Unum Market Commentary: Recession Realities Hit JSE; Rand Slides

On Tuesday, the reality of South Africa's economic challenges manifested itself in the data set released by Statistics South Africa which showed that the economy contracted by 0.7% for the second quarter of 2018, following on from a 2.6% contraction in the first. Immediately following the release, weakness was seen in the Rand which saw a sharp sell-off from 15.02 to 15.21 versus the US Dollar . This weakness continued throughout the day with the local unit reaching a low of R15.38 versus the greenback by 8pm Tuesday evening. As a result of the poor GDP print and subsequent currency slump, shares with widespread South African exposure saw sharp declines. These shares included Bidvest (-6.60%), Firstrand (-5.00%) and Vodacom (4.54%) while MTN (-17.05%) saw sharp losses on the back of fresh claims out of Nigeria. Benefiting from the weaker currency was Kumba Iron Ore (4.69%), Mediclinic International (2.45%) and British American Tobacco (+2.37%). On European markets, declines were seen across the board with the Euro Stoxx 50 index shedding 1.06% on the day, dragged down by luxury goods retailer LVMH (-3.51%) and semiconductor producer ASML (-3.20%). This morning, the Dollar starts on the back foot while Asian equities are down over 1% on average.

JSE Major Sectors

Resources 10 +0.55%
Industrial 25 -1.75%
Financial 15 -3.10%

Join the Unum Trading Desk on Friday 7 Sep 2018 starting at 14:15 as we look to trade the EURUSD Forex pair on the NFP data.

In currencies, the South African Rand trades as follows:

USDZAR -0.25% to 15.30
GBPZAR -0.23% to 19.67
EURZAR -0.17% to 17.74

Gold trades at $1198
Platinum at $778
Brent Crude Oil at $77.83

International Markets

This morning, Asian equities are as follows:

Nikkei 225 (-0.30%)
Hang Seng (-1.67%)
Shanghai Composite (-0.92%)

Latam Markets closed as follows:

Merval 25 (-4.10%)
Bovespa (-1.94%)
INMEX (-1.18%)
Company News

Steinhoff International Holdings N.V - Sale Of Interests In The Poco Furniture Group

On 26 April 2018 the Group announced that it had agreed in principle a settlement of the German litigation proceedings between the Group and entities controlled by Dr Andreas Seifert (the “Seifert Entities”). It was noted in the 26 April 2018 announcement that the Seifert Entities had offered to acquire the Group’s remaining 50% interest in the POCO furniture group (“POCO”).

The Group’s subsidiary LiVest GmbH (“LiVest”) holds the Group’s shares in POCO and has today entered into a sale agreement with the Seifert Entities by which the Seifert Entities will acquire LiVest’s shares in POCO and certain related properties for a total consideration of €270.685 million (the “POCO Sale”). In addition, the POCO business will retain debt of approximately €140 million, with no recourse to the Group. The closing of the POCO Sale is subject to typical conditions precedent including German and Austrian competition and merger control provisions. Closing of the POCO Sale shall bring the German litigation proceedings with the Seifert Entities to an end.

As noted in the Company’s Q3 2018 trading update, following the declaration of a dispute by the Pohlmann family regarding the 2015 sale of their interest in LiVest to Steinhoff, any proceeds from the sale by LiVest of its 50% share in POCO will be held in escrow while the Pohlmann dispute is finalised.

Shareholders and other investors in the Company are advised to exercise caution when dealing in the securities of the Group.
Aus miners:
BHP Billiton (-2.42%)
Rio Tinto (-2.48%)
S32 (-2.31%)

Facebook (-2.60%)
Amazon (+1.33%)
Netflix (-1.11%)
Google (-1.66%)

FTSE Miners:
Anglo American plc (-1.48%)
BHP Billiton plc (-1.92%)
Glencore plc (-1.81%)

Alibaba Holdings (-2.61%)
Tencent Holdings (-2.48%)

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Please feel free to contact the Unum Trading desk for any queries : 011 384 29 29


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