Fed Cahri Jerome Powell bolstered bets that the Fed will cut rates this year, citing progress in lowering inflation. While he declined to signal easing in September, he said in comments published by Bloomberg that the risks between price pressures and the labour market were coming into better balance. However, in Federal Open Market Committee (FOMC) minutes released after the monetary policy committee meeting, Federal Reserve officials stated they were awaiting additional evidence that inflation is cooling. Members were divided on how long to keep interest rates elevated at the July policy meeting.
Tesla likely to lose EV sector crown
Sales data compiled by Bloomberg News shows that BYD Co. sold a record number of electric (EV) and hybrid cars in the second quarter as price cuts and new technology stoked consumers into purchases. China’s best-selling car brand sold nearly 1 million models over the period, solidifying a rebound after a slow start to the year. In terms of pure EVs, the Shenzhen-based auto giant’s quarterly sales of 426,000 units put it within striking distance of overtaking Tesla Inc. (TSLA-NASQ)as the biggest seller of EVs globally again.
Anglo considers selling coal assets
Anglo American Plc (AGL-JSE) is considering options to push ahead with a sale of its coal business after an explosion at its flagship Australian mine. Options include the possibility of selling individual assets or excluding the damaged operation from a potential deal. The plan to exit coal formed part of a dramatic restructuring program announced earlier this year by Anglo, as the London-based miner was trying to fend off a takeover pursuit by larger rival BHP Group. While it also intends to spin off its platinum unit and either sell or separate diamond miner De Beers, the company had been planning to tackle the coal sale first, seen internally and by investors as the most easily achievable part of the restructuring. Bloomberg reports that Anglo has already received interest in the assets and a deal for the highly attractive coking coal mines in Australia would have demonstrated early progress to investors looking for signs that Anglo’s go-it-alone approach offers better value than the rejected bid from BHP. However, the plan was thrown into question on Saturday when an methane explosion deep underground started a huge fire at Anglo’s Grosvenor coal mine in Queensland. It’s likely to take several months before the company can safely reenter the mine, let alone restart mining.
NPN discount to NAV a buying opp?
Naspers (NPN-JSE) may offer an attractive buying opportunity after recent moves where NPN underperformed Prosus (PRX-JSE), raising increased interest in the spread to Net Asset Value (NAV), particularly for NPN. NPN is now trading at its highest discount to NAV in 6 months and has gone from a 34% discount to NAV in Feb to 44% in July – that equates to underperforming its NAV by 15% over the past 4-5 months. This discount to NAV means the current market price per share is lower than the per-share value of the company’s underlying assets, suggesting the stock is undervalued based on book value and may offer an attractive buying opportunity. The NPN discount to PRX has increased to 10%, after dropping as low as 4% in the last few months. At these levels, NPN is starting to look interesting over PRX.
Rand at mercy of US politics
The South African rand (ZAR) extended losses against the US dollar (USD), along with other emerging market currencies, as the reflation trade in the US reared its ugly head with the increased odds of a second Trump presidency. Concerns over a potential Trump victory in the 2024 presidential election fuelled bets on higher US Treasury yields, even as Fed chair Jerome Powell commented that inflation is on its way down. The prospects of a Trump victory at the November elections rose following a disastrous first debate from President Biden, and news reports that suggest Biden would consider dropping out of the presidential race if he is unable to regain support.
More challenges for embattled Sasol
Sasol’s (SOL-JSE)natural gas business might be forced to refund its industrial clients after the Pretoria high court set aside National Energy Regulator of SA (Nersa) approval of the group’s maximum gas prices for March 2014 to June 2023. Business Day reports that the energy major, which has a monopoly in the sector, urged the court to ensure that if Nersa’s decision was deemed unlawful, the consequences of the ruling should apply prospectively. The group told the court that it had already refunded about R1.7bn to its customers due to the previous ruling that reversed the 2013 and 2017 price determinations. It said retrospective adjustments of the previous decisions caused great prejudice to its business operations. The legal challenge to the methodology used by the regulator was brought to court by the Industrial Gas Users Association of Southern Africa (Igua-SA), which represents industrial gas users such as Illovo, Nampak (NPK-JSE), Mondi (MNP-JSE)and ArcelorMittal SA (ACL-JSE). If Nersa’s new determination is lower than its original decision, it is likely to have financial implications for Sasol. Nersa and Sasol have until next week to indicate if they will appeal the decision. Sasol yet has to decide on its response.
SA recommits to reducing government debt
South African Finance Minister Enoch Godongwana affirmed the governments continued commitment to reducing state debt. The recently reappointed Finance Minister addressed this key concern for investors following the successful formation of a new coalition government. Bloomberg reports that the National Treasury estimated in its annual budget in February that debt-to-gross domestic product, which is currently at 74.1% and well above the emerging-market average of 58.9%, will stabilise at 75.3% in the 2025-26 fiscal year.
M&A activity at Bidvest picks up
Bidvest Ltd (BVT-JSE)announced that the company has entered into an agreement to acquire 100% of Citron Hygiene LP from Birch Hill Equity Partners and other investors. The acquisition is subject to UK Competition and Markets Authority (CMA) approval, which is expected within five months of submission. The news comes shortly after subsidiary Bidvest Financial Services announced a formal disposal process for Bidvest Bank and FinGlobal, with management looking to identify suitable buyers by end of the 2024 calendar year.
Share focus: Nampak
Nampak (NPK-JSE) rallied +8% after strong 1H results, according to the company’s most recent trading update, with HEPS from continuing ops swinging into a profit of 5394c vs the previous periods loss of 11 027c as the turnaround strategy starts to bear fruit. Revenue was up +7% and together with a significant decline in net impairment losses along with inefficiencies and cost reduction were the drivers of the turnaround. The outlook was positive as well, talking to improvements and growth within the portfolio as the asset disposal plan continues to improve the balance sheet. Assuming a similar performance for 2H, the stock looks cheap despite the rally. Further share price gains are on the cards as the turnaround plan implementation gathers momentum.
Information correct at time of publishing. It is important to conduct thorough research and analysis using a combination of fundamental and technical analysis techniques to make informed trading decisions. Additionally, consider your risk tolerance, investment objectives, and time horizon when assessing company performance for trading.
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Trading Update : 5 July
Fed indecision about when, not if
Fed Cahri Jerome Powell bolstered bets that the Fed will cut rates this year, citing progress in lowering inflation. While he declined to signal easing in September, he said in comments published by Bloomberg that the risks between price pressures and the labour market were coming into better balance. However, in Federal Open Market Committee (FOMC) minutes released after the monetary policy committee meeting, Federal Reserve officials stated they were awaiting additional evidence that inflation is cooling. Members were divided on how long to keep interest rates elevated at the July policy meeting.
Tesla likely to lose EV sector crown
Sales data compiled by Bloomberg News shows that BYD Co. sold a record number of electric (EV) and hybrid cars in the second quarter as price cuts and new technology stoked consumers into purchases. China’s best-selling car brand sold nearly 1 million models over the period, solidifying a rebound after a slow start to the year. In terms of pure EVs, the Shenzhen-based auto giant’s quarterly sales of 426,000 units put it within striking distance of overtaking Tesla Inc. (TSLA-NASQ) as the biggest seller of EVs globally again.
Anglo considers selling coal assets
Anglo American Plc (AGL-JSE) is considering options to push ahead with a sale of its coal business after an explosion at its flagship Australian mine. Options include the possibility of selling individual assets or excluding the damaged operation from a potential deal. The plan to exit coal formed part of a dramatic restructuring program announced earlier this year by Anglo, as the London-based miner was trying to fend off a takeover pursuit by larger rival BHP Group. While it also intends to spin off its platinum unit and either sell or separate diamond miner De Beers, the company had been planning to tackle the coal sale first, seen internally and by investors as the most easily achievable part of the restructuring. Bloomberg reports that Anglo has already received interest in the assets and a deal for the highly attractive coking coal mines in Australia would have demonstrated early progress to investors looking for signs that Anglo’s go-it-alone approach offers better value than the rejected bid from BHP. However, the plan was thrown into question on Saturday when an methane explosion deep underground started a huge fire at Anglo’s Grosvenor coal mine in Queensland. It’s likely to take several months before the company can safely reenter the mine, let alone restart mining.
NPN discount to NAV a buying opp?
Naspers (NPN-JSE) may offer an attractive buying opportunity after recent moves where NPN underperformed Prosus (PRX-JSE), raising increased interest in the spread to Net Asset Value (NAV), particularly for NPN. NPN is now trading at its highest discount to NAV in 6 months and has gone from a 34% discount to NAV in Feb to 44% in July – that equates to underperforming its NAV by 15% over the past 4-5 months. This discount to NAV means the current market price per share is lower than the per-share value of the company’s underlying assets, suggesting the stock is undervalued based on book value and may offer an attractive buying opportunity. The NPN discount to PRX has increased to 10%, after dropping as low as 4% in the last few months. At these levels, NPN is starting to look interesting over PRX.
Rand at mercy of US politics
The South African rand (ZAR) extended losses against the US dollar (USD), along with other emerging market currencies, as the reflation trade in the US reared its ugly head with the increased odds of a second Trump presidency. Concerns over a potential Trump victory in the 2024 presidential election fuelled bets on higher US Treasury yields, even as Fed chair Jerome Powell commented that inflation is on its way down. The prospects of a Trump victory at the November elections rose following a disastrous first debate from President Biden, and news reports that suggest Biden would consider dropping out of the presidential race if he is unable to regain support.
More challenges for embattled Sasol
Sasol’s (SOL-JSE) natural gas business might be forced to refund its industrial clients after the Pretoria high court set aside National Energy Regulator of SA (Nersa) approval of the group’s maximum gas prices for March 2014 to June 2023. Business Day reports that the energy major, which has a monopoly in the sector, urged the court to ensure that if Nersa’s decision was deemed unlawful, the consequences of the ruling should apply prospectively. The group told the court that it had already refunded about R1.7bn to its customers due to the previous ruling that reversed the 2013 and 2017 price determinations. It said retrospective adjustments of the previous decisions caused great prejudice to its business operations. The legal challenge to the methodology used by the regulator was brought to court by the Industrial Gas Users Association of Southern Africa (Igua-SA), which represents industrial gas users such as Illovo, Nampak (NPK-JSE), Mondi (MNP-JSE) and ArcelorMittal SA (ACL-JSE). If Nersa’s new determination is lower than its original decision, it is likely to have financial implications for Sasol. Nersa and Sasol have until next week to indicate if they will appeal the decision. Sasol yet has to decide on its response.
SA recommits to reducing government debt
South African Finance Minister Enoch Godongwana affirmed the governments continued commitment to reducing state debt. The recently reappointed Finance Minister addressed this key concern for investors following the successful formation of a new coalition government. Bloomberg reports that the National Treasury estimated in its annual budget in February that debt-to-gross domestic product, which is currently at 74.1% and well above the emerging-market average of 58.9%, will stabilise at 75.3% in the 2025-26 fiscal year.
M&A activity at Bidvest picks up
Bidvest Ltd (BVT-JSE) announced that the company has entered into an agreement to acquire 100% of Citron Hygiene LP from Birch Hill Equity Partners and other investors. The acquisition is subject to UK Competition and Markets Authority (CMA) approval, which is expected within five months of submission. The news comes shortly after subsidiary Bidvest Financial Services announced a formal disposal process for Bidvest Bank and FinGlobal, with management looking to identify suitable buyers by end of the 2024 calendar year.
Share focus: Nampak
Nampak (NPK-JSE) rallied +8% after strong 1H results, according to the company’s most recent trading update, with HEPS from continuing ops swinging into a profit of 5394c vs the previous periods loss of 11 027c as the turnaround strategy starts to bear fruit. Revenue was up +7% and together with a significant decline in net impairment losses along with inefficiencies and cost reduction were the drivers of the turnaround. The outlook was positive as well, talking to improvements and growth within the portfolio as the asset disposal plan continues to improve the balance sheet. Assuming a similar performance for 2H, the stock looks cheap despite the rally. Further share price gains are on the cards as the turnaround plan implementation gathers momentum.
Information correct at time of publishing. It is important to conduct thorough research and analysis using a combination of fundamental and technical analysis techniques to make informed trading decisions. Additionally, consider your risk tolerance, investment objectives, and time horizon when assessing company performance for trading.