Unum Market Commentary: Global Equities Decline In Risk-Off

18 sept 2018

It was a risk-off start to the trading week for global equities as new rounds of jabs between the United States and China regarding trade saw Asian equities attract sellers early in the session, with the the major Hang Seng and Shanghai Composite Indices losing over 1% each while the Nikki bucked the trend, adding 1.19%. In Europe, markets continued with the bearish undertone as the DAX lost 0.23%, lead by Linde while the FTSE 100 Index shed a marginal 0.03% weighed down by Hikma Pharmaceuticals. On the local bourse, the All Share Index was lower by 0.50% while the Top 40 Index shed 0.48%, lead lower by Sanlam (-3.41%) and RMIH (-3.25%) while Kumba Iron Ore saw a gain of 1.60%. Overnight, US equities were sharply lower, with the NASDAQ Composite declining by 1.43% while this morning Asian Equities are mixed.

JSE Major Sectors

Resources 10 +0.37%
Industrial 25 -0.43%
Financial 15 -1.74%

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Unum Capital Economic Calendar: unum.co.za/economic-calendar/


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In currencies, the South African Rand trades as follows:

USDZAR +0.28% to 14.94
GBPZAR +0.28% to 19.65
EURZAR +0.14% to 17.46

Gold trades at $1202
Platinum at $800
Brent Crude Oil at $77.56

International Markets

This morning, Asian equities are as follows:

Nikkei 225 (+1.63%)
Hang Seng (-0.65%)
Shanghai Composite (+0.25%)

Latam Markets closed as follows:

Merval 25 (+3.25%)
Bovespa (+1.80%)
INMEX (-0.46%)
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Company News

Naspers Limited - Listing and Unbundling of Video Entertainment Business as Multichoice Group on the JSE

Naspers today announced its intention to list its Video Entertainment business separately on the Johannesburg Stock Exchange (JSE) and simultaneously to unbundle the shares in this business to its shareholders. The new company will be named MultiChoice Group Ltd ("MultiChoice Group") and will include MultiChoice South Africa Holdings (Pty) Ltd (and its subsidiaries, associates and/or affiliates), MultiChoice Africa Holdings B.V. (and its subsidiaries, associates and/or affiliates), MultiChoice Botswana (Pty) Ltd, MultiChoice Namibia (Pty) Ltd, NMS Insurance Services SA Ltd, (the aforesaid entities collectively "MultiChoice"), the African division of Showmax B.V. (and its subsidiaries, associates and/or affiliates), Irdeto Holdings B.V. (and its subsidiaries, associates and/or affiliates) and Irdeto South Africa (Pty) Ltd (collectively "Irdeto").

This marks a significant step for the Naspers Group as it continues its evolution into a global consumer internet company. Listing MultiChoice Group via an unbundling is expected to unlock value for Naspers shareholders and at the same time create an empowered, top 40 JSE-listed African entertainment company.

(Extract from Stock Exchange News Services)

Rhodes Foods Group - Trading update and trading statement for the year ending 30 September 2018

Trading update

The increasingly challenging local economic environment and the prolonged drought in the Western Cape have adversely impacted the group’s regional and international performance.

Regional segment (South Africa and the rest of Africa) Trading conditions showed a marked deterioration in the second half of the group’s financial year as declining consumer disposable income resulted in a sharp slowdown in sales growth, in line with the pressure being experienced in the food retail sector.

Despite the tougher trading environment, market shares have been maintained or grown.
- The pie category has proven to be resilient in the current consumer slowdown. However, the turnaround in Ma Baker has been slower than expected and the business is anticipated to report a small loss for the full year.
- Dry foods (formerly Pakco) continues to perform well and gain momentum from the relaunch of its brand portfolio earlier in the year.
- Escalating meat prices have contributed to margin dilution in Bull Brand.
- Fruit juices have shown good growth in an intensely competitive environment.
Trading in the sub-Saharan Africa markets remains tough owing to poor economic conditions and liquidity constraints in some major markets.

The regional operating margin for the second half is anticipated to be at a similar level to the 7.8% reported for the first half, although the margin for the first six months was net of certain once-off costs.

International segment International revenue will show an increase for the year due to improving export volumes. Industrial puree and concentrate pricing has remained weak and margins continued to be impacted by increased canned fruit product costs as a result of the drought in the Western Cape over the last two seasons.
The higher canned fruit costs could not be recovered through price increases and this together with the currency impact has had a material impact on profitability which will contribute to the international segment posting a loss for the year.

Trading statement

In addition to the trading performance, the group’s earnings will be adversely impacted by increased interest payments which are expected to be between R26 million and R28 million higher than the previous year. This relates mainly to the funding for the acquisition of Ma Baker, the increased capital investment programme and lower levels of cash generated as a result of the lower profit over the past year.

Earnings have benefited by R11 million from an income tax rebate relating to capital projects in the current year and the release of an over-provision for prior years.
As a result of these factors outlined above, management expects headline earnings for the year ending 30 September 2018 to be between 28% and 38% lower than the R237.0 million reported for the previous year.

Earnings per share measures have been impacted by the 8.1 million or 3.3% increase in the weighted average number of shares in issue over the prior year relating to the issue of shares for the capital raise and the acquisition of Pakco in the previous year.

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Aus miners:
BHP Billiton (-1.11%)
Rio Tinto (-0.32%)
S32 (-0.13%)

FANGs
Facebook (-1.17%)
Amazon (-3.15%)
Netflix (-3.90%)
Google (-1.55%)

FTSE Miners:
Anglo American plc (+0.09%)
BHP Billiton plc (+0.17%)
Glencore plc (-0.40%)

Alibaba Holdings (-3.62%)
Tencent Holdings (-2.44%)

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Please contact the Unum trading desk for any trading related queries : 011 384 29 29