Global News:
- The MSCI World Index is just -1.3% from its record high, in dollar terms. It is 19.3% up from its low on 11 February 2016.
- In the US, Markit Composite Purchasing Managers Index (PMI) is at a healthy 54.9. The growth of durable goods orders was expected to be 1.7% but came in at a phenomenal 4.8%. Existing homes sales came in at 2% growth when it was estimated to fall by -0.6%, but new home sales fell by -1.9%, while it was anticipated to decline by -0.5%.
- The trade-weighted US dollar is up +30% over the past four years.
- In the Eurozone, consumer confidence came in at -6.1 compared to the expected -7.8. When you consider that in the last decade, only 2015 and 2007 saw stronger numbers, this is very positive.
- In Germany and France, the Markit Composite PMI was released this week, with readings of 54.9 and 52.3 respectively.
- In Japan, headline Consumer Price Index (CPI) came in at 0.1%, versus last month’s -0.5%. Although this positive spike brings into sharp relief the mostly negative numbers Japan has seen this year, it still falls short of the inflation target set by the Bank of Japan.
- Japan’s Manufacturing PMI came in at 51.1; this is an improvement on the readings that came in below 50 for the second and third quarter of this year.
- Japan’s foreign trade has performed badly; exports fell by -10.3% year-on-year and imports declined by -16.5% year-on-year. Trade numbers have consistently dropped throughout 2016.
Local News:
- The exciting news is that Fitch and Moody’s released their rating reviews on Friday last week. Moody’s has kept its rating unchanged at Baa2, with Negative Outlook. Fitch didn’t change its rating either but changed its outlook from Stable to Negative.
- The South African Reserve Bank (SARB) kept their repo rate unchanged at 7%.
- There has been a sharp correction in the JSE: Aspen has fallen by -33% back to its June 2014 levels, Sasol decreased by -40% and is back to its price from five years ago, Discovery has fallen by -27% to is January 2015 prices, Mediclinic has dropped by -40%, Brait by -45% and is at the same level from two years ago. British Tobacco has fallen by -20%, Naspers -18% to its October 2015 levels. Mr Price dropped by a whopping -50%, to its levels from four years ago, and Truworths is down -35% to its levels from six years ago.
- Woolworths is down -40% to the same level as four years ago. AB InBev has fallen by -30% from its high or 23% since it was listed on the JSE in January 2016. Foschini is down 26% to its levels from four and a half years ago. There has also been a significant correction in Grindrod and Trencor.
- The South African unemployment rate has increased to 27.1% in the third quarter, the reason for this sharp increase is mainly due to discouraged workers re-entering the labour market.
- Over the past year, South Africa has only added 5000 jobs to the job market.
- Consumer inflation increased to 6.5% in October; it was encouraged by higher food and fuel prices. It is estimated that inflation will continue to increase over the following two months, only to decelerate in 2017.
Source: Dynasty, Stanlib, Efficient Select, Prescient, Moneyweb & Bloomberg Markets etc.
