Central bank will slow the pace of its aggressive rate-hiking campaign

SOUTH AFRICAN MARKET COMMENTARY

Shares on the Johannesburg Stock Exchange rose yesterday, with the Top-40 index up 2.62%, while the broader All-Share index closed 2.32% higher at 74,828. Almost all major bourses and indices traded in the green by the close of the session, with small cap companies being the only index in the red. Looking at data, South Africa's October trade data showed a deficit of 4.31 billion rand, while analysts were expecting a trade surplus of 16.85 billion rand. Meanwhile, data from National Treasury showed South Africa's budget deficit stood at 40.57 billion rand in October. In company news, Datatec shed more than 28%, to lead losses yesterday.

EUROPEAN MARKET COMMENTARY

European markets closed higher yesterday to finish a strong month, as regional investors reacted to the latest inflation data from the euro zone in November. The pan-European Stoxx 600 closed up 0.6%, totalling a monthly gain of around 6.1%. Household goods added 2.3% to lead gains as almost all sectors and major bourses traded in positive territory. Chemicals bucked the trend, down 0.2%. On the data front, new data out yesterday showed that euro zone inflation dropped by more than expected in November, fuelling market hopes that record-high price growth across the bloc has peaked and the European Central Bank will begin slowing its interest rate hikes next month.

US MARKET COMMENTARY

US stocks saw broad gains yesterday after Federal Reserve Chair Jerome Powell confirmed that the central bank will slow the pace of its aggressive rate-hiking campaign that has weighed on markets. Meanwhile, the U.S. economy grew at a slightly faster pace in the third quarter than was previously reported, with third-quarter GDP expansion being revised up to 2.9% from 2.6%. In company news, NetApp stock fell 10.8% after cloud services and data management provider saw weaker-than-expected revenue in its latest quarter and CrowdStrike Holdings plunged more than 18% after giving light guidance for fourth-quarter revenue.

ASIAN MARKET COMMENTARY

Markets in the Asia-Pacific traded higher today, carrying on the optimism behind Wall Street's rally as Federal Reserve Chair Jerome Powell confirmed smaller rate hikes could start in December. The Caixin/Markit Manufacturing Purchasing Managers' Index for China came in at 49.4, higher than expectations while marking a fourth consecutive month of contraction. Meanwhile, South Korea's revised gross domestic product for the third quarter confirmed growth of 3.1% compared to the same period a year ago - higher than a 2.9% expansion seen in the second quarter.

CURRENCY MARKET COMMENTARY

The rand traded flat yesterday as investors braced for comments later from U.S. Federal Reserve Chair Jerome Powell and a key monthly jobs report due at the end of the week. However, by the close the rand traded at R17.19 against the dollar, 1.17% softer. The dollar tumbled to a three-month low versus the yen, while the euro, sterling and the antipodean currencies all gained against the dollar this morning.

COMMODITIES MARKET COMMENTARY

Gold prices climbed a two-week high in early Asian trade today, after U.S. Federal Reserve Chair Jerome Powell's speech reinforced expectations of smaller interest rate hikes ahead. Oil prices nosed ahead in early Asian trade this morning, lifted by signs of tighter supply and by optimism over a Chinese demand recovery. Capping gains, the OPEC+ decision to hold its Dec. 4 meeting virtually signals little likelihood of a policy change.

Fairvest Limited (FTB) -0.3%

Fairvest holds a portfolio of 141 retail, office and industrial properties valued at R12.1 billion (held directly and indirectly through subsidiaries excluding Indluplace). The average value per direct property held as at 30 September 2022 was R85.8 million. As at 30 September 2022, Fairvest held a 61.0% interest in its subsidiary, Indluplace Properties Limited ('Indluplace'), which owns a portfolio of residential properties. In addition, Fairvest held an 5.1% interest in Dipula Income Fund Limited at 30 September 2022. This interest diluted due to the Dipula capital restructure which was effective on 6 June 2022. Revenue (excluding straight-line rental income) is up 266% at around R1.9 billion while basic earnings per combined shares in issue is up 254% from 54.50 cents per share last year, to 192.69 cents per share for the period ended 30 September 2022. Headline earnings per combined share are up 1% at 42.94 cents per share, from 43.54 cents per share last year. The Board has resolved to declare a dividend equal to 100% of the distributable income (2021: 100%). The Board has resolved to declare a final dividend (dividend number 15) of 64.70106 cents per A share and 21.96204 per B share for the six months ended 30 September 2022. Last date to trade cum dividend will be Tuesday, 20 December while the payment date is set for Tuesday, 27 December.

PBT Group Limited (PBG) -0.1%

PBT Group provides data and analytics solutions and services that capitalise on data-driven insights, to make well-timed, intuitive business decisions that consistently position our clients ahead of the curve. Continued organic revenue growth of 14.5% and EBITDA growth of 3.2%. Revenue from the South African segment, which constitutes 92% of total Group revenue, increased by 16% which resulted in a 10% EBITDA increase for this segment. PBT Group received net proceeds from non-core asset disposals totalling R20.9 million and returned R39.1 million to shareholders via a special distribution of R31.8 million (30 cents per share) and share repurchases of R7.3 million. As at 30 September 2022, PBT Group had R187.1 million (R1.78 per share) of non-core assets. Higher than usual operating costs primarily due to increased incentives paid to the sales team during June 2022, based on the success of the 2022 financial year. These incentives are paid annually and will not repeat in the second half of the 2023 financial year. Although revenue increased by 18% in the European and United Kingdom segment, EBITDA from the combined international segments decreased, which weighed on the Group's profitability. Slower cash conversion of earnings, primarily due to slower trade receivable collections and increased revenue. The collection rate has largely returned to normal levels post the reporting period. More than R115.3 million of the R136.9 million outstanding debtors for the South African segment at period-end, were collected as at the date of this announcement. PBT Group management is confident that the slower conversion of earnings was temporary and is therefore comfortable to declare an interim distribution of 25 cents per share. On Monday, 21 November 2022, the Board of Directors resolved to declare a final distribution of 25 cents per PBT ordinary share for the six-month period ended 30 September 2022. The total distribution will equate to R26.2 million. The last day to trade cum dividend is Tuesday, 20 December 2022 while the payment date is set for Tuesday, 27 December 2022.

Mahube Infrastructure Limited (MHB) +0.2%

Total revenue is down 41.0% to R24.0 million in comparison to R40.7 million for the comparative period last year. Basic earnings and headline earnings per share down to 29.0 cents per share in comparison to 60.3 cents per share for the comparative period last year. Tangible NAV per share is at R11.18 compared to R10.91 in the comparative period last year. An interim gross dividend per ordinary share of 45.0 cents, has been declared for the six months ended 31 August 2022. Dividends are subject to Dividends Withholding Tax. Last day to trade cum the ordinary share dividend will be Tuesday, 3 January and the payment date will be Monday, 9 January.

Victoria's Secret & Co. (VSCO) +1.1%

The Company reported net income of $24 million, or $0.29 per diluted share for the third quarter of 2022, which was above the high-end of our previously communicated guidance range of $0.00 to $0.25 per diluted share. This result compares to net income of $75 million, or $0.81 per diluted share for the third quarter of 2021. Third quarter 2022 reported operating income was $43 million, which was above the high-end of our previously communicated guidance range of $10 million to $40 million. This result compares to operating income of $108 million in the third quarter of 2021. The Company reported net sales of $1.318 billion for the third quarter of 2022, a decrease of 9% compared to net sales of $1.441 billion in the prior year third quarter. This result was in-line with our previously communicated guidance of down high-single digits compared to the third quarter last year. Total comparable sales for the third quarter of 2022 decreased 11% compared to the third quarter of 2021. The Company is forecasting fourth quarter 2022 net sales to decrease in the high-single digit range compared to last year's fourth quarter net sales of $2.175 billion. At this forecasted level of sales, operating income is expected to be in the range of $240 million to $290 million. Net income for the fourth quarter 2022 is estimated to be in the range of $2.00 to $2.45 per diluted share.

Costco Wholesale Corporation (COST) +2.0%

Costco reported net sales of $19.17 billion for the retail month of November, an increase of 5.7 percent from $18.13 billion last year. For the twelve-week first quarter ended November 20, 2022, the Company reported net sales of $53.44 billion, an increase of 8.1 percent from $49.42 billion last year. For the thirteen weeks ended November 27, 2022, the Company reported net sales of $58.36 billion, an increase of 7.9 percent from $54.10 billion last year. Costco will be looking to display strength as it nears its next earnings release, which is expected to be December 8, 2022. The company is expected to report EPS of $3.15, up 6.06% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $55.06 billion, up 9.32% from the year-ago period. COST's full-year Zacks Consensus Estimates are calling for earnings of $14.45 per share and revenue of $245.81 billion. These results would represent year-over-year changes of +9.97% and +8.31%, respectively.

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