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The JSE jumps in June, despite trade-war talk

The JSE jumps in June, despite trade-war talk

June once again saw volatile trade around the globe amid continued fears about a possible trade war between the US and China as well as its other major trading partners in Europe and North America. Last week, China vowed to match any further tariffs that might be raised by the US, while Europe warned of a possible global recession if the US continues down its current path. Markets saw a flight to safety in the US, whilst emerging markets (EMs), including South Africa (SA), remained under pressure for most of the month. Overall, the majority of major global markets closed lower MoM as the trade policy of US President Donald Trump took its toll on confidence levels around the world.

US equities advanced slightly and despite the Dow slipping by 0.6% MoM (-1.8% YTD), the S&P 500 advanced by 0.5% MoM (-1.7% YTD) and the tech-heavy Nasdaq gained 0.9% (+8.8% YTD). For 2Q18, all three indices ended in the green, with the Dow up 0.7%, the S&P 2.9% higher, and the Nasdaq climbing 6.3%. On the US economic data front, 1Q18 GDP growth slowed more than expected (2.0% YoY vs the 2.2% pace reported in May) as the weakest growth in consumer spending (which accounts for two-thirds of the US economy) in c. 5 years weighed on the data. Personal consumption expenditure, the US Federal Reserve’s (Fed’s) preferred inflation gauge, advanced 0.2%, while inflation rose 2.3% YoY – its fastest pace since March 2012, according to Reuters. At its June meeting, the Fed hiked rates by the expected 0.25% and pointed to two more rate hikes this year.

A European Union (EU) deal on migration reached last week, mitigated some political risk hanging over the single-currency bloc by strengthening the leadership position of German Chancellor Angela Merkel and removing concerns of a possible fresh election in Germany – the EU’s biggest economy. This, in turn, helped buoy stocks on Friday and also saw a jump in the euro. However, it was not enough to stop most markets in the region from ending June in the red. Germany’s Dax dropped 2.4% MoM (+1.73 in 2Q18 and -4.7% YTD), and France’s CAC declined by 1.4% MoM (+3.0% in 2Q18, +0.2% YTD) while, in the UK, the FTSE 100 closed 0.5% lower MoM (and -0.7% YTD), despite recording an impressive 8.2% 2Q18 gain (its biggest quarterly gain since 1Q13, when it jumped 8.7%, according to Market Watch). On the economic data front, German labour market data remained strong in June, with jobless claims dropping by 15,000 and unemployment remaining at an all-time low of 5.2%. Eurozone consumer price inflation (CPI) rose 2%, up from 1.9% in May, and headline inflation came in around the European Central Bank’s (ECB’s) target of close to, but below, 2%. Core inflation (excluding the volatile energy, food, tobacco and alcohol categories), however, fell to 1% vs 1.1% in May. At its June meeting, the ECB announced plans to wind down its R31trn quantitative easing programme by year end, but maintained rates at current levels.

Moving to Asia, following a lacklustre month, China’s markets rallied Friday as the country eased foreign investment curbs on several sectors (banking, automobiles, heavy industry and agriculture). Despite this move, sentiment continued to be hamstrung by trade war concerns and Hong Kong’s Hang Seng Index fell 5.0% MoM (-3.8% in 2Q18 and -3.2% YTD), while the Shanghai Composite Index, one of the worst-performing major indices globally this year, posted its worst monthly performances since 2016 as it dropped 8.0% MoM (-9.9% in 2Q and -13.9% YTD). Initial US tariffs on Chinese goods valued at $34bn will take effect on Friday (6 July) with markets remaining on the back foot as concern mounted that it will lead to more retaliation (or even escalation) from China. CNBC writes that the Chinese yuan also suffered its worst month on record, losing 3.0% against the greenback in June as investors pulled money from a market “likely to suffer from higher barriers to trade.” In terms of economic data, Chinese factory activity slowed in June, with the Purchasing Managers’ Index (PMI), a key gauge of factory conditions, dropping from an eight-month high of 51.9 in May to 51.5 in June (missing expectations). Meanwhile, in Japan, the Nikkei ended the month on a positive note closing 0.5% higher (-2.0% YTD and +5.4% in 2Q18). In terms of economic data, Japan’s jobless rate slumped in May, reaching the lowest level in almost 26 years but GDP shrank for the first time in 2 years – down 0.2% QoQ in 1Q18, as soft private consumption offset a stronger reading for capital investment.

On the commodities front, Brent crude prices were up again in June, reaching a three-and-a-half year high on Thursday and ending the month at $79.44/bbl – up 2.4% MoM. Gold remained near six-month lows closing Friday 3.5% down MoM at $1,252.60/oz. The yellow metal was weighed down by trade worries and interest rate expectations as the Fed’s path of higher interest rates provided support to the strong dollar, pressuring gold prices. Platinum ended June c. 6.0% lower MoM at around the $852/oz level, while iron ore prices fell to a c. one-month low on Thursday before recovering slightly on Friday. MoM, iron ore prices were down 1.84% from $61.57/tonne to $60.44/tonne.

The JSE ended June on a positive note as the FTSE JSE All Share Index (J203) gained 2.6% MoM (down 3.2% YTD). Financial counters felt the most pressure with the FINI-15 dropping 2.8% MoM (-9.7% YTD), while Industrials closed 4.6% higher MoM (-4.7% YTD). Resource counters performed well as a rally in some commodity prices buoyed the Resi-10 to end June 6.4% in the green (the index is now up an impressive 16.1% YTD). While market-heavyweight commodity companies, including BHP Billiton (a 8.8% weighting in the J203), and Anglo American (4.1% of the index), posted robust monthly gains of 7.4% and 1.6%, respectively, industrial counters such as British American Tobacco (with a 2.4% J203 weighting) and Naspers (with its c. 20% weighting) jumped by 6.7% and 15.2% MoM, respectively, lifting the local bourse.

The rand lost significant ground (-8.1% MoM) in June on the back of a rampant dollar, negative EM sentiment and weak domestic economic data, especially the poor 1Q18 GDP showing. GDP plummeted 2.2% in 1Q18 (vs a 3.1% QoQ increase in 4Q17), data showed at the start of June – the largest QoQ decline since 1Q09, according to Stats SA. YoY, GDP grew 0.8%. The biggest negative contributors to 1Q18 GDP growth were the agriculture, mining and manufacturing industries. However, May consumer price inflation (CPI) surprised on the downside coming in at 4.4% YoY (vs April’s 4.5% print), despite April’s VAT hike. Most of the increase was due to higher alcohol, tobacco and fuel prices. With local consumers under pressure from all fronts, April retail sales data also disappointed as growth contracted 1.2% YoY, vs March’s 0.2% decline and 1.4% growth in February. Bloomberg writes that the latest data reflects the slowest growth in 15 months. Meanwhile, private-sector credit growth also decelerated to 4.6% YoY in May – its slowest pace since September 2010, according to SA Reserve Bank data.

On the political front, public hearings on the amendment of Section 25 of the Constitution, in order to allow for the expropriation of land without compensation, kicked off in June giving citizens the opportunity to air their views on the highly contentious issue. Health Minister, Aaron Motsoaledi gazetted the bill detailing an ambitious plan to roll out universal health care through a National Health Insurance (NHI), while Mineral Resources Minister Gwede Mantashe unveiled a revamped third Mining Charter.

Namibian financial services company, Trustco Group Holdings was June’s best-performing share, gaining 42.9% MoM. Last month, the company, which sold 20% of its insurance segment to the Riskowitz Value Fund for NAD1.2bn, posted FY18 results. In its results presentation the firm said this transaction enabled it “to diversify its revenue streams and operations to various geopolitical zones, reducing … exposure to adverse economic conditions.” The Group’s net asset value (NAV) increased from ZAc323 to ZAc504/share – a substantial 56% YoY increase. Management noted the company was well capitalised, and they were positive the Namibian economy “is poised for a recovery”, which the Group “is well positioned to take advantage of … ”.

Investment Group, Brait SE was the second-best performer (+16.6% MoM) despite reporting a (improved) R10.15bn FY18 loss (vs a R16.03bn loss in FY17) as it struggled to make headway into the UK market. The firm said its NAV fell to R57.32/share vs R78.15/share last year, as UK clothing retailer New Look weighed heavily on its performance. Nevertheless, Brait’s underlying investments (in Virgin Active, Iceland Foods and Premier), performed well despite a difficult operating environment and was likely the main reason for the share price performance.

Steinhoff International climbed 15.2% MoM, albeit from a low base and despite reporting a rise in its FY18 loss per share last week. Most of this share-price increase was on the back of news that the firm had secured support on its restructuring plans from the majority of its key creditors. The reports resulted in the share surging c. 13% higher at R1.29 on 7 June, but gains were capped as it became evident that the business remains in a very difficult financial situation.

Management at Naspers (also up 15.2% MoM) told investors last week that if the firm does not find good opportunities to deploy its very significant cash pile, it will start returning funds to shareholders. Company CEO Bob van Dijk also said in June that Naspers planned to start offering lending services in SA and other African markets.

African Rainbow Capital and Ascendis Health posted gains of 13.8% and 10.8% MoM, respectively. Last week, Ascendis announced plans in its investor update to dispose of two non-core and underperforming assets as part of a strategy to boost profitability. In the firm’s strategic business review, management declared that it has undertaken divestment in two underperforming assets, Ascendis Sports Nutrition along with Ascendis Direct, and a sizeable pharmaceutical production plant in Gauteng. The market seemed to welcome the move by CEO Thomas Thomsen, who only took over from long-serving CEO, Karsten Wellner in March. The company also appointed Marnus Sonnekus as interim SA COO with effect from 1 July 2018.

Rounding out the top-10, Stenprop recorded a 10.4% MoM rise, while Sappi, Sasol and Caxton and CTP Publishers all recorded gains of 9.9% MoM in June. The market seemed to approve of Stenprop CEO Paul Arenson’s move into the UK’s multi-let industrial property sector. Stenprop said it would sell all of its non-industrial assets over the next few years, and become “a competitive player in a market segment that offered long-term returns”, according to Business Day. Disposals worth GBP210.4mn, including GBP41.7mn concluded after the Group’s March year-end, yielded proceeds of GBP97.9m, which it said would fund investment in the sector.


Battery and automotive components maker, Metair (-22.5% MoM), was June’s worst-performing share. Early last month Metair confirmed reports that it was looking at acquiring Slovenian car battery maker, Tovarna Akumulatorskih Baterij (TAB) in a R4.4bn transaction. However, last week Metair said that, due to the drop in its share price, equity funding was not the best way forward, and it is now in talks over securing debt funding for the deal.

In second spot, Novus Holdings recorded a decline of 16.8%. Ince writes that the print and packaging Group closed a plant and decommissioned printing presses after Media24 renegotiated its printing agreement with the company. In June, Novus also released a trading statement saying its results for the year to end-March would not be as bad as previously expected. The company now expects basic EPS to be between ZAc20 and ZAc24 (a 70.1%-75.1% YoY drop) and headline EPS to be between ZAc100 and ZAc105 (a 5.2% to 9.8% YoY decline). In an April trading statement, the company had said basic EPS would be at least 75% YoY lower.

Following closely, in third spot, real estate Group, Delta Property Fund (-16.7% MoM) last month released FY18 results, which showed that rental income fell to R1.56bn from R1.61bn posted in FY17, while diluted EPS increased 25.4% YoY to ZAc112.26. The company declared a final dividend of ZAc50.8/share. Investors are concerned about an empowerment deal Delta initially announced in May 2017, which has not yet come to fruition. Delta remains under cautionary and the board said it will update the market when further information around the deal becomes available. Delta has also come under pressure because government has been reluctant to sign leases with term lengths that are market related.

Investment holdings company, Invicta (-15.6% MoM) issued a FY18 trading statement saying headline earnings would record a significant drop of 80% YoY (from ZAc500/share to ZAc98/share), due to costly tax liabilities caused by past transactions. The company also said it is continuing to negotiate with the SA Revenue Services with a view towards “reaching an agreement regarding the tax consequences of the transactions.”

Cashbuild, Botswana-based retailer Choppies and Arrowhead Properties recorded MoM declines of 15.4%, 14.7% and 14.5% MoM, respectively, while Vodacom Group’s (-14.4% MoM) share price has been hit hard since it released disappointing results in May, which fell short of consensus analyst expectations. Last month, Vodacom announced a R17.5bn empowerment deal which it said will “replace and build on the R7.5bn … BEE ownership scheme that was concluded in 2008 and anticipated to unwind on 8 October 2018.” This transaction, which is still subject to regulatory and shareholder approvals, will be the largest ever broad-based BEE transaction in the sector, the company noted.

Finally, material and construction firm, Raubex (-14.2% MoM) and Tradehold (-13.4% MoM) round out the 10 worst-performing shares for June. Last month, Raubex released a trading statement indicating that it expects 1H18 EPS and HEPS to be at least 20.0% YoY lower. Meanwhile, Tradehold has, over the last few months, streamlined its operations to become a full-on property play with significant SA exposure and in June it listed its unbundled financial services division, Mettle Investments, on the JSE.


Murray & Roberts Holdings (M&R), Trustco (following its impressive performance in June) and Allied Electronics (Altron) are the best-performing shares YTD, recording price gains of 44.6%, 34.8% and 28.3%, respectively. In June the majority (52.06%) of M&R’s shareholders gave the company’s board the mandate to pursue a merger with its competitor Aveng, despite strong opposition from M&R’s suitor (and 44% shareholder), German group ATON. M&R CEO Henry Laas said the shareholder vote was the first step to comply with provisions of the Companies Act and that the next step would be to get Take-Over Regulation Panel (TRP) approval. Meanwhile, Altron said in June it has concluded a deal to acquire iS Partners Ltd for R225mn.

Clover Industries (+25.2% YTD), released a FY18 trading statement last week in which the company said that it expects HEPS and EPS to be at least 20.0% higher YoY. Clover was followed by BHP Billiton, Clientele and Anglo American Plc, which posted YTD gains of 24.0%, 22.9% and 20.3%, respectively.

Finally, rounding out the 10 best-performing shares YTD, Lewis Group rose 17.7%, while Sasol and rand hedge, Mondi Plc are up 17.4% and 16.8% YTD, respectively. Mondi last month completed its acquisition of NPP in Egypt, for a total consideration of EUR24mn on a debt and cash free-basis. NPP operates an industrial bags plant near Cairo, serving regional customers. According to Mondi, the business will be integrated into its Fibre Packaging unit.


Despite recording a 15.2% MoM gain in June, Steinhoff remained the worst-performing share YTD, down 72.3%. Steinhoff is followed by Niveus Investments (-65.0% YTD) and Fortress REIT (-64.3% YTD), one of the Resilient Group of companies, in third spot. Resilient REIT was the fourth worst-performing share, dropping 58.5% YTD.

Following Resilient, EOH and Stadio Holdings, which was spun off from Curro last year, were down by 52.0% and 49.2% YTD, respectively. In June, investors seemed to welcome EOH’s announcement around the creation of two independent businesses – a ICT business (which will operate under the company’s brand) and a specialised solutions business for high-growth industries, which will operate under the newly launched NEXTEC brand. After just over a year at EOH, CEO Zunaid Mayet has now been appointed as NEXTEC CEO, with Rob Godlonton the new CEO of the EOH-branded business.

Another Resilient counter, Greenbay Properties, also made the bottom-20 performers YTD, with a decline of 48.2%, while Sibanye Gold is now down 45.9% YTD. Sibanye had a difficult June, with the company coming under fire for its safety record after reporting its 21st fatal mining accident this year on Wednesday last week.

Rounding out the ten worst-performing counters, Lonmin and Pan African Resources recorded YTD declines of 45.0% and 43.8%, respectively. The UK’s Competition and Markets Authority last week unconditionally cleared Sibanye’s proposed takeover of Lonmin.

Market Review


South African markets closed in the red yesterday, amid renewed global trade concerns ahead of the US-China tariffs implementation. Miner, Anglo American Platinum shed 2.2%, amid reports that it had disposed of its 33.0% interest in the Bafokeng Rasimone Mine to Royal Bafokeng Platinum, which surged 12.3%. Peers, Assore and Kumba Iron Ore declined 1.2% and 0.9%, respectively. Further, bankers, FirstRand, Barclays Africa Group and Capitec Bank Holdings dropped 0.9%, 0.8% and 0.4%, respectively. Market heavyweight, Naspers declined 0.6%. On the flip side, real estate companies, Delta Property Fund, Growthpoint Properties and Redefine Properties rose 3.1%, 2.0% and 1.6%, respectively. The JSE All Share index declined 0.3% to close at 57,414.00.


The UK market finished firmer yesterday, after reports surfaced that the auto tariff dispute between the US and European Union might be resolved. Miner, Glencore, rose 2.1%, after it announced a buy-back of shares up to $1.00bn in a two-stage process. Peers, Rio Tinto and Antofagasta added 1.8% and 0.9%, respectively. Further, oil companies, Royal Dutch Shell and BP climbed 0.8 and 0.4%, respectively. On the flip side, retailer, Associated British Foods shed 4.2%, after it revealed a slowdown in its core Primark retail business. Peers, Next and Kingfisher declined 1.8% and 0.2%, respectively. Also, real estate companies, Land Securities Group, Segro and British Land dropped 1.8%, 0.7% and 0.2%, respectively. The FTSE 100 index advanced 0.4% to close at 7,603.22.


US markets ended higher yesterday, driven by gains in technology sector stocks. Facebook, Alphabet and Apple climbed 3.0%, 2.2% and 0.8%, respectively. Industrial gases company, Praxair rose 3.0%, after the company announced that it would sell a bulk of its European gases businesses to Taiyo Nippon Sanso, in a deal worth $5.83bn. Further, semiconductor company, Micron Technology rose 2.6%, despite expectations of reduction in 4Q18 sales in China, following an injunction against some of its products being sold in the country. Airliner, Boeing rose 0.1%, after it announced a joint venture with Embraer. The S&P 500 index rose 0.9% to settle at 2,736.61, while the DJIA index advanced 0.8% to close at 24,356.74. The NASDAQ index climbed 1.1% to end the trading session at 7,586.43.


Asian markets are trading mostly higher this morning, hours before the US-China tariff deadline. In Japan, automakers, Toyota Motor and Honda Motor have risen 1.7% and 1.6%, respectively. On the contrary, Japan Petroleum Exploration and Canon have declined 1.7% and 0.3%, respectively. In Hong Kong, Tencent Holdings and AIA Group have fallen 1.1% and 0.9%, respectively. In South Korea, financials, Shinhan Financial Group and KB Financial Group have climbed 2.9% and 2.8%, respectively. On the downside, LG Electronics, Samsung Electronics and SK Telecom have declined 5.3%, 2.5% and 1.1%, respectively. The Nikkei 225 Index is trading 0.8% higher at 21,709.52. The Hang Seng Index has fallen 0.6% to trade at 28,022.50, while the Kospi Index is trading 0.2% higher at 28,022.50.

Commodities

At 06:00 SAST today, Brent crude oil fell 0.5% to trade at $76.53/bl.

Yesterday, Brent crude oil fell 0.9% to settle at $76.92/bl, after the US Energy Department stated that US crude inventories unexpectedly advanced by 1.25mn bls for the week ended 29 June 2019.

Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.3% to $3.18/bushel.

At 06:00 SAST today, gold prices declined 0.3% to trade at $1,254.45/oz. Yesterday, gold gained 0.2% to close at $1,257.91/oz, as weakening of the greenback against major currencies led to increase in demand for the precious metal.

Yesterday, copper declined 0.7% to close at $6,344.00/oz. Aluminium closed 0.6% lower at $2,102.00/mt.

Currencies

Yesterday, the South African rand strengthened against the US dollar. In the US, the Federal Reserve’s (Fed) June FOMC meeting minutes highlighted concerns of trade policy risks which had intensified significantly. In economic news, seasonally adjusted initial jobless claims unexpectedly advanced in the week ended 30 June 2018. Meanwhile, the ISM non-manufacturing PMI in the US climbed more than market expectations in June. Further, the final services PMI in the US rose in line with market expectations in June.

The yield on benchmark government bonds ended mixed yesterday. The yield on 2018 bond advanced to 6.71% while that for the longer-dated 2026 issue fell to 8.72%.

At 06:00 SAST the US dollar is trading 0.2% higher against the South African rand at R13.5698, while the euro is trading 0.2% higher at R15.8587. At 06:00 SAST, the British pound has gained 0.2% against the South African rand to trade at R17.9304.

Yesterday, the euro advanced against most of the major currencies. On the macro front, the retail PMI in the eurozone advanced in June, supported by Germany, as it posted a nineteenth straight monthly increase in retail sales. Further, the seasonally adjusted factory orders in Germany advanced more than expected on a monthly basis in May, driven by increase in domestic orders.

At 06:00 SAST, the euro marginally slipped against the US dollar to trade at $1.1687, while it has marginally gained against the British pound to trade at GBP0.8844.

Economic Updates

In South Africa, the electricity consumption climbed 0.2% in May on an annual basis. In the previous month, the electricity consumption had dropped 0.7%.

In South Africa, the electricity production fell 0.8% on an annual basis, in May. In the prior month, the electricity production had fallen 0.5%.

The Bank of England Governor Mark Carney expressed confidence in the British economy and stated that the UK’s economic slowdown in the first quarter was largely due to poor weather and not the economic climate. He further added that domestic inflationary pressures are gradually building to rates consistent with target.

In June, the consumer price index in Switzerland remained unchanged on a monthly basis, compared with an advance of 0.4% in the prior month. Markets were anticipating the consumer price index to climb 0.1%.

On a YoY basis, the calendar adjusted industrial output recorded a rise of 1.6% in May, in Spain, lower than market expectations for a rise of 1.7%. The calendar adjusted industrial output had risen by a revised 2.1% in the prior month.

In May, on an annual basis, the non-seasonally adjusted factory orders rose 4.4% in Germany, compared with a revised advance of 0.8% in the prior month. Market anticipation was for factory orders to rise 1.7%.

On a monthly basis, the seasonally adjusted factory orders in Germany registered a rise of 2.6% in May, more than market expectations for an advance of 1.1%. In the prior month, factory orders had registered a revised drop of 1.6%.

In the eurozone, the retail PMI registered a rise to 51.80 in June. In the prior month, the retail PMI had recorded a reading of 51.70.

Minutes of the Fed’s June monetary policy meeting revealed that policymakers remain concerned about global trade tensions and that such uncertainty and risks eventually could adversely affect business sentiment and investment spending. They also discussed flattening of the yield curve and stated that gradual interest rate hikes could take the funds rate above neutral level some time in the next year.

The non-manufacturing PMI unexpectedly rose to 59.10 in the US, in June. In the previous month, the non-manufacturing PMI had recorded a reading of 58.60.

In the US, the private sector employment registered a rise of 177.00 K in June, lower than market anticipations of an advance of 190.00 K. The private sector employment had recorded a revised gain of 189.00 K in the previous month.

The final Markit services PMI fell to a level of 56.50 in the US, in June, meeting market expectations. The preliminary figures had also indicated a fall to 56.50. In the previous month, Markit services PMI had recorded a reading of 56.80.

The seasonally adjusted initial jobless claims recorded an unexpected rise to a level of 231.00 K in the week ended 30 June 2018, in the US. In the previous week, initial jobless claims had recorded a revised level of 228.00 K.

The household spending in Japan slid 3.9% in May on an annual basis, higher than market expectations for a fall of 1.5%. In the prior month, household spending had recorded a drop of 1.3%.

In June, the AiG performance of construction index in Australia eased to 50.60. The index had recorded a level of 54.00 in the previous month.

Corporate Updates

South Africa

Royal Bafokeng Platinum Limited: The platinum mining company announced that Royal Bafokeng Resources Proprietary Limited (RBR), which is a wholly-owned subsidiary of the company and Rustenburg Platinum Mines Limited (RPM), which is a wholly-owned subsidiary of Anglo American Platinum Limited have agreed that RBR will acquire the balance of the 33.0% interest in the Bafokeng Rasimone Platinum Mine Joint Venture from RPM. Future, the total purchase consideration of the transaction is R1.86bn.

Howden Africa Holdings Limited: The engineering company announced that Eric Vemer has been appointed as an Executive Director, effective from 12 September 2018. Further, following an extensive on boarding process with the global organisation, Mr Vemer will commence the handover with Mr Thomson, the present Chief Executive Officer (CEO) and will become the CEO of the company towards the end of 2018.

Scepticism around EOH rejig plan: With its market rating hammered to a 4.5 price:earnings ratio, the once high-flying EOH is pinning its hopes on a rejig of its corporate structure to restore investor confidence.

Glencore shares rebound on news of $1.00bn buyback programme: Glencore will buy back as much as $1.00bn of its shares, a move that may soothe investors’ concerns after the world’s top commodity trader was hit by a US Department of Justice probe earlier this week.

Adapt IT buy-back adds fizz to share rally: Shares in software company Adapt IT, which has used surplus cash to buy back 3.1% of its own shares in recent months, have rebounded as much as 28.0% since the start of June.

Independent contract comes as a relief to Novus: Printing and manufacturing group Novus Holdings, which is struggling to replace the loss of annual revenue of R560.00mn from its printing contract with Media24, has won the contract to print Independent Media’s newspapers and magazines for five years from 1 August 2018.

SA mine safety back in the spotlight: Mine safety in SA has undergone a vast and sustained improvement over the past two decades.

Hong Kong an option for Naspers: As Hong Kong prepares to allow companies with control structures to list there, analysts say Naspers might be tempted to consider moving its primary listing to the Asian city as pressure mounts on the media company to reduce its hefty valuation discount.

Vodacom to show off 5G at the races: It’s all rather academic at this stage, but Vodacom — like rival MTN — is keen to show off the capabilities of 5G wireless broadband technology. The company will use the upcoming Durban July to showcase the capabilities of the technology.

UK and US

International Speedway Corporation: The motorsports activities promoting company, in its 2Q18 results, stated that its revenue decreased to $25.68mn from $28.66mn posted in the corresponding period of the previous year. Its diluted EPS rose 31.0% from the same period of the prior year to $0.38.

Xplore Technologies Corporation: The personal computers manufacturer, in its FY18 results, indicated that its revenue rose to $86.94mn, compared with $77.93mn posted in the corresponding period of the previous year. Its diluted EPS significantly increased from the same period of the prior year to $0.03. Separately, the company announced that its boards of Directors have approved a definitive agreement in which Zebra Technologies Corporation will acquire all outstanding common stock of the company for $6.00 per share in cash.

Boeing Company: The commercial aircraft manufacturer along with Embraer announced that it has signed an agreement to establish a strategic partnership that positions both companies to accelerate growth in global aerospace markets.

Micron Technology Inc: The semiconductor developer announced that its two Chinese subsidiaries have been granted a preliminary injunction by Fuzhou Intermediate People’s Court, against entities in patent infringement cases filed by United Microelectronics Corporation and Fujian Jinhua Integrated Circuit Company.

Associated British Foods Plc: The retailer, in its 9M18 trading update, stated that revenue from continuing operations increased 3.0%, from the same period of the previous year. For FY18, the company expects good profit growth in grocery, agriculture and ingredients and expects profit from AB Sugar to decline due to lower EU sugar prices.

Centrica Plc: The integrated energy company announced that its Chief Executive, Mark Hanafin has decided to retire from the company at the end of March 2019.

Persimmon Plc: The property developer, in its 1H18 trading update, stated that its total revenue increased 5.0%, from the same period of the previous year to GBP1.84bn. Further, the company expects improvement in its underlying housing operating margin despite inflationary cost pressures.

easyJet Plc: The airliner, in its June 2018 traffic statistics, stated that passengers increased 6.6% from the same period of the prior year to 83,273,673. Further, load factor also improved to 93.5% from 92.1%, posted in the corresponding period of the previous year.

Dixons Carphone Plc: The electronic retail company announced that it has appointed Jonny Mason as the Chief Financial Officer (CFO) with effect from 13 August 2018. Further, Clare Pettitt will remain as interim CFO until Jonny Mason joins the company.

Workspace Group Plc: The real estate investment trust announced the disposal of the mixed-use redevelopment of Marshgate Business Centre in Stratford for GBP15.00mn in cash.

3i Infrastructure Plc: The investment company, in its 1Q19 performance update, indicated that its total portfolio income and non-income cash was GBP23.70mn, compared with GBP32.30mn received in the previous quarter. Further, the company will pay a final dividend of 3.92p per share. Additionally, the company stated that it has completed a EUR200.00mn acquisition of a 50.0% stake in Attero and through Infinis, a GBP125.00mn acquisition of Alkane Energy.

Financial Times

Irish banks directed to raise capital buffers: Ireland’s central bank has directed the country’s commercial banks raise their capital buffers to guard against any shock as the economy booms.

Generali to sell German life business for almost EUR1.00bn: Italy’s biggest insurer, Generali, has sold a large chunk of its German life insurance business for almost EUR1.00bn to a company owned by private equity group Cinven and reinsurer Hannover Re.

JPMorgan to move several dozen staff ahead of Brexit: JPMorgan has become the latest bank to begin moving staff out of London ahead of Brexit.

Credit Suisse to pay $77.00mn fine over China hiring practices: Credit Suisse has been fined $77.00mn by US authorities for hiring the friends and family of Chinese government officials as part of a “corrupt scheme” to win banking business.

Swiss buyout fund engineers EUR2.00bn European conveyor belt merger: Partners Group, one of the largest private equity groups by market capitalisation, is set to merge two conveyor belt makers it bought within a month of each other in a deal valued at EUR2.00bn, according to two people with direct knowledge of the transaction.

Financial sector told to plan more for tech failure: The financial sector has been put on notice by the Bank of England to test scenarios for dealing with system outages and cyber attacks, with senior executives placed in the line of fire and the threat of higher capital charges for lenders taking insufficient steps.

Bacanora secures $150.00mn financing from Red Kite for lithium project: Bacanora Minerals has secured $150.00mn in debt funding from London’s Red Kite fund to develop its lithium project in Mexico.

Shell says firm carbon emissions targets are ‘superfluous’: The chief executive of Royal Dutch Shell said setting firm carbon emissions targets was a “superfluous” exercise that would expose the oil major to litigation should it fail to meet them.

European copyright overhaul rejected by MEPs: The European Parliament has narrowly voted to reject draft reforms to the EU’s copyright laws, delivering a partial victory for campaigners including Google and Wikipedia that say the rules will severely restrict internet freedom.

ThyssenKrupp CEO steps down amid criticism of Tata merger: ThyssenKrupp chief executive Heinrich Hiesinger has stepped down just days after the 200-year conglomerate signed off on a historic deal to merge its steelmaking business with Tata Steel.

Growth in Spanish industrial production cools in May: Spanish industrial production grew at a slower rate in May than the previous month, continuing a downward trajectory and falling below expectations, according to data published on Thursday. To Read More Click Here

Stobart moves shares around ahead of crucial AGM vote: Stobart Group has shifted shares to an employee benefit trust, potentially giving the management an edge in a battle for control of the company at Friday’s annual general meeting.

Biogen, Eisai say Alzheimer’s drug succeeds in mid-stage trial: Biogen and Eisai have notched a rare success in the notoriously difficult field of Alzheimer’s research, announcing that one of their experimental drugs had succeeded in a mid-stage clinical trial.

Xiaomi retail share offer 9.5-times oversubscribed: Xiaomi’s highly-anticipated initial public offering in Hong Kong drew nearly ten times more applications for share purchases than what it made available for retail investors, after the Chinese tech giant priced at the bottom end of its target range.

Samsung Electronics projects decline in profits after record quarter: Samsung Electronics has projected its first profit decline in seven quarters as the strong performance of its chip business was dented by slowing sales of its premium smartphones and display panels.

MEPs reject EU copyright reforms in victory for internet giants: The European Parliament has narrowly voted to reject draft reforms to the EU’s copyright laws in a partial victory for campaigners including Google, YouTube, and Wikipedia who say the rules will impose serious curbs on internet freedom.

Singapore regulator challenges Uber-Grab merger: SoftBank’s strategy of merging ride-hailing competitors has been called into question by Singapore’s antitrust watchdog, which said Uber’s sale of its south-east Asian business in March to local rival Grab had reduced competition and may have to be unwound.

Investors take fright over slowing growth at Sophos: Sophos, the UK cyber security group, suffered its biggest one-day share price fall since listing on public markets after it warned that customer orders had been slower than expected in the first quarter of the year.

UK Treasury rejects calls from retailers for business rates reform: The UK government is resisting pressure from retailers to reform business rates, saying that it has already made changes and that reforming international corporate taxation is a higher priority.

Food prices fall on trade wars: Worries about escalating trade wars weighed on food prices, with the UN Food and Agricultural Organisation’s food price index posting its first month-on-month decline this year, despite adverse weather conditions in the world’s growing areas.

Etsy shares hit record as it gets tough with artisans: A few weeks ago, visitors to Etsy were being offered discounts on everything from handmade moonstone rings, reclaimed wood chopping boards to vegan tote bags across its website.

Ryanair faces further strike disruption this summer: Ryanair faces strikes among pilots and cabin crew across Europe this summer after talks with labour unions failed to reach an agreement.

BA wins legal fight over pension payments boost: British Airways has won a legal fight with the trustees of one of its pension funds over increases in payments to retired workers.

Lex

Google/Europe: not all about meme, meme, meme: Search engine would do well to maintain a friendly approach towards regulators.

China deleveraging: shocking the boondocks: Regional bank lending is only one fight in the battle to gain financial respectability.

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Market Commentary 18 July 2018 Moody’s Favourably Reverses South Africa’s Credit Rating