| Monday 01 November 2021 Good morning Voornaam,
If you know any forex traders driving Mercedes AMGs, they will either be upgrading once more or handing them back to the banks depending on which view they took on the USD/ZAR cross in the past 10 days or so. Since 20th October, our currency has lost over 5.5% against the USD. That's a significant move in a short period.
The Bureau for Economic Research (BER) has highlighted load shedding and a 150bps policy hike by Brazil as possible reasons. Local elections can also cause volatility in a currency.
The JSE All Share Index can be helped along by a weaker currency, as many of the largest companies in the index have substantial offshore earnings. The index recovered by around 5% in October but is still not trading above the levels seen in March. The best action in the index happened in the first two months of the ye ar, although those who bought the substantial dip in mid-September would now be up 9.8%.
Oceana Group released a concerning announcement that there is a delay in finalising the group's financial results for the year ended September. The issue is mainly an accounting matter related to the group's United States subsidiary. The board does not believe that the matter will have a material impact on the financials, but the company fell 2.9% regardless.
Telkom expects HEPS for the six months to September to be 25% to 35% higher than the comparable period, coming in at between 273.8 and 295.5 cents. The main driver of this increase was a 35% drop in finance charges, fair value movements and foreign exchange losses. Debt repayments are good news in terms of strengthening the business, but shareholders would've liked to see a positive narrative around the operations as well.
Nampak has secured a tr ade finance facility with Standard Bank for up to R1 billion. This will allow Nampak to sell a portion of its accounts receivable balances to the bank. The facility will be used to repay debt, as Nampak needs to reduce interest-bearing debt by at least R1 billion by June 2022. This goes a long way towards reducing the risk of being forced to sell productive assets in a desperate sale. During October alone, R206 million of the facility has been utilised.
A couple of MTN's African subsidiaries released results recently. The big one the market was waiting for was MTN Nigeria. The quarter ended September reflected strong revenue cadence (2.2% growth on the previous quarter) and ongoing operating margin expansion (34.85% vs. 34.6% in the prior six months). MTN closed 1.11% higher on the day.
Massmart announced the completion of its transaction to acquire a 87.5% stake in OneCart. It will be interesting to see whether this ha s the desired effect of helping the group compete with the likes of Takealot.
In another example of a bank buying back its preference shares, Investec is making an offer to its preference shareholders to acquire the shares at R99.52 per share. They were issued at an average of R99.30 per share between 2003 and 2010. The market price before the offer was made was R85.50. A lack of liquidity hurt those who invested in these bank preference shares and then tried to sell them in the open market.
In today's first feature article, I looked at The Foschini Group's interim result. The group has had to deal with lockdowns on three continents and civil unrest at home. Against that backdrop, it has been remarkably resilient! An even stronger demonstration of adaptability and survival has been Distell, a company that has defied the odds and posted excellent results despite the alcohol bans.
For those interested in ESG investing, Mohammed Nalla and I welcomed Kate Mackenzie to Ep49 of Magic Markets. Kate is a Bloomberg Green contributing columnist and is right at the coalface of the fight to move on from coal (and other fossil fuels). We discussed tough topics like developed vs. emerging markets and the difficulties of balancing all three letters in ESG.
Regardless of who you vote for today, make sure you get in the queue and exercise your democratic right to do so.
Happy voting day!
The Finance Ghost
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Local and Offshore Market News |
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