🇿🇦Local Market Indicators & News Highlights
.PNG)
🌟 Growthpoint Properties Anticipates Lower Income Amid High Interest Rates
Growthpoint Properties, with a portfolio valued at around R179 billion and a JSE market cap of just over R41 billion, expects a 10%-12% decline in distributable income per share in 2024 due to high interest rates. The property developer, which owns the V&A Waterfront in Cape Town with the Public Investment Corporation, reported a standout performance from the waterfront, with distributable income increasing by 13.7% to R380.7 million.
Despite the V&A Waterfront's success, Growthpoint's overall interim financial performance saw an 8.6% decrease in both distributable income per share and dividend per share. The company declared an interim dividend of 58.8 cents per share and reported distributable income per share of 71.2 cents.
Total revenue rose by 4% to R7.1 billion in the six months ended December 31, with South African revenue increasing by 3.4% due to improved letting conditions. However, the cost of funding surged by 16.9% to R2,127 million, impacting distributable income.
Growthpoint, which has 541 properties across South Africa, Australia, the UK, Poland, and Romania, saw improvements in vacancies in the retail and office sectors. The group is planning a multi-billion-rand expansion of the V&A Waterfront, with details yet to be finalized.
🌟 TFG Partners with JD Sports for South African Expansion
The Foschini Group (TFG), a prominent South African retailer, has announced a franchise agreement with UK-based JD Sports Fashion, becoming its exclusive retail partner in South Africa. The partnership will see the launch of the first JD Sports stores in the country by the end of the year, with plans to open more than 40 stores over the next five years.
JD Sports is known for its sports fashion retailing, offering products from global brands such as Nike, Adidas, and Puma, alongside private labels like Pink Soda and Supply & Demand. The introduction of JD stores in South Africa will provide consumers access to a wide range of international sports fashion offerings.
TFG CEO Anthony Thunström expressed excitement about the partnership, stating it will bring a new dimension to the South African sports fashion market. Regis Schultz, CEO of JD Sports Fashion plc, highlighted the agreement as a significant step in their global growth strategy and JD's "Brand First" plan for under-penetrated markets.
The partnership aligns with TFG's strong presence in the sports retail sector, complementing its existing brands like Sportscene, Totalsports, and Sneaker Factory. With a customer base of 30 million, TFG is well-positioned to introduce the JD brand to the region.
The agreement is still subject to Exchange Control approval from the Financial Surveillance Department of the South African Reserve Bank.
🌟 Standard Bank Profit Up, Shares Down
Standard Bank, Africa's biggest lender, reported a 27% increase in annual profit with earnings of R42.9 billion for the year ending 31 December 2023. However, its share price fell over 6% to close at R186.11 on Wednesday. The bank's income grew by 20% to R177.6 billion, driven by higher net interest income and non-interest revenue.
Despite the profit jump, challenges like inflation, high interest rates, and power blackouts have led to increased defaults among customers. Credit impairment charges rose by 22% to R16.3 billion, pushing the credit loss ratio to 98 basis points. Loans and advances grew by 7% to R1.7 trillion.
Standard Bank expects credit impairment charges to peak in the first half of 2024 and the credit loss ratio to remain near the top of its target range.
🌍Global Market Indicators & News Highlights
.PNG)
🇺🇸 United States: Inflation Concerns and Consumer Spending
Mixed Stock Performance: The Dow Jones Industrial Average hit a record high midweek, while energy stocks benefited from rising oil prices. In contrast, technology shares, including NVIDIA, faced challenges.
Inflation Data: February's consumer price index (CPI) matched expectations, but core prices rose slightly more than anticipated. Producer price index (PPI) data showed a notable increase, fueling concerns about inflationary pressures.
Retail Sales and Sentiment: Retail sales growth was driven by higher gasoline prices, with online sales and restaurant spending showing signs of slowing. Consumer sentiment dipped slightly, reflecting uncertainty about the economy's direction.
🇪🇺 Europe: Earnings and Rate Cut Hopes Drive Gains
Steady Gains: The STOXX Europe 600 Index achieved its eighth consecutive weekly gain, reaching new highs thanks to encouraging corporate earnings and anticipation of ECB rate cuts.
Market Movements: Major stock indexes showed varied performance, with France's CAC 40 and Italy's FTSE MIB posting significant gains, while Germany's DAX and the UK's FTSE 100 saw more modest increases.
Bond Market Dynamics: The yield spread between German and Italian benchmark 10-year sovereign bonds narrowed, reflecting growing confidence in Italy's economic policy and increased demand for high-yield debt ahead of potential rate reductions.
ECB's Policy Stance: The European Central Bank maintained its key deposit rate but signaled a potential rate cut in June, revising its inflation and economic growth forecasts downward and expressing a need for more confidence in sustainable inflation reduction.
🇬🇧 United Kingdom: Labor Market and Economic Growth
Labor Market Adjustments: The UK's unemployment rate unexpectedly rose from 3.8% to 3.9% in the three months through January, while wage growth excluding bonuses fell to 6.1%.
Economic Recovery: GDP increased by 0.2% in January, showing signs of recovery from the recession in the second half of 2023. However, GDP fell by 0.1% over the three months through January.
Full Employment: BoE Governor Andrew Bailey stated that the UK is near or at full employment, with concerns about a wage-inflation spiral diminishing.
🇯🇵 Japan: Anticipation of Monetary Policy Shift
Stock Market Performance: Japanese stocks had a mixed week, with the Nikkei 225 Index declining while the TOPIX gained ground.
BoJ Policy Expectations: Speculation about the Bank of Japan raising short-term interest rates grew, with wage rises for labor unions suggesting a potential shift in monetary policy.
Economic Data: Revised figures showed that Japan avoided a recession in the last quarter of 2023, with GDP growing modestly.
🇨🇳 China: Price Stabilization and Economic Measures
Stock Market Gains: Chinese equities rose as recent government measures to stabilize the market bolstered investor confidence.
Inflation and Deflation: The consumer price index turned positive in February for the first time in six months, while the producer price index continued its decline.
Policy and Spending: The People's Bank of China injected liquidity into the banking system, and the State Council announced plans to increase spending to boost consumption and meet the 5% economic growth target for 2023.