The Traders' Update, 21-22 November 2024
Realeboha Molaba
Actuarial Junior Consultant; Actuarial Science Honours Graduate from the University of Cape Town; Actuarial Science and Mathematical Statistics Graduate from the University of the Witwatersrand
Segment 1: Overseas Markets
European Markets
Equity markets were trading mostly higher during midday trades, i.e.:
On the individual shares front, French semiconductor materials company Soitec shares surged to the top of the pan-European Stoxx 600 on Thursday after the company reiterated its full-year guidance.
Swiss insurer Zurich Insurance shares rose after the company announced a new three-year plan and it also reiterated that it was on track to meet its 2023-2025 targets a year ahead of schedule. The company attributed the success to the execution of its strategy and a better-than-expected operational environment.
French payments company Worldline shares plunged to the bottom of the Stoxx 600 on reports that the company is planning to initiate a refinancing exercise following a difficult trading year and it has issued three profit warnings.
British sports retailer JD Sports shares fell after the company issued a trading warning that its annual profit may be lower than expected following a tough October operational period due to strained consumer spending.
On the data front, the French National Institute of Statistics and Economic Studies reported that French manufacturers' confidence index rose to 97 in November from last month's 93 reading, however it remains below its long-term average of 100. The broader business confidence index, which includes services and wholesale trade data, fell slightly to a reading of 96 from the 97 recorded in the previous month.
Asia-Pacific Markets
Hong Kong
eCommerce giant Alibaba shares fell after the company announced plans to merge all its e-commerce arms, both domestic and international, into a single business unit.
The Hang Seng closed 1.99% lower at 19,211.17.
China
Mainland markets plunged, i.e.:
Japan
The Statistics Bureau reported that headline inflation fell to 2.3% year-on-year in October from the 2.5% reading recorded in the previous month.
The government is planning to spend JP¥13.9 trillion (US$89.7 billion) from its general account in order to finance a new stimulus package aimed at reducing the impact of rising prices on Japanese households.
Broader markets closed higher, i.e.:
South Korea
Chipmaker SK Hynix shares rose after its parent company SK Square announced a series of plans to boost shareholder value and one of these is for the parent company to repurchase shares worth ₩100 billion (US$71 million) of SK Hynix stock.
Korean markets closed mixed, i.e.:
Singapore
The Department of Statistics reported that the city-state's economy grew by 5.4% year-on-year in the third quarter of 2024, faster than the 4.1% expected by polled market analysts. On a quarterly basis, the economy expanded by 3.2%. The statistics agency also raised its projections for the full-year economic growth to be around 3.5% from the previous range of 2%-3%.
The Straits Times Index was trading 0.15% higher at 3,744.85 in its final hour of trading.
Australia
The S&P/ASX 200 closed 0.85% higher at 8,393.80.
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U.S. Markets
Equity markets closed higher as investors digested Nvidia's financial results, i.e.:
Server maker Super Micro Computer shares surged to the top of the S&P 500 after semiconductor behemoth Nvidia announced a partnership with the company. The company earlier in the week filed a compliance plan to counteract the possible delisting of its stock from the Nasdaq after the company failed to release its annual report citing accounting irregularities.
Semiconductor behemoth Nvidia shares rose after the company's third-quarter revenue and profit results exceeded forecasts even though it cited supply chain issues could reduce its current-quarter revenue growth prospects.
Government and commercial services contractor Amentum shares rose after the company secured a US$389 million (R7.03 billion) contract to provide logistical support for the U.S. Army and it has also partnered with the government of the Netherlands to assess potential nuclear power projects in the country.
Manufacturer of tractors and other heavy-duty farming equipment Deere shares rose after the company reported higher-than-expected profit for its fiscal fourth quarter. The slump in the company's equipment was counteracted by moderate raw material prices and freight expenses. However, the company's full-year profit guidance came in lower than expected as the company expects continuous pressure on farm incomes to continue dragging down spending on agricultural equipment.
Electricity generator Vistra shares continued to rise after the company announced a senior secured notes private offering worth US$1.25 billion (R22.60 billion). The company's stock has delivered a year-to-date return of over 330% on prospects that the company will provide power to energy-intensive data centers.
Tech giant Alphabet (GOOGL) shares fell to the bottom of the S&P 500 after the Department of Justice ruled that the company should divest its Chrome browser citing that the company has a monopoly in the search business. The court also ruled that the company needs to make sure that its control of the Android mobile operating system does not disadvantage others.
Aerospace component supplier TransDigm Group shares fell after a short-selling opportunities newsletter alleged that the company may have engaged in price gouging and hence taken advantage of government inefficiencies to boost its profits. The company may face scrutiny from emerging government efficiency efforts.
Medical technology firm GE Healthcare Technologies shares fell after the company highlighted that it is facing a challenging operational environment in its Chinese market and indicated that it expects recovery in the country to remain muted in the first half of 2025. However, the company boosted its quarterly dividend and reaffirmed its organic revenue growth targets.
Segment 2: African Markets
Nigeria
Parliament has approved the government's request to borrow ₦3.74 trillion (US$2.21 billion) from the Eurobond market to address financing deficiencies in the 2024/25 fiscal budget.
Naira-denominated local crude sales have fallen short of the government's target according to refineries like Dangote oil refinery. The government wanted to address challenges relating to the inaccessibility associated with foreign currencies.
Brazilian meat-maker JBS reported on Thursday that it has signed a memorandum of understanding (MOU) with the Nigerian government to invest ₦4.23 trillion (US$2.5 billion) in the country through building poultry factories.
Ethiopia
The government plans to spend an additional 581.98 billion Ethiopian birr (US$4.8 billion) in the current 2024/25 fiscal year.
Rwanda
The National Bank of Rwanda kept its benchmark lending rate unchanged at 6.5% on Thursday after cutting it for two consecutive times.
Ghana
Graded and sealed (G&S) cocoa arrivals at the country ports by November 7 from September 11 stood at 183,000 metric tons and represented a 49% increase compared to the cocoa arrivals recorded in the same period in the previous season.
Morocco
Annual inflation in October fell to 0.7% month-on-month, down from the 0.8% recorded in the previous month.
Segment 3: South African Markets
Wholesale retailer Pick 'n Pay received overwhelming request for its 40% shareholding in discount retailer Boxer Superstars and will be offering each share at R54. The company plans to offload 202.4 million shares and this is expected to result in the IPO raising R10.93 billion (US$610 million).
Lanseria International Airport has been purchased by a group of investors led by local private equity firm Harith General Partners for about R6.5 billion (US$360 million). The group of investors are purchasing the stake in the airport from investors like the Government Employees' Pension Fund (GEPF), Old Mutual and Absa.
Hotel group Southern Sun's Sandton Consortium which houses the Sandton International Convention Centre generated a revenue of R318 million (US$17.63 million) and earnings of R99 million in six months.
As the South African Reserve Bank (SARB) reduced the repo rate by 25bps to 7.75% on Thursday, Capitec Bank is expected to be one of the least impacted banks as its strategy is less reliant on net interest income. Nedbank, however, is expected to be more impacted as net interest income constitutes a large portion of its revenue basis.
Segment 4: JSE Afternoon Market Update