WHAT HAPPENED OVERNIGHT IN THE US:
· US closed for President’s Day. Reopens today.
WHAT’S UP THIS MORNING IN THE EAST:
· Asia mixed. Hong Kong -0.3%, giving some back (Tencent -0.8%). But China +0.1%, holding yday’s late push.
· Australia -0.1%, held back by IT & utilities. But resources indicating London up 0.5% - & that was before we got BHP nos with some upside surprise from dividend (40c vs ests 35c). Mgmt warns iron prices to “come under pressure” – but tell that to Dalian buyers.
· Dalian iron +3.8%, likely to lift spot above $95 for first time in 2-&-half years as steel mills ratchet up production ahead of March Party Congress where authorities historically force industry to close.
SOUTH AFRICAN NEWS:
· Expect AllShare +0.50%. From SA close yday, gold -$5 ($1233), plat -$3 ($1001), copper +0.5% ($2.76/lb), oil unch ($56.15), USDZAR unch (13.06).
· IPL: H1 core EPS down 8% vs guided range 6%-13%, hit by FX losses, higher finance costs & mortisation. Group revs & operating profit from cont ops both +3% (vs Nov guidance “single digit” & “decline” resp) - and group operating margin held at 4.8%. But outlook cautious; Logistics to see some H2 pressure and Vehicles ongoing drag. Fwd PE c.13x is in line with Bidvest, but weaker relative EPS outlook highlights risk of relative de-rating.
· SHP: H1 dil hEPS +15.5%, trading profit +19.2% - looks good. We already had turnover, so this was all about trading margin – which they increased to 5.48% (from 5.24%), managing to keep cost growth (+12.6%) below t/over (+14%). Internal inflation up to 7.4% (from 2.7% year ago) – highest in years but unlikely to be sustained. Expect these numbers to underpin yday’s move in share price, but not much more.
· BIL: H1 underlying earnings $3.2bn in line, but interim dividend 40c about 5c ahead of consensus (ie 30c per the policy plus additional 10c). Net Debt a tad lower at $20.06bn (vs consensus US$22.5bn).
· ANG: FY basic earnings $63m vs guided range $54m-$71m, cash costs $744 vs $730-$750, prod 3.628m oz vs 3.6-3.65m. Div 130c will be welcomed but shouldn’t be a huge surprise given improvement in cash flow.
· CSB: guiding H1 EPS up 5%-10% after excluding impact of BEE deal in prior period.
· SPG: H1 core hEPS +3.2%, cash up 11%, revs +15%.
· Also due today: AGL FY, BLU H1.
· AGMs: TBS
· ZAR shook off intraday nerves yday on Friday reports of Brian Molefe’s swearing-in as MP - feeding into recent speculation he is set to replace Gordhan at finance ministry. It is pretty clear that a cabinet reshuffle is on the cards, but the big question is whether Zuma would dare to touch the FM. We suspect not. If he removes Gordhan, he will face a major backlash from within the ANC (& markets). We continue to argue that Zuma doesn't have the base to see it through successfully - recall he was forced into a u-turn over his appointment of van Rooyen back in Dec 2015, and his position is far weaker now. A more likely outcome is that Molefe will be appointed to a role in economic cluster where he will be able to have some influence over economic policy (eg Public Enterprises for overseeing SOEs, Energy for nuclear build, or Dept of Trade & Industry for black industrialists programme).
TODAYS KEY DATA POINTS:
· 10am: France Feb Markit PMI first read (Manuf 53.5, Services 53.9)
· 10.30am: Germany Feb Markit PMI first read (Manuf 56, Services 53.6)
· 4.45pm: US Feb Markit PMI first read (Manuf 55.3, Services 55.8)