest credit cycle" has emerged in South Africa, particularly in the retail and commercial segments. 

"These trends have resulted in slightly higher advances growth, mainly in the mortgages and agriculture portfolios.

Corporate advances growth remains subdued.

"In the UK strong growth has continued in the vehicle financing business, with mortgages and asset finance also showing "a modest uplift" in new business.

African Bank posts profit as transactional accounts double

African Bank is back in the black - reporting a R2 million profit after tax for the financial year to 30 September, from a R560 million loss in 2020. 

At the group level – when including African Bank's insurance operations – the company posted an after-tax profit of R534 million compared to a loss of R27 million in September 2020.

African Bank said the year to end-September was significantly better because the higher credit impairment charge that the company raised a year ago was sufficient to account for the increased risk of default this year. Furthermore, the bank achieved strong debt collections.African Bank's credit impairment charge to cater for bad debt and possible defaults decreased to R1.3 billion, after hitting R3.4 billion in 2020.

A highlight of the past year, was the demand for African Bank's MyWORLD transactional banking accounts.

Some 741 000 of these accounts have now been established, compared to 388 000 at the end of September 2020. 

Building confidence remains relatively stable in fourth quarter

The FNB/BER Building Confidence Index slipped marginally lower from 35 points in the third quarter to 34 points in the fourth quarter.

The building confidence index varies between 0 - an indication of an extreme lack of confidence- and 100 - an indication of extreme confidence. The index assesses the satisfaction levels of architects, quantity surveyors, main contractors, sub-contractors, manufacturers of building materials and retailers of building material.

While three of the six sub-sectors reflected higher confidence, the business mood of building material manufacturers fell by 34 points to 21. "The decline in sentiment was mainly due to a deterioration in production and domestic and export demand, as well as higher production costs," the report read.

Generally activity was better - particularly in the non-residential building sector.

"While the recovery in other sectors of the economy following the slump in 2020 is well on the way, as expected, the building sector has lagged. In addition, the uptick in non-residential building activity registered this quarter is likely to be temporary – possibly lasting into next quarter," said Siphamandla Mkhwanazi, FNB economist.

"That said, the results from the building pipeline are reason to be cautiously optimistic about the prospects for the sector next year although it is still too soon to tell for sure. Also, this trajectory could change should the macroeconomic environment underperform," he said.

AYO pays out fat dividend despite R201m loss

AYO Technology Solutions has declared a final dividend of 30 cents per share despite suffering a loss before tax of R201 million in the year ended 31 August.  

This brings its total dividend for the year to 95 cents per share.   AYO is an IT group in the stable of Iqbal Survé's Sekunjalo Group.  

In a market update, the group recorded a headline loss of 64.37 cents from a profit of 8 cents a share in the prior year.  

The group said the losses were chiefly attributable to contracts coming to an end and the cancellation of a deal with "a significant customer", together with disruptions caused by Covid-19.  

It still has a cash pile of R2.2 billion from which it earns interest of R165 million

Stocks drop as Omicron concerns flare-up again

Asian stocks fell along with US and European futures on Tuesday while Treasuries advanced as concerns about the omicron virus strain filtered through markets again.

MSCI Inc.’s Asia-Pacific gauge turned lower after Moderna Inc.’s head told the Financial Times that existing vaccines will be less effective at tackling omicron and it may take months before variant-specific jabs are available at scale.

Meanwhile, Federal Reserve Chair Jerome Powell said omicron poses risks to both sides of the central bank’s mandate for stable prices and maximum employment. That stoked speculation that the strain could delay interest-rate increases.

The 10-year Treasury yield fell back below 1.5%. Swap markets signal about two quarter-point Fed hikes for 2022, down from the three seen before omicron flared up. The yen jumped and the dollar slipped, while oil erased an advance and dropped. 

President Joe Biden cautioned Americans against panicking over the variant and said lockdowns won’t be necessary. Scientists are still evaluating the strain, which has already buffeted international travel and could add to inflation pressures if it exacerbates supply-chain disruptions.

“We’ll get a new variant, we’ll get new waves but the market, and we all as investors, see how that might play out,” Jason Brady, president at Thornburg Investment Management, said on Bloomberg Television.

“I’m much more interested in inflation and potentially rising rates causing some of the market leaders of 2020 and 2021 to falter a little bit more.”

Powell, in prepared testimony released Monday, said the “recent rise in Covid-19 cases and the emergence of the omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation.” 

He didn’t discuss specific monetary policy actions or the possibility of changing the pace of the tapering of Fed bond purchases -- a key issue that other officials have flagged in recent remarks.

In China, factory sentiment improved in November as the impact of a power crunch subsided and inflation pressures eased. 

Bloomberg

Nasdaq suspends trading in Twitter

Nasdaq suspended trading of social media network Twitter on Monday amid news reports the company's CEO Jack Dorsey is expected to step down.

Nasdaq cited "news pending" as the reason for the halt in trading.

A few minutes earlier, CNBC reported that Dorsey was expected to step down as Twitter CEO, citing unnamed sources.

- AFP