DAILY MARKET COMMENTARY

Transcription

1 DAILY MARKET COMMENTARY 20 June :30 AM For any queries, please contact: Reezwana Sumad Charts of the day Currencies Commodities Fixed income & interest rates Equities Equity derivatives Economics *Foreign flows JSE performance LDT Economic calendar Other reports #Contacts Click on any of the above links to access your point of interest (* when available) Key daily drivers Nedbank CIB Market Commentary SNIPPETS (Fixed Income) (Currencies) (Commodities) (Equities) (Foreign flows) Locals re-investing coupons kept yields from running away too hard after commentary by the Public Protector Headlines weigh heavily on USDZAR Oil price continues to grind lower on the back of a supply glut in the West, gold remains subdued Global equities grind higher in a subdued trading sessions Foreign bond flows record biggest outflow in 18 weeks Key overnight factors and upcoming events Nedbank CIB Market Commentary CIBMarketComm@Nedbank.co.za Date Region Event Actual/expected/prior Implications 20/06 SA Current account bal --/-2.0%/-1.7% Current account likely to show sharp portfolio outflows, deteriorating trade balance 21/06 SA CPI y/y --/5.3%/5.3% CPI is susceptible to downside risks due to food disinflation. Transport costs likely to rise temporarily in May 21/06 UK UK budget balance --/6.8b/10.4b Borrowing requirement may ease as tax revenues rise 22/06 US Leading index --/0.4%/0.3% Leading indicator extremely important in inferring economic growth trajectory over the next 6 months Source: Nedbank Daily Market Commentary 20 June 2017 Page 1 of 11

2 06/12 20:00 06/13 03:00 06/13 08:00 06/13 13:00 06/13 18:00 06/14 02:00 06/14 07:00 06/14 12:00 06/14 17:00 06/14 22:00 06/15 05:00 06/15 10:00 06/15 15:00 06/15 20:00 06/16 04:00 06/16 09:00 06/16 14:00 06/16 19:00 06/19 03:00 06/19 08:00 06/19 13:00 06/19 18:00 06/20 01:00 06/20 06:00 06/09 12:05 06/09 15:05 06/12 07:05 06/12 10:05 06/12 13:05 06/12 16:05 06/13 08:05 06/13 11:05 06/13 14:05 06/13 17:05 06/14 09:05 06/14 12:05 06/14 15:05 06/15 07:05 06/15 10:05 06/15 13:05 06/15 16:05 06/19 08:05 06/19 11:05 06/19 14:05 06/19 17:05 Fixed income and interest rates Bond flow sales Corporate Money Markets Business Bank Money Markets Bonds Δ Δ Δ Last price 1d MTD YTD % bps bps bps R yrs # R yrs # R yrs # R yrs # US 10 yr # UK 10 yr # German 10 yr # Japan 10 yr # Money Market Last price Δ 1d Δ MTD Δ YTD % bps bps bps SA repo rate # SA prime rate # SA CPI (MTD = previous month) # SA 3m JIBAR # SA 3m NCD # SA 6m NCD # SA 12m NCD # US 3m LIBOR # UK 3m LIBOR # Japan 3m LIBOR # Source: Bloomberg & Nedbank CIB T ime Δ Δ Δ FRAs and Swaps Last price 1d MTD YTD % bps bps bps 3X6 FRA # 6X9 FRA # 9X12 FRA # 18X21 FRA # SA 2yr Sw ap # SA 3yr Sw ap # SA 5yr Sw ap # SA 10yr Sw ap # SA 15yr Sw ap # Δ Δ Δ Spreads Last price 1d MTD YTD % bps bps bps 2v10y # 3v10y # R186-R # R2048-R # 5y-R # 10y-R # 15y-R # SA 5yr CDS spread - basis points # Source: Bloomberg & Nedbank CIB T ime A rollercoaster ride yesterday with more radical indications as the Public Prosecutor opined on the need to change the SARB mandate and the broader Constitution. This gave local markets a bit of a fright, but locals re-investing coupons kept yields from running away too hard. Expect this to continue into the auction this morning, and expect bids in the secondary market up to the 8.63 level on R186. We open unchanged. US 10 year yield SA 10 year yield US 10 year yield US 10Y SA 10 year yield R Daily Market Commentary 20 June 2017 Page 2 of 11

3 Currencies Business Banking FX Corporate FX Institutional FX The new week opened with the rand having staged a modest recovery to trade at around , some good two way flows initially but this was short lived and once the dollar buyers dominated as a result of various comments regarding the amendment of the constitution and the mandate of the SARB by the public protector, this saw the local unit weaken to a high of , before a modest recovery going into the local close, to trade at at that time. This morning the rand is currently trading at , EURZAR is trading at and GBPZAR at International markets were once again skittish, after having recovered to trade back around the level in the wake of the French election results the euro traded generally weaker for the majority of the session, although not spectacularly so, trading down to a low of where we closed the session, this morning EURUSD currently trading at Gold has drifted marginally weaker after holding above the mark for most of last week, this morning currently trading at Data releases scheduled for today, locally we have leading index, current account and the release of the SARB quarterly bulletin, and from Europe we have Eurozone current account and Italian current account data, the same current account data from the U.S. The on-going pronouncements regarding mining charters, changes to the constitution and the mandate of the SARB create an environment which is not conducive to stability and confidence and this has seen the rand pay the price for this over the past two sessions, having traded to a best level below last week. Possible trading range in the rand today 12,8500 to Majors Last price -1d MTD YTD USD GBPUSD # USD strength EURUSD # USD strength USDJPY # USD strength USDAUD # USD weakness ZAR Rand crosses Last price -1d MTD YTD USDZAR # ZAR strength GBPZAR # ZAR strength EURZAR # ZAR strength AUDZAR # ZAR weakness ZARJPY # ZAR strength ZAR African FX Last price -1d MTD YTD ZARMWK (Malaw ian kw acha) # ZAR strength ZARBWP (Botsw ana pula) # ZAR strength ZARKES (Kenyan shilling) # ZAR strength ZARMUR (Mauritian rupee) # ZAR strength ZARNGN (Nigerian naira) # ZAR strength ZARGHS (Ghanian cedi) # ZAR strength ZARZMW (Zambian kw acha) # ZAR strength ZARMZN (Mozambican metical) # ZAR strength Source: Bloomberg & Nedbank CIB T ime *Please note that the sign on the % change reflects the change on the headline number. The narrative indicates the direction over the month. For trade in any of these currencies, contact our FX dealing desks USDZAR $/R (close, high and low) R R R R R R R R EUR/USD /$ (close, high, low) $1.14 $1.13 $1.13 $1.12 $1.12 $1.11 R /14 06/15 06/16 06/19 06/20 USDZAR Curncy $/R HIGH $/R LOW $ /14 06/15 06/16 06/19 06/20 EURUSD Curncy EURUSD HIGH EURUSD LOW Daily Market Commentary 20 June 2017 Page 3 of 11

4 06/12 18:00 06/13 00:00 06/13 06:00 06/13 12:00 06/13 18:00 06/14 00:00 06/14 06:00 06/14 12:00 06/14 18:00 06/15 00:00 06/15 06:00 06/15 12:00 06/15 18:00 06/16 00:00 06/16 06:00 06/16 12:00 06/16 18:00 06/19 00:00 06/19 06:00 06/19 12:00 06/19 18:00 06/20 00:00 06/20 06:00 06/12 08:00 06/12 13:00 06/12 18:00 06/12 23:00 06/13 06:00 06/13 11:00 06/13 16:00 06/13 21:00 06/14 04:00 06/14 09:00 06/14 14:00 06/14 19:00 06/15 02:00 06/15 07:00 06/15 12:00 06/15 17:00 06/15 22:00 06/16 05:00 06/16 10:00 06/16 15:00 06/16 20:00 06/19 01:00 06/19 06:00 06/19 11:00 06/19 16:00 06/19 21:00 06/20 04:00 06/09 09:30 06/09 11:30 06/12 08:30 06/12 10:30 06/12 17:30 06/13 09:30 06/13 11:30 06/14 08:30 06/14 10:30 06/14 17:30 06/15 09:30 06/15 11:30 06/19 08:30 06/19 10:30 06/19 17:30 Commodities Nedbank CIB Market Commentary Brent rallied marginally yesterday, before giving back most gains towards the end of the day. The oil market remains in a supply glut, even though OPEC is actively pursuing production cuts. Apart from Saudi Arabia and a handful of other OPEC countries, the compliance rate has been dismal, particularly within non-opec countries like Russia which have not yet achieved their target for the YTD. It is now questionable as to whether the balance of the production cuts will materialise, given the dismal reaction of the oil price to these stabilisation efforts and the lack of compliance by most non-opec countries. Gold dipped below $1250/oz. yesterday, and will likely continue weaker towards $1230/oz. in the near term as the dollar maintains its resilience over the last week. Commodities Last price -1d MTD YTD Brent near future ($) # WTI crude ($) # Gold spot ($) # Platinum spot ($) # SA w hite maize spot (R) # Source: Bloomberg & Nedbank CIB T ime SA white maize SA White maize (ZAR/MT) - 30 day chart R R R R R R R R SA white maize ZAR/MT Source: Bloomberg Source: Bloomberg Platinum vs Gold Brent Crude vs West Texas Intermediate Platinum vs. Gold Brent Crude vs West Texas Intermediate $1 278 $1 273 $1 268 $1 263 $1 258 $1 253 $1 248 GOLD PLATINUM $949 $944 $939 $934 $929 $924 $50 $50 $49 $49 $48 $48 $47 $47 BRENT WTI $47 $47 $46 $46 $45 $45 $1 243 $919 $46 $44 Source: Bloomberg Source: Bloomberg Daily Market Commentary 20 June 2017 Page 4 of 11

5 06/12 06/13 06/14 06/15 06/19 Equities Cash equities /31 South Africa We gapped up at the open, playing catch up following the Youth Day holiday on Friday, and grinded higher throughout the day and closed at the highs of the day. Resources jumped +1.9%, financials increased by 0.6% and financials surged +2.2% to help the Top40 close up +1.9%. Resources recouped losses from Thursday s onslaught and industrials flourished on the rand s weakness. The top performers on the Top40 were Mondi (+6%), Discovery (+4%) and Naspers (+3.8%). The value traded was R21 billion and the rand was hovering around to the US dollar at the close. We expect the SA current account data for the first quarter out later today. UK/Europe European markets opened in positive territory and maintained those gains and closed off the highs but firmly in the black, the Dax gained +1%, the Cac rose +0.9% and the FTSE added +0.8%. Victory of Macron's party in the French parliament sparked the positive mood around the region which was supported by positive economic and company news. Brexit negotiations with the EU began and the Central European bank published the details of the Emergence Liquidity Assistance (ELA) which would provide temporary lifeline to banks. Airbus climbed +2% after unveiling an upgrade to their passenger jet, Rolls-Royce rose +1.9% after a positive update and Aberdeen Asset Manger jumped +5% after shareholders approved their merger with Standard Life. USA Asia US markets closed a subdued trading session in positive territory led by tech stocks, the Dow rose +0.7%, the S&P500 advanced +0.8% and the Nasdaq shot up +1.4%, with those moves the Dow and S&P500 recorded new highs. Lack of major US economic data caused the lack of direction and markets looked across the Atlantic for direction. Clovis Oncology jumped after a positive late trial to their ovarian cancer drug boosting the biopharmaceutical sector, strength was also seen in the semiconductor, internet and airline stocks. Asian stocks are trading lower this morning, despite the record close on Wall Street last night; the MSCI Asia Pacific ex Japan is up 0.2%. The cautious trade around the region was in anticipation of whether the MCSI would include China A shares in its world emerged market index after the three previous rejections. The Japanese market is up on a weak yen following hawkish remarks by New York Fed president. Lower commodity prices are dragging the Australian market lower. Tencent is currently trading up +1.3% in Hong Kong this morning. Developed Markets Last price -1d MTD YTD Dow Jones # Nasdaq # S&P # DJ Eurostoxx # DAX # CAC # FTSE # ASX # Nikkei # MSCI World # Emerging Markets Last price -1d MTD YTD Hang Seng # Shanghai # Brazil Bovespa # India - NSE # Russia Micex # MSCI Emerging # SA Indices Last price -1d MTD YTD JSE All Share # Top # Resi # Indi # Fini # Source: Bloomberg & Nedbank CIB T ime Short-term performance of SA equity indices SA equity indices Based to 100 at T TOP40 Index FINI15 Index INDI25 Index RESI20 Index Daily Market Commentary 20 June 2017 Page 5 of 11

6 Last day to trade Susan Correia Share code Share name Dividend / interest rate 20 June 2017 DLT Delta Property Fund Ltd cps GIVFIN Newfunds S P Givi SA Distribution (if any) TBA on or before 13/07/17 GIVIND Newfunds S P Givi SA Distribution (if any) TBA on or before 13/07/17 GIVISA Newfunds S P Givi SA Distribution (if any) TBA on or before 13/07/17 GIVRES Newfunds S P Givi SA Distribution (if any) TBA on or before 13/07/17 HCI Hoskens Consolidated Inv Ltd 170cps LBHP Liberty Holdings Ltd 11 Cum Prefs 5.5cps MDP Mara Delta Prop Hldgs Clean Out USD MEI Mediclinic International PLC cps MRP Mr Price Group Ltd 438.8cps NEWFSA Newfunds NewSA Index Fund Distribution (if any) TBA on or before 13/07/17 NFEMOM Newfunds Equity Momentum ETF Distribution (if any) TBA on or before 13/07/17 NFGOVI Newfunds Govi ETF Distribution (if any) TBA on or before 13/07/17 NFILBI Newfunds ILBI ETF Distribution (if any) TBA on or before 13/07/17 NFSH40 Newfunds Shariah Top 40 Index ETF Distribution (if any) TBA on or before 13/07/17 NFSWIX Newfunds SWIX40 ETF Distribution (if any) TBA on or before 13/07/17 NFTRCI Newfunds TRACI 3 ETF Distribution (if any) TBA on or before 13/07/17 RLO Reunert Ltd 120cps SCD Schroder European real Estate EUR SPP Spar Group Ltd 240cps TCP Transaction Capital Ltd 15cps TDH Tradehold Ltd 10cps TON Tongaat Hulett Ltd 200cps VKE Vukile Property Fund Ltd cps VOD Vodacom Group Limited 435cps Source: JSE Daily Market Commentary 20 June 2017 Page 6 of 11

7 JSE performance Nedbank CIB Market Commentary Top40 constituents Last price -1d MTD YTD AGL : Anglo American Plc # ANG : Anglogold Ashanti Ltd # APN : Aspen Pharmacare Holdings Lt # BGA : Barclays Africa Group Ltd # BID : Bid Corp Ltd # BIL : Bhp Billiton Plc # BTI : British American Tobacco Plc # BVT : Bidvest Group Ltd # CFR : Financiere Richemont-Dep Rec # CPI : Capitec Bank Holdings Ltd # DSY : Discovery Ltd # FFA : Fortress Income Fund Ltd-A # FFB : Fortress Income Fund Ltd # FSR : Firstrand Ltd # GFI : Gold Fields Ltd # GRT : Grow thpoint Properties Ltd # INL : Investec Ltd # INP : Investec Plc # ITU : Intu Properties Plc # LHC : Life Healthcare Group Holdin # MEI : Mediclinic International Plc # MND : Mondi Ltd # MNP : Mondi Plc # MRP : Mr Price Group Ltd # MTN : Mtn Group Ltd # NED : Nedbank Group Ltd # NPN : Naspers Ltd-N Shs # NTC : Netcare Ltd # OML : Old Mutual Plc # RDF : Redefine Properties Ltd # REI : Reinet Investments Sa-Dr # REM : Remgro Ltd # RMH : Rmb Holdings Ltd # SAP : Sappi Limited # SBK : Standard Bank Group Ltd # SHP : Shoprite Holdings Ltd # SLM : Sanlam Ltd # SNH : Steinhoff International H Nv # SOL : Sasol Ltd # TBS : Tiger Brands Ltd # TRU : Truw orths International Ltd # VOD : Vodacom Group Ltd # WHL : Woolw orths Holdings Ltd # Source: Bloomberg & Nedbank CIB T ime Daily Market Commentary 20 June 2017 Page 7 of 11

8 Foreign flows Nedbank CIB Market Commentary Last week, foreign investors withdrew R7.7 billion from the bond and equity market. The bond market experience d the biggest sell-off in 19 weeks, led by sharp outflows in the latter part of the week as the new Mining Charter was announced, causing volatility in financial markets, and hampering foreign investor sentiment in the process. For the month to date, all gains in the bond market have been erased, while equity outflows have ballooned to R14.6 billion. Given the recent turn in sentiment, local political headlines, suggestions by the Public Protector that the Constitutional mandate of the SARB be changed to advance socio-economic transformation, this may keep foreign sentiment subdued in the near term. Outflows are likely to persist this week, until markets achieve some relative calm after recent headlines. SA equities and bonds (bn) Week to 16 Jun 2017 to 16 Jun 2017 Year to 16 Jun 2017 Foreign flow s into SA equity market Foreign flow s into SA bond market -R R R R R R Total foreign flow s -R R R Source : Bloomberg Foreign equity flows: 5-day history Net Foreign Flows: Equities (R'000) (LHS) vs. ALSI daily % change (RHS) R Foreign bond flows: 5-day history Net Foreign Flows: Bonds (R'000) R 0 R R R R R R R R R R R SABO INDEX -R R R /12 06/13 06/14 06/15 06/19 SAEQ INDEX ALSI % change R /12 06/13 06/14 06/15 06/19 Daily Market Commentary 20 June 2017 Page 8 of 11

9 Economic calendar Nedbank CIB Market Commentary Country Event Period Survey Actual Prior Revised 19-June 01:50 AM JN Exports YoY MAY 16.00% 14.90% 7.50% - 01:50 AM JN Imports YoY MAY 14.50% 17.80% 15.10% - 01:50 AM JN Trade Balance Adjusted MAY JPY 345.5b JPY 133.8b JPY 97.6bJPY 157.6b 20-June 08:00 AM GE PPI YoY MAY 2.90% % - 09:00 AM SA Leading Indicator APR :00 AM EC Current Account NSA APR - - EUR 44.8b - 10:00 AM EC ECB Current Account SA APR - - EUR 34.1b - 10:00 AM SA Current Account as a % GDP 1Q -1.95% % - 10:00 AM SA Current Account Balance 1Q ZAR -0.1b - ZAR -0.1b - 21-June 10:00 AM SA CPI YoY MAY 5.35% % - 10:30 AM UK PSNB ex Banking Groups MAY GBP 6.8b - GBP 10.4b - 04:00 PM US Existing Home Sales MAY 5.54m m - 04:00 PM US Existing Home Sales MoM MAY -0.45% % - Source: Bloomberg Daily Market Commentary 20 June 2017 Page 9 of 11

10 Contacts Treasury: Economic Analyst Reezwana Sumad (011) ALM Portfolio Management (011) Equities Sales and Distribution (011) /31 Forex Institutional Sales Desk (011) Bond Trading (011) Forex Business Banking Sales Desk (011) Forex Retail Sales Desk (011) Credit Derivatives (011) Forex Corporate Sales Desk JHB (011) ; DBN (031) ; CTN (021) Inflation Trading (011) Interest Rate Swaps & FRA s Trading (011) Money Market Institutional Sales Desk (011) Money Market Business Banking Sales Desk (011) Non Soft & Soft Commodities Trading (011) Money Market Corporate Sales Desk JHB (011) ; DBN (031) ; CTN (021) Preference shares desk (011) Daily Market Commentary 20 June 2017 Page 10 of 11

11 Disclaimer The information furnished in this report, brochure, document, material, or communication ( the Commentary ), has been prepared by Nedbank Limited (acting through its Nedbank Corporate and Investment Banking division), a registered bank in the Republic of South Africa, with registration number: 1951/000009/06 and having its registered office at 135 Rivonia Road, Sandton, Johannesburg ( Nedbank ). The information contained herein may include facts relating to current events or prevailing market conditions as at the date of this Commentary, which conditions may change and Nedbank shall be under no obligation to notify the recipient thereof or modify or amend this Commentary. The information included herein has been obtained from various sources believed by Nedbank to be reliable and expressed in good faith, however, Nedbank does not guarantee the accuracy and/or completeness thereof and accepts no liability in relation thereto. Nedbank does not expressly, or by implication represent, recommend or propose that any securities and/or financial or investment products or services referred to in this Commentary are appropriate and or/or suitable for the recipient s particular investment objectives or financial situation. This Commentary should not be construed as advice as contemplated in the Financial Advisory and Intermediary Services Act, 37 of 2002 in relation to the specified products. The recipient must obtain its own advice prior to making any decision or taking any action whatsoever. This Commentary is neither an offer to sell nor a solicitation of an offer to buy any of the products mentioned herein. Any offer to purchase or sell would be subject to Nedbank s internal approvals and agreement between the recipient and Nedbank. Any prices or levels contained herein are preliminary and indicative only and do not represent bids or offers and may not be considered to be binding on Nedbank. All risks associated with any products mentioned herein may not be disclosed to any third party and the recipient is obliged to ascertain all such risks prior to investing or transacting in the product or services. Products may involve a high degree of risk including but not limited to a low or no investment return, capital loss, counterparty risk, or issuer default, adverse or unanticipated financial markets fluctuations, inflation and currency exchange. As a result of these risks, the value of the product may fluctuate. Nedbank cannot predict actual results, performance or actual returns and no guarantee, assurance or warranties are given in this regard. Any information relating to past financial performance is not an indication of future performance. Nedbank does not warrant or guarantee merchantability, non-infringement or third party rights or fitness for a particular purpose. Nedbank, its affiliates and individuals associated with them may have positions or may deal in securities or financial products or investments identical or similar to the products. This Commentary is available to persons in the Republic of South Africa, financial services providers as defined in the FAIS Act, as well as to other investment and financial professionals who have experience in financial and investment matters. All rights reserved. Any unauthorized use or disclosure of this material is prohibited. This material may not be reproduced without the prior written consent of Nedbank, and should the information be so distributed and/or used by any recipients and/or unauthorized third party, Nedbank disclaims any liability for any loss of whatsoever nature that may be suffered by any party by relying on the information contained in this Commentary. Certain information and views contained in this Commentary are proprietary to Nedbank and are protected under the Berne Convention and in terms of the Copyright Act 98 of 1978 as amended. Any unlawful or attempted illegal copyright or use of this information or views may result in criminal or civil legal liability. All trademarks, service marks and logos used in this Commentary are trademarks or service marks or registered trademarks or service marks of Nedbank or its affiliates. Nedbank Limited is a licensed Financial Services Provider and a Registered Credit Provider (FSP License Number 9363 and National Credit Provider License Number NCRCP 16). Daily Market Commentary 20 June 2017 Page 11 of 11