23 September 16:18
Markets rally, dollar profit-taking boosts rand
Stock markets rallied Thursday after the Federal Reserve moved closer to unwinding its huge emergency stimulus.
Equities have won back ground from last week's sharp falls thanks also to easing concerns over troubled Chinese property giant Evergrande.
Stocks had tumbled over fears that the group could collapse, leading to possible contagion around the world.
Ratings agency Fitch on Thursday cut its growth forecast for China's economy this year, citing a slowdown in the country's colossal property sector.
But focus remained firmly on central banks, with the Bank of England keeping rates and stimulus measures in place at its own meeting Thursday.
It comes a day after the Fed said it expects to "soon" be ready to start tapering stimulus put in place at the start of the pandemic via bond purchases - a key driver of the global economic and equity rebound.
The JSE's all share index was 0.6% stronger, despite losses in mining shares.
Across the Atlantic, Wall Street opened higher, with the Dow Jones Industrial Average and tech-heavy Nasdaq both gaining in early trades.
The dollar weakened on profit-taking. The rand was last at R14.63/$, after weakening to R14.88 earlier this week.
"US stocks are extending yesterday's solid rebound from Monday's tumble, with the markets continuing to digest yesterday's Fed monetary policy decision," Charles Schwab analysts wrote.
Looking ahead, "markets are volatile amid the flared-up real estate debt concerns out of China, Fed tapering expectations... and the continuing stalemate among lawmakers on whether to raise the debt ceiling" in Washington, they added."The Delta variant (of coronavirus) and supply chain challenges continue to fester".
Fed chief Jerome Powell warned US lawmakers to lift the country's debt ceiling to avoid the government running out of cash and failing to service its debt obligations, which could lead to a default and spark a financial crisis.
In Asia, Hong Kong closed up more than one percent, with Evergrande's share price surging by around one-quarter.
Elsewhere Thursday, oil futures retreated after a two-day rally helped by higher demand expectations.
23 September 15:50
Reserve Bank keeps rates on hold, revises growth higher
The SA Reserve Bank has kept the repo rate unchanged at 3.5%, in line with economists' expectations.
During a media briefing on Thursday, Reserve Bank Governor Lesetja Kganyago said that all members of the Monetary Policy Committee were in favour of keeping the repo rate on hold.
According to the central bank, core inflation is revised higher to 3% in 2021, from 2.9% estimated previously. Headline consumer price inflation for 2021 has been revised slightly higher to 4.4%, up from 4.3%.
The bank revised the growth outlook from 4.2% to 5.3%. This is despite the much larger negative effect on output than was previously estimated from the July unrest, explained Kganyago.
23 September 12:41
Bertina Engelbrecht is new CEO of Clicks as Ramsunder quits to move to Australia
From the start of 2022, Clicks will have a new CEO - the 58-year-old Bertina Engelbrecht, who is currently the group corporate affairs director.This after current CEO Vikesh Ramsunder resigned from the group with effect from 31 December 2021. The company says he will become CEO of a listed company in Australia, but will continue as a "strategic advisor" until August next year.
23 September 09:52
Slow recovery for battered Spur
Restaurant chain franchisor Spur reported that its restaurant sales only increased by 1% to R6 billion for the year to end-June, while its revenue fell by 10.5% to R681 million.
But the company said it will pay its deferred interim 2020 dividend of almost R71 million next month.
Its headline earnings rose by 33% to 110.74 cents.
"Despite the continuation of these difficult trading conditions, the group’s casual dining restaurants were better positioned to manage deliveries and takeaways, loyal customers were more responsive to convenience channels such as click and collect,” said Spur.
The company added its overall performance in the second half of the financial year improved, showing a slow but positive recovery.
23 September 09:46
Canal+ now owns more than 15% of MultiChoice
Canal+ has pushed its stake in pay-TV group MultiChoice to 15.37%.
The French company, owned by Vivendi Group, first bought a 6.5% stake in MultiChoice in April 2020.
23 September 05:33
Markets gain as Fed announcement settles nerves
Stock markets were buoyant Wednesday, bouncing off recent sharp losses as concerns eased over Chinese property giant Evergrande, while the Federal Reserve kept interest rates low, as expected.
The dollar also gained against other major currencies, while oil prices won solid support. The rand was trading at R14.81/$.
Nerves were settled by news that Evergrande had agreed a plan to repay interest on one of its key bonds, avoiding a default that many feared could hammer the domestic and global economy.
In a statement to the Shenzhen stock exchange, Evergrande's property unit Hengda said it had negotiated a plan to pay interest due on its 2025 bond, worth 232 million yuan ($35.9 million).
"It feels like we've reconciled that Evergrande is not going to be the start of a financial crisis," said Art Hogan, chief strategist at National Securities. "Some calm has been restored."
Later, the Fed announced that it expects to "soon" be ready to begin removing stimulus it provided during the pandemic.
The closely-watched announcement left policy unchanged for now, but new forecasts from central bankers show they expect at the first interest rate increase next year.
Powell said the asset purchases served as a "critical tool" to support the economy and functioning markets, but the effectiveness has waned.
The economy has healed to the point that the central bank could slow the pace of purchases "if progress continues broadly as expected," the policy setting the Federal Open Market Committee (FOMC) said in a statement after concluding its two-day meeting.US stocks jumped around during Powell's press conference, but essentially held on to gains achieved earlier in the session following the reassuring news on Evergrande.
Investor reaction to the Fed was "somewhat muted," said Cliff Hodge, Chief Investment Officer for Cornerstone Wealth.
"The lack of a formal taper announcement is clearly dovish, compared to a somewhat surprising hawkish dot plot, which now increases the odds of a rate hike in 2022," Hodge said."At first blush, it appears that Powell has successfully threaded the needle again."
22 September 17:55
Stocks rise awaiting Fed update
Stock markets mostly rose Wednesday, recovering further from recent sharp losses on easing concerns over Chinese property giant Evergrande ahead of a key update from the Federal Reserve.
The dollar also gained against most of its biggest rivals, while oil prices won solid support.
Nerves were settled by news that Evergrande had agreed a plan to repay interest on one of its key bonds, avoiding a default that many fear could hammer the domestic and global economy.
However, confidence remains at a premium as traders awaited the outcome later Wednesday of a meeting of the Federal Reserve, which could announce a timetable to start tapering its vast monetary easing programme.
"Having seen some very bad days for equities in recent sessions, Europe and parts of Asia were more upbeat on Wednesday," noted AJ Bell investment director Russ Mould, who suggested the Fed outcome "could give further support to markets."
But Fawad Razaqzada, market analyst at ThinkMarkets, warned "volatility" could return to the markets in the event of "a hawkish tilt from the Fed, which may trigger some risk aversion."
"The later tapering starts, the better it will likely be for risk assets -- and gold," said Razaqzada, who added that, "overall, there is greater risk that the Fed will come across as being more hawkish than in June.
"The US central bank's meeting comes against the ever-present backdrop of spiking coronavirus infections and slowing global growth.
But despite those concerns, Wall Street was 0.6 percent up shortly after the opening bell while Frankfurt, London and Paris also showed similar gains.
Fed officials have signalled that by the end of the year they will begin winding down the ultra-loose monetary policies put in place at the start of the pandemic which have been key to driving a global economic and equity-prices recovery.
The growing consensus is that the first announcement will be in November and the first reduction the next month. But Fed boss Jerome Powell could still provide details on the timetable.
The decision comes as the Fed tries to keep a lid on surging inflation and prevent the recovering economy from overheating.
22 September 12:57
Sasol announces ambitious emissions-reduction target
Energy and chemicals company Sasol has revised its target to reduce greenhouse gas emissions by 30% for the year 2030 - up from 10% previously.
This is expected to require capital spend of between R15 billion to R25 billion, according to its chief financial officer Paul Victor.
The group will not be investing in new coal projects, and plans to replace coal feedstock with gas according to its new vision for a decarbonised future.
22 September 12:52
Iron ore storms past $100 as China soothes Evergrande concerns
Iron ore’s roller-coaster ride in 2021 shows no signs of easing, with prices ending an unprecedented slump to move sharply higher as investors monitor simmering debt troubles at China Evergrande Group.
The developer’s onshore property unit said it reached an agreement with yuan bondholders on an interest payment, offering some relief after fears over Evergrande’s financial stability sparked a global flight from risk.
China’s central bank also boosted short-term cash into the financial system, helping steady commodity markets.
In Singapore, iron ore futures climbed more than 15%, surging back above $100 a ton from their lowest close in 16 months.
Events around Evergrande spooked the market earlier in the week and the steelmaking material was already oversold, said Atilla Widnell, managing director of Navigate Commodities.
Still, analysts warn that China’s steel sector faces prolonged headwinds. The steelmaking ingredient, which was in the vanguard of this year’s commodities boom, has plunged 60% from a record above $230 a ton in May.
Curbs on steel output, alongside a property crackdown and concerns about a power shortage, have hammered iron ore demand in China.
“With a continuous rollout of energy-consumption curbs, mill maintenance works have been expanding, and volumes of construction steel in particular have slid massively,” said Haitong Futures Co. analyst Qiu Yihong.
22 September 11:23
Johann Rupert-chaired Remgro swings into Covid-19 recovery
Investment holding company Remgro’s performance has begun recovering following a tough 2020, dominated by the Covid-19 pandemic.
In its annual results for the year ended 30 June 2021, the group said its headline earnings from continuing operations saw a 66.1% jump, from R1.7 billion to R2.8 billion. Its headline earnings per share, from continuing operations increased by 66%, to R510.6 cents from 307.5 cents.
Remgro, which is chaired and controlled by Johann Rupert, attributed the increase in its headline earnings from continuing operations to the improved performance of most of its investee companies, RCL Foods, Distell, TotalEnergies, and Rand Merchant Investment (RMI).
RMI, announced on Monday that it will unbundle its Discovery and Momentum Metropolitan stakes to its shareholders. The company has a 25% in Discovery and 27% in Momentum Metropolitan, making it their largest shareholder.
22 September 10:54
Asian investors soothed by Evergrande bond plan
Asian markets mostly rose on Wednesday with nerves settled for now by news that troubled Chinese property giant Evergrande had agreed to a plan to repay interest on one of its key bonds, avoiding a default that many fear could hammer the domestic and global economy.
However, confidence remains at a premium as traders await a crucial meeting of the Federal Reserve, where it could announce a timetable to start tapering its vast monetary easing programme.
That comes against the ever-present backdrop of spiking coronavirus infections and slowing global growth, as well as a brewing battle over the US debt ceiling that, if not resolved, could see a default in the world's top economy, potentially sparking another financial catastrophe.
In Asia, eyes were on mainland Chinese markets as investors returned to work from a four-day weekend to catch up with Monday's rout fanned by feverish talk that one of the country's biggest developers was close to collapse.
While Tuesday saw a little more stability return to trading floors, there remained a lot of uncertainty and there is a hope that the government will at some point break its silence and give an idea about how it intends to deal with the crisis.
With debts topping $300 billion and no way to make cash, there had been an expectation that it would not be able to meet its interest obligations Thursday on two bonds -- one offshore and one domestic -- which would put it effectively in default.
22 September 10:48
Absa's planned R9.4bn empowerment deal could put shares in the hands of black staff and investors
Absa is planning a R9.4 billion empowerment transaction which might see 8% of its shares in the hands of staff and third-party investors. The banking group said the transaction will enable all Absa employees across the group's operations to become shareholders.
"While the transaction is in development, it is currently envisaged that the scheme will hold up to 8% of the group's issued share capital, which equates to approximately R9.4 billion, based on the group's share price on 20 September 2021," the group said in a statement issued on Wednesday morning.
The company said this will be its second significant broad-based black economic empowerment (B-BBEE) transaction
22 September 10:29
Inflation heats up as fuel, meat prices rise
South Africa's consumer price inflation increased to 4.9% in August, up from 4.6% in July 2021.
The August CPI number is the fourth consecutive month where the annual increase in inflation is higher than the midpoint (4.5%) of the South African Reserve Bank’s inflation target range.
This was in line with the median expectation of 16 economists who took part in a Bloomberg poll.
Pricier petrol and diesel, as well as increases in vehicle prices contributed to the hotter inflation.
Fuel prices are currently at record highs - with the price of inland 95-octane petrol reaching R18.30 per litre last month. Fuel prices increased by 4.9% between July and August, and by 19.6% over the last 12 months.
Vehicle prices increased at a rate higher than overall inflation across all 16 months from May 2020 to August 2021, Statistics SA said. There was also a sharp 22% spike in airfares between July and August, which contributed to transport inflation.
Prices of food and non-alcoholic beverages rose by 6.9% - the highest level of food inflation since June 2017 when it was also 6.9%.
But Statistics SA says there are signs that food inflation may be slowing down.
While meat prices are still climbing - up almost 11% in August, prices for bread and cereal products fell by 0.5%. Maize meal prices decreased by 1.2% and white bread by 1.1%. Cooking oil prices dipped by 0.4% and margarine by 0.8% month-on-month.
The Reserve Bank's monetary policy committee is meeting this week, and is expected to announce its interest rate decision on Thursday. No change is expected.
22 September 09:44
Spar sees strong booze, building material sales
For the 48-week period to 27 August, the Spar group reported a sales increase of almost 4% to R116 billion.
In Southern Africa, sales rose by 4.5%, and its grocery business increased sales by only 0.5%, with internal prices rising by 4.7%.
Liquor sales increased by 12%, while Build-it sales growth increased by 27% compared to the previous period.
"Despite strong initial demand for building materials, sales have slowed in recent months," the group said.
Its BWG Foods group in Ireland and South West England increased turnover by 3.3%. Spar Switzerland continued to report strong turnover growth with an increase of 7.3%, while Spar Poland increased sales by 17.5%. (All in local currencies.)
Of the 184 stores that were initially affected by the unrest in July, Spar has since reopened 115 of them.
A further 32 stores will be reopened before the end of the 2021 calendar year.
The reopening of the remaining 37 stores will be delayed due to the extent of the damage caused.
Its results for the year to end-September will be released on 17 November 2021.
21 September 18:45
Markets rebound after Evergrande-driven rout
US and European equities rebounded Tuesday after fears over the possible collapse of Chinese property giant Evergrande sparked a rout across global markets.
The JSE's All Share Index gained 1.5%, with Sasol (+5%) one of the biggest movers.
Implats (-4%) and other mining companies.
The Dow Jones Industrial Average, the tech-heavy Nasdaq and the S&P 500 were all around 0.4 percent higher in early trading as Wall Street opened.
In Europe, London stocks advanced 1.1 percent, while Frankfurt and Paris each won 1.4 percent in afternoon trading.
Major European markets had fallen between around one and two percent Monday, similar to drops seen on Wall Street.
The picture was mixed in Asia Tuesday, with Hong Kong closing up 0.5 percent, while Tokyo slumped 2.2 percent and Shanghai was closed for a Chinese public holiday.
"The early contention is that yesterday's reported angst that a debt default by China's Evergrande could trigger systemic risk has been tempered," said Briefing.com analyst Patrick O'Hare.
"Helping in this regard are many pundits suggesting Evergrande is not a 'Lehman moment' and reports that Evergrande's Chairman said the property developer plans to fulfil its responsibilities," O'Hare said, referring to the collapse of the Wall Street giant firm during the 2008 financial crisis.
Evergrande founder Xu Jiayin said in a letter to staff that he "firmly believes Evergrande will be able to step out of the darkest moment soon.
ThinkMarkets analyst Fawad Razaqzada said sentiment also improved after Washington announced that it will lift Covid travel bans on all air passengers in November if they are fully vaccinated and undergo testing and contact tracing.
The news boosted the travel sector."The better mood is a reflection of optimism about travel returning to some form of normalcy after the United States announced it will allow fully vaccinated people to travel to the US," Razaqzada said.
Markets are also juggling an expected tightening of US monetary policy, rising Covid infections, a slowing global recovery, elevated inflation and a brewing energy crunch.
The OECD on Tuesday warned of an "uneven" global economic recovery as it lowered its 2021 growth forecasts for the world and the United States while raising the outlook for Europe
In Asia trading, Hong Kong-listed real estate firms - which took the brunt of the selling on Monday, tanking more than 10 percent - eked out gains.
But Evergrande, which has fallen more than 80 percent this year alone, ended further in negative territory.
Attention is on what happens next in the Evergrande saga, with the firm - wallowing in debts of more than $300 billion - due to pay interest to bondholders on two notes on Thursday.
Focus this week is also on the Fed's latest policy meeting, with observers predicting it will set out its timetable for tapering the vast bond-buying monetary easing programme that has been a key driver of a global recovery for more than a year.A battle in Washington to raise the US debt limit was also fuelling concern that the government could miss payments on its debt obligations, sparking a disastrous default.
21 September 12:38
Richest banker says Evergrande is China’s ‘Lehman moment’
Many analysts are predicting that the cash crunch at China Evergrande Group is unlikely to become China’s version of the 2008 Lehman Brothers crash. The world’s richest banker begs to differ.
“Evergrande seems like China’s Lehman moment,” Uday Kotak, chief executive officer and founder of Indian lender Kotak Mahindra Bank, said in a tweet.
Kotak also likened the crisis at Evergrande to the collapse of India’s Infrastructure Leasing & Financial Services. The Indian government chose him to oversee the restructuring of the distressed shadow lender three years ago after it defaulted on debt repayments.
21 September 09:45
Low confidence levels persist in construction industry - survey
The Civil Confidence Index for the third quarter climbed four points, to 17.
The index is on a scale of 0 to 100, with figures close to 0 indicating general dissatisfaction among respondents. The civil confidence index has been around the 20-point mark since the middle of 2017.
"The current index level means that the vast majority (more than 80%) of respondents are dissatisfied with prevailing business conditions," the report read.
The low confidence is attributed to a slowdown in construction activity and profitability. Respondents also indicated there is a lack of new construction demand - raising concerns for the future.
"While the annual results of some larger firms revealed an improvement in domestic order books, this quarter's survey results suggest that this is not the experience of the broader sector," said Siphamandla Mkhwanazi, senior economist at FNB.
Mkhwanazi however highlighted that the new amendments to schedule 2 of the Energy Regulation Act that would support the development of new renewable energy projects and a draft version of the National Infrastructure Plan are positive developments for the industry.
"However, this is only of value to contractors when the work materialises. Until then, activity will remain subdued," he said.
21 September 07:50
Evergrande crisis isn't a 'Lehman Brothers moment' for China, say analysts
China Evergrande Group’s debt crisis is unlikely to become China’s "Lehman moment" according to strategists at Citigroup, Barclays and UBS Group.
Barclays argues the market environment isn’t similar to what happened during the collapse of Lehman Brothers, UBS says the default levels are pretty low versus the size of China’s economy and Citi expects the policy makers to step in.
"The conditions are simply not in place for even a large default to be China’s Lehman moment," Barclays macro strategists including New York-based Ajay Rajadhyaksha wrote in a note on Monday. One would need to see a sharp increase in credit distress away from the real-estate sector, banks unwilling to face each other and massive policy mistakes for that to happen, they wrote.
Growing investor angst about Evergrande and a crackdown on China’s real-estate sector have caused a chain reaction across global risk assets this week, even ensnaring stocks with less tangible links to China. S&P Global Ratings warned on Monday that the distressed developer is likely to default if it doesn’t get support from Chinese government.
"Policy makers will likely uphold the bottom line of preventing systematic risk to buy time for resolving the debt risk, and push forward marginal easing for the overall credit environment,"Citi analysts including Judy Zhang wrote in a note.
Still, some banks may become victims, they noted.Citi’s analysis of banks’ loan exposure to high-risk developers suggest credit risk is the highest for China Minsheng Banking Corp., Ping An Bank Co. and China Everbright Bank Co.
21 September 05:58
Steinhoff moves ahead with Mattress Firm listing plans
Retailer Steinhoff says that Mattress Firm has "confidentially" filed a draft registration statement with the Securities and Exchange Commission in the US ahead of a possible listing.
Steinhoff, which owns 50.1% of the bedding company, announced in late August that was investigating an initial public offering as a means of returning cash to shareholders.
"The number of shares of common stock potentially to be offered by its stockholders and the price range for any such offering have not yet been determined," said Steinhoff in an update to shareholders on Monday.
If the Mattress Firm listing does go ahead, it will mean that three of Steinhoff's subsidiaries are independently listed. The group's African holdings are listed on the JSE, while the bulk of its European operations are listed in Warsaw.
21 September 05:57
Wall Street bleeds amid fears of debt crisis in China
Major US stock indices finished with heavy losses on Monday, as fears of a debt crisis in China and a credit default in the United States sparked a selloff.
The benchmark Dow Jones Industrial Average was 1.8 percent lower at the close at 33,970.47.
The broad-based S&P 500 lost 1.7 percent to finish at 4,357.73. The tech-rich Nasdaq Composite Index lost 2.2 percent to 14,713.90.
The day had started ugly, with Wall Street indices opening deep in the red as traders fretted over the fate of Evergrande, one of China's biggest developers that is awash in debt of more than $300 billion and teetering on collapse.
Their plunge continued throughout the day, with all indices losing at least two percent, though the S&P 500 and Dow managed to reign in some of their losses.
September is known for rocky trading, but the situation was made worse by the ongoing impasse in Congress over raising the US debt limit.
The Republican opposition refuses to increase the cap despite warnings from the White House of an economic catastrophe in the event of an unheard-of US debt default.
"We are really playing with fire, at the risk of the government having to shut down. It's not catastrophic, but it doesn't really give confidence in the short term," said Gregori Volokhine of Meeschaert Capital Markets.
The two-day Federal Reserve meeting beginning Tuesday is another source of uncertainty, as the central bank could announce changes to its stimulus policies.
Traders also remain concerned about the economic impacts of Covid-19, which continues to spread across the country at high rates."There's a buildup of negative trends, especially since with the Fed meeting, there's going to be talk of less liquidity, which isn't ideal for the markets," Volokhine said, adding that some of the losses were due to traders selling off shares that had soared in recent sessions.
Washington announced Monday it will lift pandemic travel bans on all air passengers if they are fully vaccinated and undergo testing and contact tracing, sending US airlines higher.
United Airlines gained 1.6 percent, Delta Air Lines rose 1.7 percent and American Airlines won three percent.
20 September 17:43
Motor dealership CMH expects dramatic turnaround in interim results
Dealership and rental owner Combined Motor Holdings (CMH) saw its share price jump by more than 9% on Monday after it released a trading statement saying its interim earnings for the six months to 31 August 2021 would likely be between 190 cents and 210 cents, compared to a 19 cents loss in the same period in 2020.
The group said it also expected its headline earnings per share to be between 190 cents and 210 cents, recovering from a 14.1 cents loss.
CMH closed just over 7% up at R25.75 per share. It will release its interim results by 19 October.
20 September 14:54
Evergrande meltdown risk rocks world markets
World stocks sank Monday as trading floors were gripped by contagion fears from the expected collapse of debt-plagued Chinese property giant Evergrande, with investors also on red alert over spiking wholesale gas costs.
Sentiment is being dented by strong inflation, the Federal Reserve's plans to taper monetary policy, surging infections with the Delta variant of coronavirus, and signs of weakness in the global recovery.
Hong Kong dived 3.3 percent, spearheading Asian losses, with Evergrande widely expected to default on upcoming interest payments this week.
Europe tanked, with London losing 1.6 percent and Paris down 2.2 percent, while Frankfurt's newly expanded index dropped 2.3 percent in early afternoon deals.World oil prices shed about two percent on energy demand worries.
"Contagion risks from the Evergrande meltdown are the prime cause of today's sell-off," said Markets.com analyst Neil Wilson.
"It is definitely though a major cause for investor concern right now and it is possible we see further losses.
"Evergrande, one of China's biggest developers, is on the brink of collapse as it wallows in debts of more than $300 billion.
Mining shares were hard hit because of the potential economic impact on China, which has a voracious appetite for raw materials.
"Evergrande... appears to be teetering on the precipice with concerns about contagion from the situation infecting the wider economy in China," said AJ Bell analyst Russ Mould."Any downturn in China would have significant implications for commodities demand given its status as the world's largest consumer of many minerals and metals."
Anxiety is also running high over spiking wholesale gas costs, fuelling global inflationary pressures and sparking concern from the world's biggest central banks.
Against this backdrop, the Federal Reserve's monetary policy meeting this week will be particularly important, according to Wilson."Does a Chinese property collapse and energy crisis collide with expectations for a Fed rate hike next year and biting inflationary pressures?" he wrote in a note to clients."That would be a pretty nasty cocktail for risk appetite and I think these are the risks being priced into today's selling."
Back in Hong Kong, property companies and banks bore the brunt of heavy selling.
Evergrande stock briefly plunged almost 19 percent before ending down 10 percent, sparking similar losses for Henderson Land and New World Development.
The Hang Seng Property Index meanwhile dropped more than six percent, its worst performance since May 2020.
The selling was mirrored elsewhere in Asia, although Tokyo, Shanghai, Seoul and Taipei were closed for holidays.
Despite the growing crisis, the Chinese government has yet to step in to prevent Evergrande from going under.
In addition, a new Delta outbreak in China has raised fear about the effect on the recovery in the world's number two economy, which remains a key driver of global growth.
20 September 10:44
to weakest level in weeks
On Monday morning, the rand declined to R14.81/$, its weakest level since 27 August, more than three weeks ago. The currency is under pressure amid dollar strength and a slump in commodity prices, particularly iron ore, platinum and palladium. South Africa is dependent on mining exports.
The dollar is gaining ahead of a Fed meeting on Wednesday, with investors expecting US monetary policymakers to confirm that market stimulus – aimed at curbing the pandemic fallout on markets - will be scaled back.
This, along with the eventual increase in US interest rates, will be positive for the dollar. Across the world, investors are getting more risk averse and buying the dollar (and other "safer" assets) ahead of the expected tapering of stimulus money to the markets, but also due to concerns about the global economic recovery as inflation pressures start heating up.
In addition, contagion fears over a default by the Chinese property developer, Evergrande, are unsettling markets on Monday morning, says André Cilliers, currency strategist at TreasuryONE.
Evergrande, which has a debt burden of more than $300 billion, is struggling to repay its interest payments - some of which are due this week. There are fears that the company could collapse, and its share price lost almost a fifth of its value in early Hong Kong trading on Monday.
It ended the day down 10%, at levels last seen more than a decade ago. Meanwhile the JSE was also taking strain as commodity prices continued to decline.
By mid-morning on Monday, Anglo was down more than 7% and Implats lost more than 6%.
20 September 10:10
PPC concludes Botswana disposals
Cement maker PPC has finalised the disposals of its lime business and its quarry operations in Botswana.
In an update on Monday, the group said the conditions for both sales were met last week.
PPC Lime is now owned by Kgatelopele Lime and PPC Aggregate Quarries Botswana (AQB) has been sold to a construction and mining company in that country.
The proceeds of the disposals will go towards the company’s debt, which it has reduced from R5.8 billion to R2.6 billion. The lime and quarry operations have been sold for R515 million and R60 million respectively
“The completion of the sale of PPC Lime and PPC AQB is an important and positive step in the ongoing capital restructuring and refinancing project,” said PPC.
20 September 09:05
RMI rockets 14% after Discovery, Momentum announcement
Rand Merchant Investment (RMI) announced plans to unbundle its large stakes in Discovery and Momentum Metropolitan directly to its shareholders.
RMI owns 25% of Discovery and 27% of Momentum Metropolitan. RMI shareholders will now hold these stakes directly.
The RMI board says this move will unlock material shareholder value by reducing the reduction in the discount at which RMI currently trades to its underlying intrinsic value.
The unbundling will also establish RMI as a focussed property and casualty insurance investment group, “with exposure to, and influence over” unlisted insurers in South Africa, Australia, and the United Kingdom via OUTsurance, Youi and Hastings. RMI owns 89% of OUTsurance.
RMI's shares jumped 14% to R35.26 in opening trading on Monday.
20 September 08:25
Moment of truth arrives for crisis-hit Chinese property giant Evergrande
China Evergrande Group bondholders are about to find out if the property giant’s liquidity crisis is as dire as it appears.
Interest payments on two Evergrande notes come due Thursday, a key test of whether the developer will continue meeting obligations to bondholders even as it falls behind on payments to banks, suppliers and holders of onshore investment products. Investors are pricing in a high likelihood of default, with one of the notes trading at less than 30% of face value.
Concern over Evergrande’s ability to make good on $300 billion of liabilities is spilling into China’s financial markets. Shares of other real estate firms have plunged, while the yield on an index of dollar-denominated junk bonds has climbed to about 14%, the highest in nearly a decade.
The People’s Bank of China injected $14 billion of short-term cash into the financial system on Friday in a sign policy makers want to soothe nerves.
The Evergrande payments due Thursday include $83.5 million of interest on an 8.25%, five-year dollar bond, Bloomberg-compiled data show. There is a 30-day period before a missed payment is considered a default, according to the bond’s covenants. Evergrande needs to pay a 232 million yuan (R534 million) coupon on an onshore bond the same day. In total, Evergrande has $669 million in coupon payments coming due through the end of this year. Some $615 million of that is on dollar bonds, Bloomberg-compiled data show.
Fitch Ratings flagged the increased chance of a payment failure this month when it slashed the firm’s credit grade even deeper into junk territory, citing the risk of “probable” default.
Evergrande is also scheduled to pay interest on bank loans Monday, with a one-day grace period. Monday and Tuesday are public holidays in China. While details on the amount due aren’t publicly available, Chinese authorities have already told major lenders not to expect repayment, people familiar with matter said last week.
20 September 06:26
Asian markets sink ahead of Fed, Hong Kong plunges again
Asian markets fell Monday in holiday-thinned trade, dragged by a range of issues including the Federal Reserve's plans to taper monetary policy, surging Delta infections, China's regulatory crackdown and signs of a slowdown in the global recovery.
Hong Kong again led the losses on growing fears about the possible collapse of troubled property giant China Evergrande - which experts say could have a painful spillover into the broader economy - as interest payments on some of its bonds come due.
The selling followed another loss on Wall Street, where investors are also tracking the progress of Joe Biden's multitrillion-dollar spending bills, while there is unease that lawmakers have yet to raise the US debt ceiling, risking the country defaulting on its own debt obligations.
The Fed's policy meeting this week is being closely followed, with some experts predicting it could set a timetable for winding in its vast bond-buying programme put in place last year to support the economy and equity markets.
Officials have flagged they will begin tapering by the end of the year in order to keep a lid on inflation, though it is yet to indicate by how much and from when.
Wednesday's announcement comes as several other central banks around the world also prepare to make decisions, with many now considering tightening.
The shift towards turning off the taps to financial markets comes as the Delta variant continues to spread quickly around the world, forcing some governments to reimpose lockdowns or other strict containment measures.
Among them is China, where a new outbreak is raising concerns about the effect on the recovery in the world's number-two economy, a key driver of global growth.
Another major headache for traders is the debt crisis at Evergrande, which is on the brink of collapse owing more than $300 billion, with many worried about a possible contagion that could hammer other property firms, banks and small investors.
Traders are keeping a nervous watch as the company is due to pay interest Monday and Thursday on some of its loans and bonds.
Despite the growing crisis, the government has yet to step in to prevent it from going under.
Analysts say that, while leaders are looking to curb excessive risk-taking, they will probably work to prevent the issue from becoming unmanageable."
The central government's priority of social stability makes restructuring likely with haircuts for debt holders, but spillovers to other listed property developers means there will likely be a real economy impact on the real estate sector," said National Australia Bank's Tapas Strickland.
"To what extent Evergrande slows the growth momentum remains unclear."Some of Hong Kong's biggest property firms tanked Monday, with Evergrande more than 12 percent down while New World Development and Henderson Land dived more than 11 percent.
The city's Hang Seng Index sank more than three percent, while Sydney fell more than one percent with Singapore, Wellington, Manila and Jakarta also down. Tokyo, Shanghai, Seoul and Taipei were closed for holidays.