MONEY LIVE | US labour surprise hits rand

AngloGold down 12% as Ghana mine remains shut

AngloGold Ashanti, which last year exited its mining operations in South Africa, saw its net half-year profit decline in the first half in sharp contrast to what has been reported by its peers in the mining sector.

The gold producer - which has operations in Ghana, Tanzania, the DRC, Australia and South America - said net profit for the six months to end of June was $362 million compared to $382 million seen in the corresponding period in 2020. 

Operations at Obuasi in Ghana remain suspended after an accident in May and the interruption contributed to a drop in production, with 1.2 million ounces produced during the period, compared to 1.5 million ounces a year earlier. The mine should be open by year-end, the company said.

The company said it expects 2021 production to be in the 2.5 million ounces to 2.6 million ounces range, down from previous guidance in the 2.7 million ounces to 2.9 million ounces range.

This helped to send the company's share price down almost 12% to R247 on Friday. It share price has now lost almost 20% this year. 

Still, the company's adjusted net debt declined by 41% year-on-year to $850 million, from $1.431 billion at 30 June 2020. The company also declared its first half-year dividend (6c per share) - according to Bloomberg, its first since 2013. 

US labour surprise hits rand

The rand was trading at R14.49/$ on Friday afternoon, hit by renewed dollar strength following stronger-than-expected employment numbers.

The currency started to weaken on Thursday evening, following the news that Finance Minister Tito Mboweni would leave his position. Enoch Godongwana was appointed in his place. It was trading around R14.37 before the announcement, reaching R14.58 shortly thereafter. The rand strengthened to R14.47 on Friday morning, but the new data bolstered the dollar, leaving the rand to trade weaker.

Bloomberg reports that US employers added the most jobs in nearly a year and the unemployment rate declined faster than forecast, showing the labour market is making more robust gains toward a full recovery.

Payrolls climbed by 943,000 last month after an upwardly revised 938,000 increase in June, a Labour Department report showed Friday. The median estimate in a Bloomberg survey of economists called for a 870,000 gain.

The unemployment rate dropped by a half percentage point to 5.4%.

The dollar erased gains as traders bet a strengthening labour market will lead Federal Reserve officials to begin pulling back monetary support, including bond buying, Blomberg reported. 

Central Bank's July gross reserves virtually unchanged 

The Reserve Bank's gross reserves position was virtually unchanged in July at $54.46 billion, compared to June, Investec economist Kamilla Kaplan noted.

"The effects of an increase in gold reserves were fully offset by the decrease in foreign exchange reserves." Kaplan noted that the Board of Governors of the IMF approved a $650 billion general allocation of Special Drawing Rights (SDR) on 2 August.

"The new SDRs become effective on 23 August and will be credited to IMF members in proportion to their IMF quota share. SA's paid quota share is 0.64% and its share of the allocation is estimated at around $4.0bn."

The Reserve Bank's gross reserves should incorporate the general allocation in its August figures.

Sasol expects profits after last year's loss

In a trading update for the year to end-June, Sasol said that it expects headline earnings of R39 and R41, compared to the prior year headline loss per share of R11.50.

"This results from a strong recovery in chemical prices and a 4% increase in the rand per barrel price of Brent crude oil, partly offset by weather-related events in both the US and South Africa impacting our gross margins adversely."

Absa to report surging profit

In a trading update for the six months to end-June, Absa expects its headline profit to rocket from 67.7 cents a share, to between 982 and 988 cents. Its results will be released on 16 August. 

Standard Bank profit up by almost 55%

In a trading statement update for the six-months to end June, Standard Bank said its headline profit will be between 45% and 55% higher.

In the two months of May and June 2021, relative to the two months in the prior period (which was hit by the hard lockdown at the start of the pandemic), revenues grew driven by stronger non-interest revenue and bad debt write-offs also recovered. 

Sappi slumps amid profit disappointment

Renewable material and paper company Sappi reported profit of $18 million in the quarter to end-June, compared to a loss of $73 million in the same three months in 2020.

But its share price fell by more than 5% on Thursday to R38.34.Analyst Chantal Marx said the group’s profit fell short of market expectations, and the precautionary closures of Sappi mills due to the unrest in KwaZulu-Natal were also weighing on Sappi's positive outlook.

"The outlook statement was broadly positive, but management did mention some challenges for the fourth quarter. Sappi also confirmed the precautionary closures of three mills located in KZN (Saiccor, Tugela and Stander) from 12 July 2021 (this was already known to the market) and [that] the expansion of its Saiccor mill has been on hold [until early in its new financial year, which starts in the final quarter of 2021].

”Sappi said on Thursday that the company lost a combined total of 28,000 tons of dissolving pulp and 7,000 tons of paper production were lost, which will have an estimated negative impact on the current quarter profit of some $16 million (R230 million)"Shipments through Durban port have been impacted and they are facing some logistical challenges as well," said Marx.

But Sappi said it experienced a more favourable economic climate compared to the previous quarter in the majority of its trading regions.

Sibanye-Stillwater profit up 162%

In a trading update for the six months to end-June, Sibanye-Stillwater expects that its attributable earnings will jump by 162% to almost R24.6 billion.

This was thanks to higher production from both the South African platinum group minerals and gold operations compared to the same half-year in 2020, which was hit by a hard lockdown.

Also, Sibanye also enjoyed the impact of higher average platinum prices, as well as lower debt resulting in a decrease in finance expenses.

The 13% increase in the rand against the dollar during the past six months had a negative impact, along with higher tax payments.

Trellidor profit more than doubled

In a trading update for the year to end-June, Trellidor says its headline earnings are expected to be at least 154% higher than in the same period in 2020.

Woolworths profit to jump by more than 200%

In a trading update for the year to 27 June, Woolworths says its headline profit is expected to increase by 205% to 215%. Its adjusted diluted headline earnings will grow by 95% to 105%.

The retailers says that this was due in part to the sale of two large properties in Australia, as well as the renegotiation of various leases, which resulted in "gains" of approximately R591 million (pre-tax).

The company added that Covid-19 continues to have a significant impact on its performance, which necessitated impairment charges of approximately R364 million (pre-tax).

Stocks rise amid optimism, Naspers recovers

Stock markets rose Wednesday as traders weighed economic recovery prospects against concerns over the fast-spreading Delta virus variant and China's regulatory crackdown.

The JSE's all-share index was up 0.3% in late afternoon trading, with Naspers and Prosus gaining around 3% after large losses on Tuesday amid concern over China's crackdown on a range of sectors including tech, private tuition, and property.

There is a fear that gaming firms could be next after a state-run media article described online games as "spiritual opium".

Tencent, which has been hammered by the latest government moves, rose more than two percent Wednesday on bargain-buying though it is still down more than 20 percent since the start of last month.

The rand was last almost a percent weaker at R14.33/$.European and Asian stock markets mostly advanced following Tuesday's latest record close for the S&P 500 on Wall Street.

While markets have cheered strong company earnings in recent weeks, there are growing fears over the Delta variant which has forced countries to reimpose strict containment measures."It doesn't take much to rattle the markets, and there are plenty of reasons to remain cautious, such as many stocks trading on elevated valuations and the Delta variant continuing to cause disruption," noted Russ Mould, investment director at AJ Bell.

The main worry surrounds the world's second biggest economy China, where millions of people have been put into lockdown.

The country had brought domestic cases of the coronavirus down to virtually zero after the disease first emerged in Wuhan in late 2019, but it is now facing its worst outbreak in months.

"While China's resolve to control outbreaks has been well illustrated, markets will continue to watch the outbreak given the high transmissibility of the Delta variant," said National Australia Bank's Tapas Strickland."There are also concerns China's domestic vaccines are less effective against the Delta variant.

"Oil prices steadied Wednesday following recent volatility and amid predictions that oil demand in China could tumble as a result of the tough new lockdown measures.

-AFP and Fin24

Telkom appoints new CEO

Telkom has appointed Serame Taukobong as the company's CEO-designate to take over when the Sipho Maseko leaves the company in June 2022.

Taukobong is the current head of the Telkom Consumer Business and a member of the executive committee.

"[Under his leadership] as CEO of the Telkom Consumer Business, the mobile business customer base grew threefold to 15 million and its revenue almost doubled to R20 billion within a three-year period," the company said in a statement, adding that Telkom Mobile has become the third-largest mobile business in South Africa.

Civil unrest, level 4 Covid-19 restrictions knock July business activity

Private sector business conditions in South Africa suffered a downturn due to civil unrest and lockdown level 4 Covid-19 restrictions.

The IHS Markit PMI - a measure of private sector business performance - slumped from 51 points in June to 46.1 points in July. The PMI dipped below the 50-neutral mark for the first time in 10 months. A move below 50 indicates a deterioration of conditions.

"Business activity slid at the strongest rate in 14 months during July, in the wake of rioting across mainly the KwaZulu-Natal province that severely dampened sales volumes. Firms were also hindered by the continuation of level 4 lockdown measures and shortages of raw materials," the report read.

"After nine consecutive months of growth, the downturn was the first notable setback in the country's economic recovery, as the hit to consumer confidence added to the impact of a return to level 4 lockdown," said David Owen, IHS Markit economist.

New orders decreased for the first time in four months. "Around 29% of surveyed firms saw a drop in sales, linking this to Covid-19 restrictions, unrest and a resulting decline in consumer confidence. Some firms had to pause sales to foreign clients, leading to a solid reduction in export sales," the report read.

Data also showed a drop in employment levels across the private sector. But the rate of job shedding was marginal. "Despite new orders falling, backlogs of work continued to rise as raw material shortages and strikes added to capacity issues."

Confidence levels also weakened - to the lowest seen in almost a year, according to the report. But firms expect activity to improve in the coming 12 months - on the back of expectations that the Covid-19 restrictions will ease and civil unrest will subside.

"Whilst the easing of restrictions to Level 3 may help restore some confidence, there will be many businesses facing damages from the riots and a prolonged period of recovery. Supply chains will also take longer to rebuild, particularly amid ongoing difficulties sourcing and supplying raw materials due to the pandemic," Owen added.

Tencent boss loses R200 billion in rout

Turns out even the most compliant Chinese billionaires aren’t immune to the regulatory onslaught sweeping the world’s second-largest economy.

In a twist that has upended conventional wisdom on the political pecking order of China’s business elite, Tencent’s mild-mannered boss, Pony Ma, has lost more paper wealth over the past nine months than Jack Ma, the combative co-founder of Alibaba Group and Ant Group.

The reversal underscores how rapidly Beijing’s crackdown has expanded since authorities scuttled Ant’s initial public offering on November 3. What initially looked like a targeted campaign against China’s most outspoken tech tycoon has since spread to nearly every corner of the industry and beyond, as regulators de-emphasize unfettered growth in favour of other priorities such as data security, financial stability and reduced inequality.

Throughout most of China’s nine-month campaign to reign in big tech, Tencent had appeared to fare much better than its arch-nemesis, helped in part by Pony’s reputation for staying out of the limelight. While Alibaba had to cough up a record $2.8 billion in antitrust penalties, regulators only slapped token fines on Tencent for not seeking approval during past acquisitions and investments. Its music arm was recently ordered to give up exclusive streaming rights, though it escaped the doomsday scenario of a breakup of the business.

But a damning state news report Tuesday has turned the tables. Tencent shares posted their biggest intraday decline in a decade after a Xinhua-affiliated newspaper took aim at the company’s key gaming business, fueling speculation it could become the next target of Beijing’s crackdown. The rout left the company, whose market capitalisation briefly neared $1 trillion earlier this year, with a value of $550.5 billion.

Pony’s fortune has dropped by almost $14 billion (R200 billion) since the Ant IPO was suspended in November, falling to $45.8 billion on Tuesday, according to the Bloomberg Billionaires Index. He now ranks third on the China rich list behind Jack, who has a net worth of $47.8 billion.

- Bloomberg

Telkom revenue grows by almost 4%

In a trading update for the quarter to end-June, Telkom said its revenue grew by 3.5% to R10.6 billion, following a full year of flat group revenue.

Its revenue from fixed-line business declined by 5.6%, but "fixed data connectivity" revenue grew by 1.2% year on year, compared to the decline of 15.6% reported in the prior year.

In its mobile business, the company saw "a reluctance to renew postpaid contracts with some customers opting to switch from postpaid to prepaid propositions".

Postpaid average revenue per user held steady at around R220.

Group EBITDA grew by 7.3% to R 2.751 billion, which Telkom says was underpinned by cost management.

Liberty posts profit despite 61% increase in death, disability claims

Liberty Holdings reported a headline profit for the past six months of R222 million, compared to a loss of almost R2.3 billion in the same period in 2020. 

This is despite an increase of 61% in death and disability claims paid (R8.5 billion) during the six months to end-June, "which is reflective of the severe impact of the pandemic on our clients". Total annuity payments to clients during the period were 10% higher at R4.5 billion.

No interim dividend was declared amid "the uncertainty that still exists regarding the ongoing spread of the Covid-19 virus in South Africa in the short term and its economic consequences".

Rand rallies on dollar weakness, while Naspers and Prosus slump 7%

The rand strengthened to R14.35/$, after reaching R14.47 on Monday as the dollar dipped against other major currencies ahead of key US jobs data later in the week.

Most major stock markets eased lower Tuesday as traders weighed strong earnings news against the potential impact of the Covid Delta variant on economic activity.

Oil prices slumped further meanwhile, adding to Monday's sharp losses as the reimposition of lockdowns and other restrictions in several countries including China raised demand concerns.

As trading gathered steam in New York, the Dow Jones index was off by 0.2 percent. 

The JSE's All-Share Index ended the day flat, with Prosus and its parent company Naspers down 7%.

Prosus owns 28% of Chinese gaming giant Tencent. Following China's crackdown on the tech, private education and property sectors, gaming firms appeared to be next in the crosshairs after a state-run media commentary described online games as "spiritual opium"."Fears over Chinese regulatory interference aren't going away, with Tencent the latest stock to slump on chatter about Beijing seeking to wield its power," added Russ Mould, investment director at AJ Bell.

- Fin24 and AFP

Naspers, Prosus hit as Tencent slumps on ‘spiritual opium’ attack

Tencent dived as much as 10% Tuesday after an offshoot of China’s official news agency decried the "spiritual opium" and "electronic drugs" of games, stoking fears Beijing will next set its sights on online entertainment.

Naspers and its subsidiary Prosus, which owns 28% of Tencent, declined in opening trading on the JSE. Naspers was down 4%, while Prosus lost closer to 5%.

The social media giant joined rivals NetEase and XD in an abrupt selloff in early Hong Kong trading after an outlet run by the Xinhua News Agency published a blistering critique of the gaming industry. The Economic Information Daily cited a student as saying some schoolmates played Tencent’s Honor of Kings - one of its most popular titles - eight hours a day and called for stricter controls over time spent on games.

It spooked investors already on edge after Beijing came down hard on online industries from e-commerce to ride-hailing, triggering a global selloff of Chinese shares that at one point surpassed $1 trillion.

Nervous investors continue to reevaluate their holdings as they ponder the longer-term ramifications of a crackdown on firms from Jack Ma’s Ant Group Co. and Alibaba to Tencent-backed Meituan and Didi Global. Tencent has now shed more than $120 billion or roughly 20% of its market value since the start of last week, when Beijing sharply amped up its campaign.

“No industry or sport should prosper by eradicating an entire generation,” the article said, citing an academic at a state-backed institution.

“You can never pay too little attention to any Xinhua story,” said Ke Yan, a Singapore-based analyst with DZT Research.“The word choice of spiritual opium is especially harsh, it would be surprising if the regulators won’t do anything about this.”China’s most valuable corporation has run afoul of regulators in the past, most notably in 2018 when watchdog agencies clamped down on gaming addiction and temporarily suspended monetization licenses, walloping Tencent’s main business. The term “spiritual opium” has in fact been employed in Chinese media in the past to call attention to the prevalence of gaming among youths, tracing back to the era of PC gaming in cybercafes.

In response, Tencent has restricted playing time for minors and imposed other measures to try and curb addiction. Just last month, it installed facial recognition systems for certain games to prevent kids from using their parents’ IDs to buy in-game items. In the fourth quarter of 2020, minors aged under 18 accounted for just 6% of the company’s Chinese online gaming gross receipts.

- Bloomberg

Stocks rebound but China, Delta fears temper optimism

Stock markets rebounded Monday but investor optimism over the global recovery was kept in check by worries over the spread of coronavirus variants as well as China's regulatory crackdown.

The JSE's All-Share Index ended flat, while the rand strengthened almost a percent to R14.41/$.

Signs that US lawmakers were edging towards agreement on President Joe Biden's $1 trillion infrastructure bill were unable to provide much of a boost, while eyes were on the release of US jobs data at the end of the week as firms struggle to fill positions.

The Dow Jones index was stronger as trading got underway in New York.

MTN jumps 6% after news on terror case, Nigerian dividends

Despite warning that its profit declined in the six months to end-June, MTN scored two major victories, which saw its share price jump 6% on Monday.

In a trading update for the six months to end-June, MTN announced that its headline profit will decline by between 5% and 15%. Its profit was hit by once-off items due to foreign exchange losses, and large Covid-19 donations.

But the market was encourage by the news that a magistrate judge in the US has recommended to a district judge to dismiss Afghanistan terrorism-related charges filed in the US.MTN had filed a submission seeking to dismiss the US case, which accused the company of paying Taliban officials not to attack its operations in Afghanistan. The company said that the judge concluded that the court did not have jurisdiction over MTN.

In addition, MTN also announced on Monday that it had in the last reporting quarter finally repatriated approximately R9.3 billion in cash from its operating companies, including R4 billion from MTN Nigeria.

The released funds are expected to strengthen the company's financial position and settle debt.  

The company has been struggling to repatriate R4.3 billion in dividends from Nigeria due to challenges securing foreign currency in that country.

RCL CEO to retire, Cruickshank to take over

RCL Foods, which owns brands like Rainbow Chicken, Selati, 5 Star and Bobtail, has announced that its CEO Miles Dally will retire at the end of November after 18 years with the company.

Paul Cruickshank has been appointed as the new CEO.

Cruickshank, who has been with the company since 2004, is currently chief operation office of the food division.

Manufacturing activity plunges by a record in July amid third wave and riots

The Absa Purchasing Managers' Index dropped by almost 14 points in July - a record single-month decline.

The steep fall is linked to the riots in KwaZulu-Natal and Gauteng, as well as the Covid-19 third wave and associated lockdown level 4 restrictions.

Overall, surveyed respondents expect output to recover in August.

SA banks rally thanks to rand boost

South African stocks kicked off August on a positive note, rising to trade near their all-time high and joining global peers in rallying as some of the concerns over China’s regulatory crackdown eased and progress on a US infrastructure spending plan aided sentiment.

The FTSE/JSE Africa All Share Index advanced as much as 0.9%, before paring its gains to 0.6% by late morning in Johannesburg, with the index’s biggest companies - Naspers, Anglo American, BHP and Richemont - among those leading the advance. MTN gained after its Nigerian unit reported increased profit.

Naspers, with a 14% weighting on the index, advances 1% to provide the biggest boost to the market, as the risk-on sentiment countered weakness in partly owned online giant Tencent Holdings Ltd. in Hong Kong trading.

Bank stocks rise 0.9% as the rand strengthens to R14.52/$. FirstRand +1.1% Capitec Bank +1.2%, Standard Bank Group Ltd. +1%, Absa Group Ltd. +0.8%, Investec Plc +0.1%.

- Bloomberg

Asian markets mostly up but China, Delta fears temper optimism

Asian markets mostly rose Monday but investor optimism over the global recovery was being kept in check by worries over the spread of the Delta Covid variant as well as China's regulatory crackdown.

Signs that US lawmakers were edging towards agreement on Joe Biden's $1 trillion infrastructure bill were unable to provide much of a boost, while eyes are on the release of US jobs data at the end of the week as firms struggle to fill positions despite unemployment remaining high.

In the latest sign that the global outlook is upbeat, figures last week showed the US economy had returned to its pre-pandemic level -- though at a slower pace than expected - while the eurozone expanded at a much better rate than forecast.

However, observers said the rally that world markets have enjoyed for much of the past year was sputtering as investors grow increasingly concerned about spiking inflation that many have warned could force central banks to taper their ultra-loose monetary policies.

Added to that is the slow vaccination programmes in some countries and rapid spread of the Delta variant that has led to the reimposition of lockdowns and other containment measures.

In early trade, Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Wellington, Taipei and Manila rose but Singapore and Jakarta fell."Shares remain at risk of a short-term correction or volatility as coronavirus cases rise globally, the inflation scare continues and as we come into seasonally weaker months, but surging company profits in the US and lower bond yields are providing support," said Shane Oliver at AMP Capital.

Nervous traders are keeping tabs on China after authorities last week embarked on a crackdown on the country's private tuition firms as well as the tech and property sectors.

The moves raised concern that other industries could be next, despite officials and state media trying to calm markets in the face of a rout.- Afterpay soars -On Friday, tech firms were told by authorities to conduct "deep self-examination" over issues including data security and user rights as they tighten the leash on big corporations citing national security and antitrust concerns.

US lawmakers finish $1 trillion infrastructure proposal

US senators on Sunday finalised a historic, trillion-dollar infrastructure proposal that is expected to be approved within days, Democratic Senate leader Chuck Schumer said.

If passed by Congress and signed into law, the bill would pump historic levels of federal funding into fixing US roads, bridges and waterways, ensuring broadband internet for all Americans and expanding clean energy programs.

A bipartisan group "finished writing the text of the infrastructure bill," Schumer told the Senate, which met for an extended weekend session in Washington."I believe the Senate can process relevant amendments and pass this bill in a matter of days."The bill, a cornerstone of President Joe Biden's sweeping domestic agenda, is about 2,700 pages long and provides for $1 trillion in funding.

The Democratic leader succeeded in rallying a few elected officials from the opposite camp to work on the proposal.

The group released a joint statement saying the goal of the bill was to invest in infrastructure and create jobs without raising taxes.