Markets Overnight:
Risk aversion was on the rise yesterday as concern over the implementation of ‘The Plan’ grew larger and larger. The market euphoria was short lived last week as investors now concern themselves with the fact decisions made at the EU leaders meeting 3-4 November, may not be as cut and dry as was once thought. MF Global the broker and one of the first casualties of the crisis, has filed for bankruptcy after making bets on European sovereign debt - this action has caused a stir in the market as investors are being thrown back to the horrific turmoil of the crash.
The OECD (The Organisation for Economic Co-operation and Development) lowered its estimates for US growth from +2.6% for 2011 (+3.1% for 2012) to +1.7% for 2011 (+1.8% for 2012) and EU growth from +2% for 2012 to only +0.3%! China stated that they would not be the Euro’s saviour after speculation on their participation rallied market sentiment over the last couple of days – why buy something now for R10 rather than wait for it to fall to R5…
Greece has thrown what one could say to be a tree trunk, into the spokes of the recovery after the prime minister of Greece, George Papandreou, announced a referendum. A referendum??? Yes, my thoughts exactly!
Essentially, with all the unwanted austerity measures being passed, Papandreou has lost support and thus voting rights for the passing of further austerity measures needed to gain the funding the country’s needs. These specific austerity measures are expected to shed ANOTHER 100 000 jobs over the next three years. So a referendum is what Papandreou is doing to get full voting rights on the austerity measures to pass them accordingly. Sounds like a last draw to me! The other worry for concern surrounding this issue is that the vote for the referendum is only expected to be conducted in January 2012, delaying the process yet again!
South Africa:
Government, business and labour signed an accord on local procurement, to boost employment and industrialization within the country. This accord is aimed at the participating parties buying as much as 75% of its purchases locally. Credit demand in the private sector grew by 5.47% y-o-y for September, lower than the +5.77% expected. South African trade account swung into a surplus in September from a deficit in August.
Company News:
Mondi [MND] reported a better third quarter operating profit that the third quarter last year, stating that economic pressures were affecting the pricing of its products. Capitec Bank [CPI] is going to issue 4.6million new shares to raise R800million to fund its continuing expansion. This makes it Capitec’s second capital raising exercise in 10 months. Impala Platinum [IMP] reported a 13% fall in its Zimbabwe unit during the July to September quarter following a maintenance shutdown. On a positive note the company is on the right track to submitting its revised local ownership plan.
Today:
The US reports their ISM Manufacturing number today alongside their Auto and Chain Store Sales. The UK reports its GDP growth for the third quarter and South Africa reports its Kagiso PMI and unemployment numbers.
You can expect negative sentiment to take a good bite from the market today following the news out of Greece.
