25 August 2020

Political Upheaval, Dow Jones Giants And A Virus

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Mali's new strongman, Colonel Assimi Goita, and his junta have proposed a military-led transitional body to rule for three years. Last week's coup - Mali's second in eight years - followed months of protests calling for Ibrahim Boubacar Keita to resign as public discontent with the government grew over the collapsing economy and a brutal Islamist insurgency. 

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The World Health Organization on Monday was cautious about endorsing the use of recovered COVID-19 patients' plasma to treat those who are ill, saying evidence it works remains "low quality" even as the United States issued emergency authorisation for such therapies.


Belarusian authorities detained three opposition leaders on Monday morning, as strongman leader Alexander Lukashenko battles to quell the most severe protests he has faced during his 26 years in power.


The Special Investigating Unit (SIU) is investigating over 650 allegations of Covid-19 fraud and corruption totalling R5 billion and said that reports of more malfeasance continue to pour in. The South African Revenue Service (SARS) is currently profiling 307 cases, representing a revenue loss of about R300 million.

South Africa

South Africa's coronavirus data shows a continued downward trend, and there is currently no sign of a 'second wave' of infections as restrictions are eased in the country, the National Institute for Communicable Diseases (NICD) says.

Economists expect Q2 GDP to contract between 45% and 55% on a quarter-on-quarter annualised basis and the rand has gained momentum, dipping below R17/$ for the first time since the end of July.


Sun International's share price rose more than 9% on the JSE on Friday after the hotel chain and casino company agreed to sell its 64.94% majority stake in Latin American operation Sun Dreams for $160 million (R2.75 billion) and settled the dispute with its partner, Nueva Inversiones Pacifico Sur.

Edcon Holdings has signed a purchase agreement that will see it sell parts of South African clothing chain Edgars to rival Retailability.


FSCA fined Tongaat Hulett R20m for contravening the Financial Markets Act. This fine comes after the JSE imposed an R7.5 million fine on Tongaat last month, also relating to the accounting irregularities. Tongaat Hulett noted the FSCA's announcement and fine in a JSE Sens statement on Monday which saw its share price sliding just over 5% (by around 3:30 pm).


Gold Fields announced it had doubled its interim profits for the period to end June 2020 and paid shareholders a special dividend equivalent to the entire previous year's dividend. And this despite the Covid-19 shutdown of operations.

Europe

A full bounceback from the euro zone's deepest recession on record will take two years or more, according to a Reuters poll of economists who also said there is a high risk the job recovery underway reverses by the end of 2020.


In data likely to concern policymakers and diminish hopes for a V-shaped recovery, IHS Markit's flash Composite Purchasing Managers' Index sank to 51.6 from July's final reading of 54.9, below all forecasts in a Reuters poll that predicted no change.


Renewed optimism over a U.S.-China trade deal and a smaller-than-expected decline in German economic output fuelled gains in European stocks on Tuesday, with Frankfurt shares hitting a one-month high.


The German economy contracted by a record 9.7% in the second quarter as consumer spending, company investments and exports all collapsed at the height of the COVID-19 pandemic, the statistics office said on Tuesday.


The European Commission gave the green light on Friday for the Belgian government to inject €290 million of state aid into Brussels Airlines, Belgium's ailing flag carrier which has been hard-hit by the ongoing pandemic.

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According to a survey of the industry, UK retailers are cutting jobs during the year to August at the fastest rate since 2009, with an even sharper decline anticipated for the figures to September.

ExxonMobil used to be the crown jewel of the US economy. From 2006 to 2011, with oil prices at historic highs, it was the most valuable company in the S&P 500, with a market capitalisation that exceeded $500 billion.


Since then, ExxonMobil's fall from grace has been swift and steep. It now ranks at #24 in the S&P—below Home Depot.


Exxon Mobil (XOM), Pfizer (PFE), Raytheon Technologies (RTX) – These stocks will be removed from the Dow Jones Industrial Average. At the same time, with effect 31 August, Salesforce.com (CRM), Amgen (AMGN) and Honeywell (HON) will be added. While Honeywell makes a return to the Dow after being removed in 2008, Exxon and its predecessor companies had been in the Dow since 1928.


Nothing like the recovery in the US stock market has ever been seen before. After the Wall Street Crash of 1929, the time it took for shares to regain their previous peak was measured in decades. After the global financial crisis of 2008, it was measured in years. This time it has taken less than five months – from a low on 23 March – for the S&P 500 to regain all its lost ground and hit a new high.


The lockdown has been disastrous for some sectors, notably hospitality and airlines, but people stuck at home have been spending more time online, shopping, watching, socialising and working. That has been good news for the five big US tech giants – Apple, Amazon, Facebook, Google and Netflix.


The recent sharp depreciation of the US dollar has led to concerns that it may lose its role as the leading global reserve currency. After all, in addition to the Federal Reserve's aggressive monetary easing – which threatens to debase the world's key fiat currency even further – gold prices and inflation expectations have also been rising.

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Sri Lankan shares snapped a five-session rally on Tuesday, pulled down by losses in financial and industrial stocks.  Foreign investors were net sellers, offloading 697.6 million Sri Lankan rupees ($3.74 million) worth of shares.


Ant Group, Alibaba's fintech arm and China's dominant mobile payments firm, filed for a dual listing in Hong Kong and on Shanghai's Nasdaq-style STAR Market on Tuesday and could raise as much as $30 billion in what would be the world's largest IPO.


India's rupee pulled back slightly on Tuesday after surging as much as 1% a day earlier on reports of a halt in central bank intervention aimed at keeping a lid on gains for the currency to support a struggling economy.  Despite foreign investor inflows of $3.9 billion year-to-date into India's stock markets, the rupee is down about 4.1% in 2020, making it one of the worst-performing in the region.


The first batch of firms listing on mainland China's Nasdaq-style ChiNext board under its revised IPO system made their debut on Monday and saw staggering gains. Contec Medical Systems jumped more than 1,000% on the day while Ningbo KBE Electrical Technology surged more than 740%.


Hong Kong shares closed lower on Tuesday, dragged down by healthcare and property stocks. Shares in Chinese property developer Country Garden extended losses to 2.3% after its H1 core profit dropped due to delays in construction following the pandemic

Asia

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25 Augus 2020 (10:51 am)

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South Africa Moves To Level 2

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Sometimes We Create History, And Other Times History Creates Us