MONEY LIVE | SA stocks in fifth weekly gain, Telkom slips on CEO exit

SA stocks in fifth weekly gain, Telkom slips on CEO exit

South African stocks advanced for a fourth consecutive session, the longest winning streak since June 2, joining gains in global peers amid earnings optimism that helped Wall Street edge toward an all-time high despite mixed economic data. Telkom (-2.6%) dragged on the market on news its chief executive officer will step down.

The FTSE/JSE Africa All Share Index was up 1% by lunchtime in Johannesburg, trading at its highest level in more than a week, as a broad rally led by miners and banks countered losses in index giant Naspers Ltd. as well as telecommunications providers.

Friday’s gains set the index on track for a fifth consecutive weekly advance, the longest winning streak since May 2020. The index is 2% higher since Monday, its best weekly performance since May 7.

“Local equities in are positive territory, having taken their lead from stronger global markets, which have risen on the back of corporate earnings, among other factors,” said Lester Davids, a strategist at Unum Capital. “Stock leadership appears to be broad-based with Sasol, MTN and Anglo American among the biggest gainers so far in the session.”

Eskom and South32 sign power supply deal for Hillside smelter

Mining firm South32 says it has clinched a long-term energy supply agreement between its Hillside Aluminium smelter and Eskom to provide power to the site until 2031. "The agreement secures the smelter's energy supply until 2031, under a tariff that is South African rand-based with a rate of escalation linked to the South Africa Producer Price Index," the company said on Friday.

Vodacom quarterly revenue climbs to almost R25bn 

In an update for the three months to end-June, Vodacom reported that its group revenue was up 9% from a year ago, to R24.8 billion, while South African revenue (R19.5 billion) was 13% higher than a year ago. This was thanks in part to a strong recovery in equipment sales in South Africa - in the same quarter in 2020, stores were closed during hard lockdown.

In South Africa, it grew its customer base by 13% to 44.6 million over the past year. Data traffic increased by more than 8%, while mobile contract customer revenue increased by 4%. In the prepaid segment, mobile customer revenue increased by 1.8%. Financial services in South Africa remained a strong performer, delivering revenue growth of 19%.

In rand, its income from other markets – including Tanzania, DRC, Ghana, Kenya and Mozambique – was hit by the strong rand. 

Vodacom confirmed that the financial impact of damage to its infrastructure related to the unrest in KwaZulu-Natal and Gauteng was not material.

Liberty Two Degrees to resume dividends

The property group Liberty Two Degrees, which owns stakes in Sandton City, Nelson. Mandela Square, Eastgate and others, expects that it will earn a dividend of 13c to 16c per share for the six months to end-June. It did not declare a dividend in the previous period.

Royal Bafokeng earnings for the six months to end of June are expected to increase by over 400% as the platinum miner continues to benefit from the upward trend in prices. The miner said its basic earnings per share would be between 1800 cents and 1860 cents, a jump of up to 450% compared to the previous ended 30 June 2020. 

Headline earnings per share of between 1,795 cents and 1 850 is expected, which would be an increase of at least 452%.

"Despite the continued impact of the global Covid-19 pandemic and other operational challenges, 4E and platinum ounce production increased by 24.3% and 23.2%, respectively compared to the first six months of 2020, which was materially impacted by national lockdowns to curb the spread of Covid-19."

The company which has operations on the western limb of the bushveld said its earnings in the first half of 2021 were mainly impacted by Increased production and sales, favorable platinum group metals market conditions, and a stronger rand-dollar exchange rate. Royal Bafokeng would release its interim financial results on 3 August. 

Markets extend global rally as earnings trump virus worries

Asian markets rallied Thursday as worries about the Delta variant were overshadowed by more strong earnings reports that indicated companies were faring well as the global economy emerges from last year's pandemic-induced collapse.

After a painful start to the week, investors were back in the saddle after Wall Street and Europe enjoyed back-to-back rallies thanks to optimism about the outlook, and despite surging infections that have forced some governments to reimpose lockdowns or other containment measures.

On Wednesday, the JSE's All Share Index gained more than a percent, while the rand strengthened to R14.57/$ on Thursday morning - from R14.73 on Wednesday.

Confidence in the long-term recovery has been fortified by data showing that while even fully vaccinated people have become infected with the new strain of Covid - such as in the United States and Britain - hospitalisation and death rates among those people have remained relatively low, suggesting the drugs are working.

"The base case in the US is that the rise in Delta infections will not see restrictions tightened and although vaccination rates differ by state, 79.5 percent of the over-65s population is now fully vaccinated," said National Australia Bank's Tapas Strickland.

He added that while Delta concerns remained, "the consensus is that it does not pose an immediate risk to the recovery. At most, given effective vaccines, Delta pushes out the recovery by a quarter as countries seek to vaccinate a higher share of their respective populations before fully repealing virus restrictions".US traders cheered after forecast-beating earnings from Verizon and Coca-Cola, while United Airlines predicted profits down the line despite Covid curtailing travel.

Observers said about 85 percent of US firms that have reported so far have beaten expectations."Earnings estimates are quite remarkable, probably some of the best on record," David Mazza, at Direxion, told Bloomberg Television.

"Even through all this, we have central bank liquidity remaining very abundant, economic growth being robust."

Certainly there are some question marks around how long that can continue, but for the time being momentum is at investors' back."

All three main indexes in New York enjoyed healthy gains while London, Paris and Frankfurt jumped more than one percent for a second day running.And Asia extended the rally, with Hong Kong leading the way by climbing 1.8 percent, while Singapore, Seoul, Jakarta and Manila also put on more than one percent.

There were also gains in Shanghai, Sydney and Taipei. Tokyo was closed for a holiday.

However, analysts warned that the earnings reports had also shown that inflation remained an issue, with some saying price pressures were higher and longer lasting than foreseen.A long-running concern on trading floors is that an extended period of high price rises will force the Federal Reserve to tighten monetary policy earlier than thought, though the central bank has persistently denied it would act too soon."The key uncertainty for inflation though is whether these cost pressures are persistent and whether they are passed on to retail prices," Strickland said.

Joe Biden looked to temper any worries Wednesday, telling a CNN town hall gathering "there will be near-term inflation" owing to the healthy economic recovery. But he added that most experts thought "it's highly unlikely that it's going to be long-term inflation that's going to get out of hand".

Oil prices dipped slightly after rallying more than four percent Wednesday, helping wipe out almost all Monday's hefty losses, as demand optimism was boosted by news from the Energy Information Administration that stockpiles had fallen last week.

The commodity had taken a hit Monday on Delta fears and after OPEC and other major producers agreed a deal to lift output from next month.

"In the near term there may be some volatility, but anything below $70 will not sustain for long," Howie Lee, at Oversea-Chinese Banking, said.

Bitcoin was hovering around $32,000, having recovered back above the $30,000 level it lost this week, helped by comments from tycoon Elon Musk, who said his SpaceX firm had investments in the cryptocurrency.

- AFP, additional reporting by Fin24

Sappi says KZN unrest cost it R220m 

While there was no material damage to any of Sappi’s plants, the unrest in KwaZulu-Natal and Gauteng cost it more than R200 million. 

Three of its mills - Saiccor, Tugela and Stanger – closed during the period of unrest, and only started to open this week. 

“The three dissolving pulp lines at Saiccor will be restarted in a phased approach and production output will take a few days to ramp-up to full capacity. Work on the Saiccor expansion project also resumed on 19th July, but the commissioning timeline has been negatively impacted and the start-up is now expected to begin in September/early October2021,” Sappi said in a statement. 

Expected congestion at the Durban port, due to limited operations during the unrest, will likely result in protracted delays for dissolving pulp exports. 

The unrest will result in a permanent loss of sales volumes of approximately 28 000 tons of dissolving pulp and 7 000 tons of paper - which will lower the company's quarterly EBITDA by R220 million. 

June inflation cools to 4.9% - despite food, transport price hikes 

The annual consumer price inflation subsided to 4.9% in June, down from 5.2% in May 2021, Statistics SA announced on Wednesday.

From May to June, consumer inflation increased by 0.2%.

There was a 7% increase in food prices from June 2020 to June 2021, with meat prices up by 8.6% due to supply shortages and increasing input costs, says Johann van Tonder, economist at Momentum Investments. Vegetable oil rocketed by almost 22% over the past year, but lower international prices should put pressure on local prices, he added.

Transport prices increased by more than 12% in the year to June. This was due to a sharp increase in fuel prices compared to the same time last year, when oil tanked amid hard lockdowns across the world. The abnormally low fuel prices during the first half of 2020 established a very low base for prices - pushing recent inflation numbers higher, a so-called "base effect". 

Van Tonder expects a "near-term moderation" in headline inflation due to diminishing base effects and slower increases in international commodity prices, such as oil, which should reduce the pressure of fuel prices on headline CPI.

"The combined effect of a low base and higher oil prices had been a driving force of increasing headline CPI. It contributed more than 33% of the increase in May’s headline CPI. Its contribution decreased to 26% of June’s CPI and is projected to decline to around 15% of July’s CPI.

Van Tonder says it’s difficult to quantify what the effect of the recent riots may be on South Africa’s inflation rate.

"At this stage it seems as if food, clothing, household appliances and pharmaceuticals were most affected by the riots. The magnitude of the effect on CPI will to a large degree depend on how supply management and recovery [are] handled.

"Government gave companies the green light to cooperate outside the bounds of the Competition Act to restore the availability of goods as soon as possible, while the state-owned South African Special Risk Insurance Association (Sasria) - the only insurer that covers claims caused by civil unrest – has been urged to deal speedily with claims.

"The effect on CPI could therefore be limited, if handled well," Van Tonder says, adding that the Monetary Policy Committee – which meets on Thursday to decide on interest rates - will, for now, disregard the effect of the riots on near-term CPI."As such, it is plausible that the MPC may, given the devastating effects of the riots on the economic recovery, consider less hawkishness for a while."

Home buying trends

Second quarter oobarometer statistics released by home loan comparison service ooba show that recent home buying trends prioritise quality of life as well as working from home due to the influence of the Covid-19 pandemic on homebuyers.

Properties that offer flexible accommodation that allow for separate workspaces and additional space for families spending more time at home are in demand. Buyers are also using the current low interest rates to "buy up" where possible.

The average purchase price is at a high of R1 407 071. The average purchase price of first-time buyers showed a 10.9% increase for the same period reaching an average price of R1 104 351. 

Of the home loan applications submitted to ooba this quarter, it is evident that 100% bonds are very sought after amongst first-time homebuyers. 

Markets mixed after Wall St rally as virus worries persist

Equity markets struggled to maintain early gains Wednesday and were mixed in later trade despite a strong rebound in New York, with optimism over the global economy and concerns about the fast-spreading Delta variant fuelling volatility.

On Wednesday morning, the JSE's All Share Index was up almost a percent at 66 166 points. The rand was more than a percent weaker at R14.70/$.

Investor confidence - built on months of vaccinations, and vast government and central bank support -- has been knocked in recent weeks by surging infections around the world that have forced new lockdowns and containment measures while putting the global recovery at risk.

That has culminated in big losses for equity markets, which have been sitting at record or all-time highs, as dealers shifted into havens such as Treasuries, gold and the yen.

Blame has largely fallen on the highly transmissible Delta variant, which has spread like wildfire through countries, including those with high vaccination rates. But the main worry is for those that are struggling to inoculate their populations fast enough.

And the head of the World Health Organization warned Wednesday that the pandemic was "a test the world is failing".However, analysts said that while the near-term picture was bleak, sights were set on the recovery outlook and that market losses were to be expected."We had a dip, we had a shock, there is fear of the Delta variant and there is the other side -- which is some day we get beyond Covid and when we do, we have a worldwide recovery," David Kotok, of Cumberland Advisors, told Bloomberg Television.

"We are seeing that tension going on in the markets for the last few days."

- AFP and Fin24

Nobel Foundation divests funds linked to oil

The foundation that finances and organises the Nobel Prizes announced on Tuesday that it had sold off its oil sector assets, after also withdrawing from the coal industry."This year we have sold off shares in oil," Vidar Helgesen, the new head of the Stockholm-based foundation, told public broadcaster SR.

According to the former Norwegian environment minister, the fund had sold off nearly 350 million Swedish kronor (over R580 million) of assets placed in a fund that did not have strong enough restrictions on oil.Helgesen added that it is important that Nobel laureates know where their prize money comes from.

Seychelles sells 'digital' endangered bird - for up to $10 000

Want to buy your very own "digital bird"?In what it has been hailed as a world-first, a conservation group in Seychelles has launched a project to sell digital versions — or NFTs — of the island nation's endangered magpie robin.

Nature Seychelles said the aim was to raise money for conservation, as traditional sources of funding have dried up during the coronavirus pandemic. The digital twins of the black and white birds can be snapped up for as little as $10 or as much as $10 000 — and Nature Seychelles CEO Nirmal Shah told AFP they had already raised $2 500 on the first day of the sale Monday.

Emerging-market investors pile into bonds as Delta spreads

Emerging-market investors have been pouring money into bonds and cutting back on stocks in a trend that’s set to intensify as the delta variant of the coronavirus ravages developing economies with low vaccination rates.

Bonds have seen net inflows for 11 straight months, the longest streak in Institute of International Finance data going back to early 2018. They surged to a net $99.2 billion in the six months through June, versus net equity withdrawals of $2.2 billion, according the data, which tallies emerging markets excluding China.

Equities haven’t attracted more money than bonds since November, when vaccine progress and Joe Biden’s election as U.S. president boosted optimism toward the global economy.

The picture won’t change anytime soon because delta-variant risk to emerging markets hasn’t been fully priced in yet, said Paul Sandhu, head of multi-asset solutions at BNP Paribas Asset Management Asia. The money manager favours the long end of the curve in high-yield emerging markets such as Russia, Colombia and Turkey.

Pictet Asset Management’s Arun Sai also said he favors emerging-market bonds over stocks. Emerging-markets equities only attract sustained inflows when they offer a superior outlook to developed markets, according to Sai, who is a senior multi-asset strategist in London. - Bloomberg

Global markets sink on resurgent virus fears

World stocks and oil prices sank Monday as the spreading Delta variant of Covid-19 fueled fears of a faltering economic recovery, while the OPEC+ alliance agreed to hike output.

Safe-haven assets such as US Treasury bonds were the order of the day amid a generalized sell-off of risky investments.

Oil prices plunged after OPEC+ agreed Sunday to pump an extra 400,000 barrels per day each month from August to meet rising demand as economies reopen. London stocks gave up 2.3% at the close after the UK government lifted England's daily pandemic curbs despite soaring infection rates.

In eurozone trade, Frankfurt slumped by 2.6% and Paris shed 2.5%. In New York, the Dow dove 2.1% in its worst session of 2021.

Europe mirrored sharp losses in Asia as investors dumped risky investments and fretted that runaway inflation could spark central bank interest rate hikes.

"Risk aversion is firmly in place as the Delta Covid variant spread is triggering a flight to safety," said Edward Moya, an analyst at the Oanda brokerage.

"Global investors are growing anxious and selling stocks, commodities, and even cryptocurrencies to buy US Treasuries," he added.

In England meanwhile, almost all Covid-19 restrictions were lifted, a move criticized by many health experts but hailed by media and supporters as "freedom day".

"Far from bringing an added dose of confidence to investors, 'Freedom Day' appears to be a setback," Hargreaves Lansdown analyst Susannah Streeter told AFP.

"The sharply rising Covid infection rates across the UK, and concerns about the fresh easing of restrictions, is likely to be behind the drop."

The Delta variant has been in the headlines for weeks, but concerns on Wall Street grew after Los Angeles reimposed an indoor mask mandate over the weekend following a steady increase in Covid-19 infections and hospitalizations. While the losses were fairly broad-based, travel equities were an especially weak area for stocks. Carnival and United Airlines both dropped more than five percent, while Marriott International lost 3.1% and Expedia declined 3.8%.

Monday's rout reflects the "cumulative effect" of recent headlines, said Art Hogan, the chief strategist at National Securities.

"The market is focused on the coronavirus restrictions and what it means for economic activity. There is very strong muscle memory on what that means."

Key figures around 2050 GMT

New York - Dow: DOWN 2.1 percent at 33,962.04 (close)

New York - S&P 500: DOWN 1.6 percent at 4,258.49 (close)

New York - Nasdaq: DOWN 1.1 percent at 14,274.98 (close)

London - FTSE 100: DOWN 2.3 percent at 6,844.39 (close)

Frankfurt - DAX 30: DOWN 2.6 percent at 15,133.20 (close)

Paris - CAC 40: DOWN 2.5 percent at 6,295.97 (close)

EURO STOXX 50: DOWN 2.7 percent at 3,928.53 (close)

Tokyo - Nikkei 225: DOWN 1.3 percent at 27,652.74 (close)

Hong Kong - Hang Seng Index: DOWN 1.8 percent at 27,489.78 (close)

Shanghai - Composite: FLAT at 3,539.12 (close)

Brent North Sea crude: DOWN 6.8 percent at $68.62 per barrel

West Texas Intermediate: DOWN 7.5 percent at $66.42 per barrel

Euro/dollar: DOWN at $1.1804 from $1.1806 at 2100 GMT Friday

Pound/dollar: DOWN at $1.3675 from $1.3767

Euro/pound: UP at 86.29 from 85.76 pence

Dollar/yen: DOWN at 109.46 from 110.07 yen

AFP

MC Mining's Uitkomst colliery resumes production after unrest

The Uitkomst colliery in northern KwaZulu-Natal has resumed production after operations were halted last week due to civil unrest in the region.

The mine which is 70% owned by MC Mining said it lost 5,600 tons in production over the past three days of closure that also shut services at the ports of Richards Bay and Durban.

"The temporary suspension of operations has resulted in the loss of three and half days of run of mine coal production, equating to approximately 5,600 tonnes," the company formerly known as Coal of Africa said in a statement.

Operations were suspended last week as a safety measure, as looting and vandalism of businesses spread through the province. 

A number of business warehouses were torched by mobs who emptied shelves and destroyed property. The producer of thermal and coking coal said it was assessing how to recover the lost production time.