The South Africa Market TODAY

South Africa: Midweek report

With the shortened trading week, the local market seems to be in limbo as market participants return to their trading desk. The markets will be circumspect as market participants await the fed announcement later in the evening. I do not see any surprises from the fed tonight I expect the Chairman to remain positive about the economic prospects of the US economy and I do not anticipate any moves on the interest rate. What will be very important to note on the statement released by the fed is the guidance on the asset purchase programme; in my opinion the asset purchase programme is one of the main reasons risk asset prices sit at all time highs. On Thursday, The US president Joe Biden will address Congress and there has been rumours of a proposal of increases in tax’s; the market will not be happy if there is proposed tax increases especially on income taxes as this will erode consumer spending power and US economic growth. Look out for these events as they will affect markets over the next couple of days.
 
JSE talking points.

APN:SJ
On a quiet Monday, a day before the public holiday Aspen traded 10% to R163 in value traded R425 million. There was no news to drive up the share price that much. In our opinion we may be seeing some institutional investor interest in the stock. The stock has seen better days over the past few years as they have had to sell down operations in order to pay down some debt. With their involvement in manufacturing the J&J vaccine the market maybe seeing this as an opportunity to accrue some value for shareholders and the reinstated dividend. With a moderately priced valuation our research team still has a good view on the stock’s prospects in the future.

CLS:SJ
Clicks remains a business whose excellence can never be questioned. I am of the belief that this is the best run company listed on the JSE. In their recent earnings release management did say that they expect second half earnings to improve after shutting down Musica. Their previous results were reasonable, and the growth prospects remain in line with our view on the stock. On Monday clicks was up 6% to R254 in value traded worth R364 million. I am also of the belief that there has been some interest from institutions after listening to the potential the business has according to the CEO and the recent results. Our teams view is that Clicks ins priced for perfection, but such ratings are only given to companies with stability and proven track records to deliver great results and a great return on equity. We still believe clicks at these levels is a stock that investors should be interested to add to their watch list.