News in South Africa 17th March:
1. Wall Street and JSE stocks down:
Wall Street stocks had their worst day since 1987 on Monday, joining the global market carnage as the coronavirus outbreak shut down a widening part of the US and global economy.
The Dow Jones Industrial Average plunged 12.9 percent, or nearly 3,000 points, at 20,188.52.
The broad-based S&P 500 dove 12.0 percent to 2,386.13, while the tech-rich Nasdaq Composite Index shed 12.3 percent to 6,904.59.
The losses were the most substantial since worries over a coronavirus-induced recession became the market’s preoccupation over the last three weeks or so.
US President Donald Trump, for the first time, said the US economy “may be” heading into a recession, acknowledging an outcome that an increasing number of economists are expecting.
The JSE had wild day of trading as its all share index lose more than 12% of its value, many of South Africa’s biggest companies lost billions in value.
Old Mutual slumped 16% after announcing its results. Resource shares were among the biggest losers, with Implats and Northam down 19%.
FirstRand was down 10%. Other big losers included MTN (-12%) and Sasol (-12%)
Across the world, $20 trillion has now been wiped off global markets in the past month, Bloomberg reports.
The latest losses were triggered by the US central bank’s emergency rate cut of a full one percentage point. This brought interest rates effectively to 0% in the US. The central bank also committed to pumping $700 billion into the markets through buying securities.
2. Gold and platinum see record losses:
Precious metals took another beating on concerns that a wave of emergency stimulus measures by central banks won’t be enough to improve a rapidly deteriorating economic outlook.
Gold, coming off the biggest weekly drop in almost four decades, extended losses below $1 500 an ounce as market sentiment soured even after further emergency moves by the Federal Reserve. Platinum tumbled the most on record and silver fell the most since 2011.
The gold market is caught between demand for a haven and a rush to raise cash and cover losses in other markets.
- Spot gold dropped as much as 4.2% to $1 465.40 an ounce, reversing earlier gains. The metal lost 8.6% last week, the most since 1983.
- Spot silver fell 14% to $12.6133 an ounce, touching the lowest since 2009.
- Platinum fell as much as 26% to $564 an ounce, hitting the lowest since 2002.
- Palladium was down 10% to $1 626.53 an ounce, reaching the lowest since September.
3. Old Mutual worst affected share:
Financial services provider Old Mutual battled challenging macroeconomic conditions during 2019, reporting a 25% decline in headline earnings to around R14 billion. However, according to the group, adjusted headline earnings which increased 5% from R9.4billion to R9.9 billion is an appropriate reflection of its performance.
The headline earnings figure does not include the profits of Quilter and Nedbank, following the managed separation strategy, which is the main driver of the decrease recorded, according to a shareholder notice on the group’s annual results for the year ended 31 December 2019.
The group, on Monday released its annual results. It warned that due to the market turmoil and “significant downward pressure” on economic growth, it does not expect to reach its targets for results from operations for the current financial year.
Headline earnings per share were down 23% from 306.9 cents to 236.1 cents. Adjusted headline earnings per share increased 7% from 195.1 cents to 209.3 cents. Its dividend for the year (120 c) was 3% higher than the previous year.
4. Ninety One made its debut yesterday:
Ninety One – previously known as Investec Asset Management – began trading on the JSE and London after splitting from the Investec Group.
The share debuted on the JSE at R55, and briefly peaked at R60 before slumping to R49.90 in mid-morning trade. Along with other global markets, the JSE suffered large losses on Monday. The bourse lost more than 10% of its value in a morning’s trading. Financials took a particularly hard hit, with Old Mutual down almost 20%.
Investec CEO, Fani Titi, hailed the listing as a “significant step” in the company’s evolution.
5. Domino’s Pizza liquidated:
Struggling former owner of Starbucks says it is going to voluntarily liquidate Domino’s Pizza because it has failed to find a buyer for the pizza franchise.
Taste Holdings announced late in 2019 that it is exiting its food businesses (Starbucks, Domino’s Pizza Maxi’s and The Fish & Chips Co), and that the company will shift its focus to luxury goods. The group’s luxury brands include NWJ, Arthur Kaplan and World’s Finest Watches.
The company sold its Starbucks business to Rand Capital Coffee for R7 million in November. In the same month, Taste announced that it had also found a buyer for Maxi’s and The Fish & Chips Co. The three brands were successfully disposed on 2 December 2019, after fulfilling certain conditions.
But Taste Holding failed to find a suitor for Domino’s Pizza, despite engaging with several suitors.