Here’s what caught our attention on Thursday:
1. Moyo is not backing down, neither is Old Mutual
A day after the high court in Johannesburg ruled that Peter Moyo be reinstated as Old Mutual CEO, he arrived at the insurer’s headquarters, coffee in hand, ready to assume his position. The insurer, however, has launched an appeal to the ruling, which could suspend the implementation of the high court order to reinstate Moyo. Meanwhile, as the battle continues between the two parties, the insurer’s reputation is taking a knock.
2. Liberty results
Financial services provider Liberty is reporting a 32% increase in headline earnings per share to 746.6 cents for the six months ended June 30, 2019. Liberty says its South African insurance operations, along with the Stanlib SA business and higher earning from the shareholder investment portfolio, encouraged a 13.9% increase in normalised operating earnings. This resulted in normalised headline earnings increasing 51% to R2 million and normalised headline earnings per share increasing 53% to 735.8 cents. Profit before tax rose by 51% to R3.7 million and an interim dividend of 276 cents per share has been declared, unchanged from 2018.
3. Mondi results
Paper making company Mondi is reporting an 8% increase in basic underlying earnings per share to 96.2 euro cents. Profit before tax amounted to 632 million euros, up 29%, and the company’s underlying Ebitda for the six months ended June 30, 2019 amounted to 894 million euros, up 5%. Group chief executive, Peter Oswald says higher average selling prices, contributions from capital investments and acquisitions and a higher forestry fair value gain ‘more than offset the impact of planned maintenance shutdowns, lower volumes in certain segments and higher costs’. The company is declaring an ordinary interim dividend of 27.28 euro cents for the period.
4. Economic indicators
Absa’s purchasing manufacturing index for July is due on Thursday. In June, PMI rose to 46.2 and stayed within contraction territory for the sixth consecutive month, as business activity and new sales orders fell at a slower pace, data from Trading Economics shows. Improvements in supplier deliveries and inventories were, however, noted in June.
Total new vehicle sales
Data for South Africa’s total new vehicle sales for July is also due on Thursday. In June, vehicle sales increased to 45 940 from 40 430 in May 2019 and 36 787 units in April.
Updates to follow.
5. Fed lowers US interest rate
The US Federal Reserve decided to lower interest rates by 25 basis points on Wednesday, as was widely expected. Chairman Jerome Powell signalled that further action may not be necessary, a move that shook markets as investors were expecting further clarification on future rate cuts. According to Bloomberg, the Fed’s decision to cut rates comes after considering the implication of ‘global developments for the economic outlook as well as muted inflation pressures’.
The rand, along with fellow emerging market currencies, slid after the Fed dampened the long-term rate cut outlook.