DAILY MARKET COMMENTARY

2 November 2018 | 7:59 AM

02 November 2018

Fixed Income and Interest Rates| Currencies | Commodities |Equities | LDT | JSE performance |
Economics|*Foreign flows| Economic calendar| #Contacts

Click on any of the above links to access your point of interest

(* when available)

KEY DAILY DRIVERS

Nedbank CIB Market Commentary | [email protected] | +27 11 537 4091

SNIPPETS
(Fixed Income) SAGB yield curve better bid with some activity from local investors
(Currencies) Rand firms up, all eyes on US Data
(Commodities) Gold rallies as dollar weakens, Brent continues to decline as supply fears abate
(Equities) Asian markets are strong this morning as concerns about the trade war abated and Chinese
stimulus.
The Nikkei was up 2.49% while the Hang Seng gained 3.40% with the likes of Tencent
climbing 7.70%
The Australian ASX is up 0.14% with the likes of BHP up 1.18%.
(Economics) Global PMIs soften further in October; SA PMI declines for third consecutive month in
October; BOE leaves interest rates unchanged

KEY OVERNIGHT FACTORS AND UPCOMING EVENTS THIS WEEK

Nedbank CIB Market Commentary | [email protected] | +27 11 537 4091

CONTACT FOR QUERIES

REEZWANA SUMAD Date Region Event Actual/expected/prior Implications

Strategy: Research Analyst
Tel: +27 11 537 4091 01/11 Global PMIs -- PMIs expected to decline amidst
[email protected] trade tensions and lower global
growth
01/11 UK BOE interest rate 0.75%/0.75%/0.75% BOE hawkish but concerned over
decision Brexit uncertainty
02/11 US Labour market data -- Solid payroll gains expected
07/11 SA SACCI Business --/--/93.3 Business confidence likely to remain
Confidence Index downbeat because of policy
uncertainty and weak demand
07/11 EZ Retail sales --/--/1.8% Retail sales growth may remain
positive, as an extension of strong
labour market momentum
Source: Nedbank

Daily Market Commentary| Page 1

 FIXED INCOME AND INTEREST RATES back to top

Bond flow sales |+2711 535 4021 | Corporate Money Markets | +2711 535 4007 | Business Bank Money Markets | +2711 535 4006

Δ Δ Δ Δ Δ Δ Δ Δ
MTD trend MTD trend
Bonds Last price 1d MTD YTD 12Month FRAs and Swaps Last price 1d MTD YTD 12Month
% bps bps bps bps % bps bps bps bps
R204-0.1 yrs 6.13 -0.85 -0.85 -93.35 -143.65 (0.85) 3X6 FRA 7.33 0.50 -0.50 43.50 19.50 (0.50)
R208-2.4 yrs 7.69 -8.65 -8.65 13.05 -53.15 (8.65) 6X9 FRA 7.46 0.00 4.00 3.00 4.00 4.00
R186-8.1 yrs 9.26 -9.05 -9.05 67.45 0.05 (9.05) 9X12 FRA 7.62 -2.50 -1.50 82.50 32.50 (1.50)
R2048-29.3 yrs 10.13 -12.20 -12.20 41.80 -10.40 (12.20) 18X21 FRA 7.91 -1.50 -2.50 92.50 41.50 (2.50)
US 10 yr 3.16 2.67 1.35 75.16 81.20 1.35 SA 2yr Swap 7.60 -1.00 -3.00 66.32 29.00 (3.00)
UK 10 yr 1.46 1.80 1.80 26.50 11.20 1.80 SA 3yr Swap 7.81 -0.90 -1.40 75.50 34.00 (1.40)
German 10 yr 0.40 1.40 1.40 -2.80 2.60 1.40 SA 5yr Swap 8.09 0.25 -3.75 76.25 31.25 (3.75)
Japan 10 yr 0.13 0.20 -0.20 7.70 7.00 (0.20) SA 10yr Swap 8.62 0.00 -5.00 69.00 29.50 (5.00)
Δ Δ Δ Δ SA 15yr Swap 8.88 -0.20 -5.50 72.00 28.65 (5.50)
MTD trend
Money Market Last price 1d MTD YTD 12Month Δ Δ Δ Δ MTD trend
% bps bps bps bps Spreads Last price 1d MTD YTD 12Month
SA repo rate 6.50 0.00 0.00 -25.00 -25.00 - % bps bps bps bps
SA prime rate 10.00 0.00 0.00 -25.00 -25.00 - 2v10y - 1.02 -1.00 2.00 -2.68 -0.50 2.00
SA CPI (MTD = previous month) 4.90 0.00 20.00 -20.00 - 3v10y - 0.81 -0.90 3.60 6.50 4.50 3.60
SA 3m JIBAR 7.03 0.00 0.00 -13.30 -2.50 - R186-R204 3.13 -8.20 -8.20 160.80 143.70 (8.20)
SA 3m NCD 6.95 -7.50 0.00 -20.00 -10.00 - R2048-R186 0.87 -3.15 -3.15 -25.65 -10.45 (3.15)
SA 6m NCD 7.68 0.00 0.00 7.50 12.50 - 5y-R186 - 1.17 9.30 5.30 8.80 31.20 5.30
SA 12m NCD 8.40 0.00 0.00 50.00 30.00 - 10y-R186 - 0.65 9.05 4.05 1.55 29.45 4.05
US 3m LIBOR 2.56 1.75 16.01 86.42 117.73 16.01 15y-R186 - 0.38 8.85 3.55 4.55 28.60 3.55
UK 3m LIBOR 0.82 0.60 1.65 29.57 37.72 1.65 SA 5yr CDS spread - basis points 233.00 1.00 -5.00 76.00 49.50 (5.00)
Japan 3m LIBOR - 0.09 0.55 -3.15 -6.22 -4.23 (3.15) Source: Bloomberg & Nedbank CIB Time 2018/11/02 06:52

Source: Bloomberg & Nedbank CIB Time 2018/11/02 06:52

US 10 year yield SA 10 year yield

US 10 year yield SA 10 year yield

3.18 9.40
3.16
9.35
3.14
3.12 9.30
3.10
9.25
3.08
3.06 9.20
3.04
9.15
3.02
3.00 9.10
11:05
13:05
15:05
17:05
08:05
10:05
12:05
14:05
16:05
07:05
09:05
11:05
13:05
15:05
17:05
08:05
10:05
12:05
14:05
16:05
07:05
09:05
11:05
13:05
15:05
17:05
08:05
10:05
12:05
14:05
10/25 19:00
10/26 02:00
10/26 07:00
10/26 12:00
10/26 17:00
10/26 22:00
10/29 05:00
10/29 10:00
10/29 15:00
10/29 20:00
10/30 04:00
10/30 09:00
10/30 14:00
10/30 19:00
10/31 03:00
10/31 08:00
10/31 13:00
10/31 18:00
11/01 02:00
11/01 07:00
11/01 12:00
11/01 17:00
11/01 22:00
11/02 05:00

10/25
10/25
10/25
10/25
10/26
10/26
10/26
10/26
10/26
10/29
10/29
10/29
10/29
10/29
10/29
10/30
10/30
10/30
10/30
10/30
10/31
10/31
10/31
10/31
10/31
10/31
11/01
11/01
11/01
11/01

US 10Y R186

2018/11/02 06:52 2018/11/02 06:52

Source: Bloomberg, Nedbank Source: Bloomberg, Nedbank

Daily Market Commentary| Page 2

 CURRENCIES back to top

Business Banking FX | +27 11 535 4003 | Corporate FX | +2711 535 4002 | Institutional FX | +2711 535 4005

 The local trading session saw the rand open in the 14.70s. As a general dollar sell-off unfolded, the local unit benefited, and this saw it trade to a best
level on the day of 14.4500, closing the day around the 14.4925 level.
 In the overnight sessions, the prevailing trend was sustained, and this morning, the rand is currently trading at 14.3750, the EURZAR is trading at 16.4075
and the GBPZAR is trading at 18.6875.
 International markets also traded firmer as the dollar retreated, despite continuing concerns in Europe regarding the outlook for Italy. The EURUSD
traded from 1.1317 to a high print of 1.1413 on the day; this morning, it is currently holding firm above the 1.1400 level. The sterling has also continued
to push higher, posting a high of 1.2954 on the day; this morning, it is currently trading at 1.2998. After an early decline yesterday, gold resumed its
upward trajectory, and by the time of the close, it was trading at 1,232.10, where it currently trades.
 No local data releases today. From Europe, we have manufacturing PMI releases for Italy, France, Germany and the Eurozone. From the US, we have
trade, NFP, manufacturing payrolls, unemployment, average hourly earnings, participation rate, factory orders and durable goods.
 The dollar has endured a significant correction over the course of the most recent sessions. The rand, after having traded to a high of 14.8525 on
Wednesday, is trading sub-14.40 this morning. This is significant, as the 14.50 technical level has held firm so far. Key now would be price action after the
US data release this afternoon.
 Possible trading range for the rand today: 14.2000 to 14.7000

%Δ %Δ %Δ %Δ
MTD trend USD trend
Majors Last price -1d MTD YTD 12Month
GBPUSD 1.30 -0.09 1.83 -3.80 -0.45 1.83 USD weakness
EURUSD 1.14 0.05 0.90 -4.92 -2.09 0.90 USD weakness
USDJPY 112.93 0.19 -0.01 -0.21 -1.02 (0.01) USD weakness
USDAUD 1.38 -0.48 -2.32 7.81 6.53 (2.32) USD weakness
%Δ %Δ %Δ %Δ
MTD trend ZAR trend
Rand crosses Last price -1d MTD YTD 12Month
USDZAR 14.41 0.00 -2.63 14.05 3.02 (2.63) ZAR strength
GBPZAR 18.73 -0.05 -0.71 10.73 2.56 (0.71) ZAR strength
EURZAR 16.44 0.03 -1.71 9.66 0.92 (1.71) ZAR strength
AUDZAR 10.43 0.49 -0.16 7.37 -3.31 (0.16) ZAR strength
ZARJPY 7.84 0.21 2.55 -15.17 -4.15 2.55 ZAR strength
%Δ %Δ %Δ %Δ
MTD trend ZAR trend
African FX Last price -1d MTD YTD 12Month
ZARMWK (Malawian kwacha) 50.64 -0.05 2.60 -15.91 -2.45 2.60 ZAR strength
ZARBWP (Botswana pula) 0.75 0.05 1.38 -6.11 -0.43 1.38 ZAR strength
ZARKES (Kenyan shilling) 7.06 -0.00 2.19 -18.07 -5.12 2.19 ZAR strength
ZARMUR (Mauritian rupee) 2.42 -0.03 3.36 -13.06 -1.45 3.36 ZAR strength
ZARNGN (Nigerian naira) 25.13 -0.03 2.22 -15.76 -2.39 2.22 ZAR strength
ZARGHS (Ghanian cedi) 0.34 -0.03 3.00 -8.40 6.20 3.00 ZAR strength
ZARZMW (Zambian kwacha) 0.82 -0.19 3.53 2.27 12.85 3.53 ZAR strength
ZARMZN (Mozambican metical) 4.21 0.10 2.54 -12.48 -3.16 2.54 ZAR strength
%Δ %Δ %Δ %Δ
MTD trend USD trend
Emerging Market FX Last price -1d MTD YTD 12Month
USDBRL (Brazilian Real) 3.70 -0.61 -0.61 10.58 11.71 (0.61) USD weakness
USDTRY (Turkish Lira) 5.51 0.06 -1.25 31.12 31.14 (1.25) USD weakness
USDMXN (Mexican Peso) 20.14 -0.10 -1.01 2.37 5.73 (1.01) USD weakness
USDINR (Indian Rupee) 72.91 -0.75 -1.43 12.40 11.38 (1.43) USD weakness
USDRUB (Russian Ruble) 65.73 -0.22 -0.22 12.34 11.33 (0.22) USD weakness
Source: Bloomberg & Nedbank CIB T ime 2018/11/02 06:52

*Please note that the sign on the % change reflects the change on the headline number. The narrative indicates the trend direction over the month.
For trade in any of these currencies, contact our FX dealing desks

USDZAR EUR/USD

$/R (close, high and low) €/$ (close, high, low)

R 14.90 $1.14
$1.14
R 14.80
$1.14
R 14.70 $1.14

R 14.60 $1.14
$1.13
R 14.50
$1.13
R 14.40 $1.13
$1.13
R 14.30
$1.13
R 14.20
$1.12
10/26 10/29 10/30 10/31 11/01
USDZAR Curncy USDZAR HIGH USDZAR LOW 10/26 10/29 10/30 10/31 11/01
EURUSD Curncy EURUSD HIGH EURUSD LOW
2018/11/02 06:52 2018/11/02 06:52

Source: Bloomberg, Nedbank Source: Bloomberg, Nedbank

Daily Market Commentary| Page 3

 COMMODITIES back to top

Nedbank CIB Market Commentary | [email protected] | +27 11 537 4091| +27 11 535 4038

 Oil is poised for the biggest weekly loss since February on concerns that supply is growing at a time when speculation is increasing that U.S. sanctions on
Iran won’t cut the OPEC producer’s exports to zero. Futures little changed, on course for a 6.2% weekly loss.
 Gold steady after posting the biggest advance in three weeks on Thursday as a gauge of the dollar retreated from a 17-month high. Bullion for immediate
delivery steady at $1,233.14/oz; +1.5% on Thursday.
 Silver -0.5%.
 Platinum +0.6%.
 Palladium heads for first weekly decline in 3 weeks.
 Base metals climbed for a second day, shaking off an October slump, amid signals that new stimulus measures may come from China.
 Most LME metals, barring zinc, gain; copper +0.3% to $6,108/ton, aluminium +0.5%, nickel +0.4%.
Source: Bloomberg

%Δ %Δ %Δ %Δ
MTD trend SA white maize
Commodities Last price -1d MTD YTD 12Month
Brent near future ($) 72.65 -0.33 -3.74 8.64 19.84 (3.74)
WTI crude ($) 63.45 -0.38 -2.85 5.01 16.34 (2.85) SA White maize (ZAR/MT) - 30 day chart
Gold spot ($) 1 233.25 -0.01 1.52 -5.34 -3.36 1.52
Platinum spot ($) 866.16 0.80 3.49 -6.69 -6.42 3.49 R 2,460
SA white maize spot (R) 2 401.00 -1.15 -1.15 26.37 17.87 (1.15) R 2,440
Source: Bloomberg & Nedbank CIB Time 2018/11/02 06:52 R 2,420
R 2,400
R 2,380
R 2,360
R 2,340
R 2,320
R 2,300
10/24 08:30

10/24 10:30

10/25 08:30

10/25 10:30

10/25 12:30

10/26 09:30

10/26 11:30

10/29 09:30

10/29 11:30

10/30 09:30

10/30 11:30

10/31 09:30

10/31 11:30

11/01 09:30

11/01 11:30
SA white maize ZAR/MT

2018/11/02 06:52

Source: Bloomberg, Nedbank

Platinum vs Gold Brent Crude vs West Texas Intermediate

Platinum vs. Gold Brent Crude vs West Texas Intermediate

$78 $68
$1,242 $863 $68
$77 $67
$1,237 $858
$853 $76 $67
$1,232 $66
$848
$1,227 $75 $66
$843
$65
$1,222 $838 $74 $65
$833 $64
$1,217 $73
$828 $64
$1,212 $823 $72 $63
16:00
22:00
04:00
10:00
16:00
22:00
05:00
11:00
17:00
23:00
05:00
11:00
17:00
23:00
05:00
11:00
17:00
23:00
05:00
11:00
17:00
23:00
05:00

04:00
09:00
14:00
19:00
02:00
07:00
12:00
17:00
22:00
03:00
08:00
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18:00
23:00
06:00
11:00
16:00
21:00
04:00
09:00
14:00
19:00
05:00
10:00
15:00
20:00
03:00
10/25
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10/29
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11/01
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10/25
10/25
10/25
10/25
10/26
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10/26
10/26
10/26
10/29
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11/01
11/01
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11/02

GOLD PLATINUM BRENT WTI

2018/11/02 06:52 2018/11/02 06:52

Source: Bloomberg, Nedbank Source: Bloomberg, Nedbank

Daily Market Commentary| Page 4

 EQUITIES back to top

Cash equities | +2711 535 4030/31

South Africa
 The All Share index started its trading day in positive territory on Thursday and continued gaining traction throughout the day in its second day of gains
to eventually close 2.27% higher.
 The Banking index gained 2% with the likes of Capitec and Standard Bank advancing 2.83% and 2.49%
 On the company front, Mix Telematics rose following the release of its 2Q results which showed an 18.5% (y/y) increase.
 Value traded at 5pm was around R23.5bn with the currency at R14.40c vs. the USD at the close.

UK/Europe
 European markets were mixed with the FTSE100 retreating 0.19% while the DAX gained 0.18%
 The BoE decided to keep interest rates unchanged at 0.75% and maintained its asset purchase program at £435bn
 The Stoxx 50 was up 0.21% with the likes of ING Groep and Bayer AG up 5.65% and 2.69% respectively.

USA
 US markets saw their third day of gains as Trump spoke about a Trade deal being imminent and on good corporate earnings.
 The Dow Jones was up 1.06% while the S&P 500 advanced 1.06% as the materials index jumped 3.02%
 On the economic data front, US ISM Manufacturing data came in 57.7 index points versus consensus estimates of 59 index points

Asia
 Asian markets are strong this morning as concerns about the trade war abated and Chinese stimulus.
 The Nikkei was up 2.49% while the Hang Seng gained 3.40% with the likes of Tencent climbing 7.70%
 The Australian ASX is up 0.14% with the likes of BHP up 1.18%.

%Δ %Δ %Δ %Δ 2017
Developed Markets Last price -1d MTD YTD 12Month Performance
MTD trend Short-term performance of SA equity indices
Dow Jones 25 380.74 1.06 1.06 2.68 7.93 24.33 1.06
Nasdaq 7 434.06 1.75 1.75 7.69 10.71 27.16 1.75 SA equity indices
S&P 500 2 740.37 1.06 1.06 2.50 6.22 18.42 1.06 Based to 100 at T-5
DJ Eurostoxx 50 3 204.21 0.21 0.21 -8.55 -13.14 5.70 0.21 106.00
DAX 11 468.54 0.18 0.18 -11.22 -14.67 11.51 0.18 104.00
CAC 5 085.78 -0.15 -0.15 -4.27 -7.71 8.43 (0.15)
102.00
FTSE 7 114.66 -0.19 -0.19 -7.45 -5.83 7.10 (0.19)
100.00
ASX200 5 841.10 0.01 0.19 -3.69 -1.53 6.42 0.19
Nikkei 225 21 838.77 0.70 -0.37 -4.07 -3.11 16.18 (0.37) 98.00
MSCI World 2 040.93 0.94 0.94 -2.97 -0.11 19.65 0.94 96.00
%Δ %Δ %Δ %Δ 2017 94.00
MTD trend
Emerging Markets Last price -1d MTD YTD 12Month Performance 92.00
Hang Seng 26 026.18 2.40 4.19 -13.01 -8.74 35.19 4.19 90.00
Shanghai 2 637.65 1.21 1.34 -20.24 -22.04 5.46 1.34
10/26

10/29

10/30

10/31

11/01

Brazil Bovespa 88 419.05 1.14 1.14 15.73 19.77 28.22 1.14

India - NSE 34 887.27 1.32 1.29 2.44 3.91 27.91 1.29 TOP40 Index FINI15 Index INDI25 Index RESI20 Index
Russia Micex 2 359.33 0.28 0.28 11.83 13.81 -7.69 0.28
2018/11/02 06:52
MSCI Emerging 971.44 1.62 1.62 -16.14 -13.83 34.35 1.62
%Δ %Δ %Δ %Δ 2017
MTD trend
SA Indices Last price -1d MTD YTD 12Month Performance Source: Bloomberg, Nedbank
JSE All Share 53 578.76 2.27 2.27 -9.96 -9.70 17.47 2.27
Top 40 47 256.71 2.42 2.42 -10.04 -10.58 19.66 2.42
Resi 10 41 709.55 0.81 0.81 14.92 9.64 13.03 0.81
Indi 25 65 099.13 3.69 3.69 -17.69 -20.23 23.03 3.69
Fini 15 16 069.09 1.54 1.54 -10.09 2.70 18.54 1.54
Source: Bloomberg & Nedbank CIB Time 2018/11/02 06:52

Daily Market Commentary| Page 5

 LAST DAY TO TRADE back to top

Susan Correia | [email protected] | +27 11 295 8227

SHARE CODE SHARE NAME DIVIDEND / INTEREST RATE

6 November 2018

ACT AfroCentric Inv Corp Ltd dividend @ 16cps

ALP Atlantic Leaf Prop Ltd dividend @ 87.1875cps

CRG Cargo Carriers Ltd dividend @ 7.30cps

OCT Octodec Invest Ltd dividend @ 101.70cps

PSG PSG Group Ltd dividend @ 152cps

SEA Spear REIT Ltd dividend @ 41.727380cps

Source: JSE

Daily Market Commentary| Page 6

 JSE PERFORMANCE back to top

Nedbank CIB Market Commentary | [email protected] | +27 11 537 4091

%Δ %Δ %Δ %Δ 2017
MTD trend
Top40 constituents Last price -1d MTD YTD 12Month Performance
ABG : Absa Group Ltd 153.00 2.61 2.61 -15.93 7.97 7.05 2.61
AGL : Anglo American Plc 318.70 0.97 0.97 24.68 15.98 29.43 0.97
ANG : Anglogold Ashanti Ltd 140.33 -1.74 -1.74 9.10 7.76 -14.78 (1.74)
APN : Aspen Pharmacare Holdings Lt 164.82 5.65 5.65 -40.61 -48.57 -1.62 5.65
BID : Bid Corp Ltd 286.00 3.36 3.36 -4.98 -7.26 20.93 3.36
BIL : Bhp Billiton Plc 302.95 2.05 2.05 20.91 15.00 11.95 2.05
BTI : British American Tobacco Plc 644.52 0.13 0.13 -22.30 -28.86 6.38 0.13
BVT : Bidvest Group Ltd 181.50 -1.24 -1.24 -16.78 5.49 21.18 (1.24)
CFR : Financiere Richemont-Dep Rec 106.99 -0.88 -0.88 -4.26 -16.26 24.15 (0.88)
CLS : Clicks Group Ltd 191.45 1.84 1.84 5.70 17.63 54.21 1.84
CPI : Capitec Bank Holdings Ltd 1 018.68 2.83 2.83 -7.22 7.52 58.44 2.83
DSY : Discovery Ltd 161.20 2.07 2.07 -13.33 7.93 61.26 2.07
FSR : Firstrand Ltd 65.38 1.66 1.66 -2.78 24.53 25.00 1.66
GRT : Growthpoint Properties Ltd 23.02 1.63 1.63 -16.78 -7.70 6.59 1.63
INL : Investec Ltd 91.30 -0.51 -0.51 1.76 -6.31 -1.57 (0.51)
INP : Investec Plc 91.40 -0.29 -0.29 1.83 -6.54 -1.52 (0.29)
LHC : Life Healthcare Group Holdin 25.42 3.76 3.76 -8.40 -2.61 -9.23 3.76
MEI : Mediclinic International Plc 72.98 2.69 2.69 -31.40 -33.65 -18.17 2.69
MND : Mondi Ltd 345.00 -2.23 -2.23 12.65 6.68 14.66 (2.23)
MNP : Mondi Plc 343.18 -2.44 -2.44 12.38 6.17 14.14 (2.44)
MRP : Mr Price Group Ltd 233.91 1.27 1.27 -4.48 32.15 53.52 1.27
MTN : Mtn Group Ltd 86.03 0.62 0.62 -37.02 -31.23 5.08 0.62
NED : Nedbank Group Ltd 253.50 1.84 1.84 -1.02 20.19 6.16 1.84
NPN : Naspers Ltd-N Shs 2 814.72 8.56 8.56 -18.44 -17.97 69.72 8.56
NRP : Nepi Rockcastle Plc 126.93 -0.36 -0.36 -40.57 -36.54 (0.36)
NTC : Netcare Ltd 25.04 0.85 0.85 -0.44 -0.12 -20.66 0.85
OMU : Old Mutual Ltd 22.79 0.44 0.44 0.44
RDF : Redefine Properties Ltd 9.60 0.10 0.10 -10.28 -12.73 -6.96 0.10
REM : Remgro Ltd 193.86 1.94 1.94 -17.86 -9.64 4.19 1.94
RMH : Rmb Holdings Ltd 74.90 0.59 0.59 -5.39 17.97 18.13 0.59
RNI : Reinet Investments Sca 248.25 0.42 0.42 -9.40 0.42
SAP : Sappi Limited 81.66 -1.54 -1.54 -8.76 -12.66 0.56 (1.54)
SBK : Standard Bank Group Ltd 167.40 2.49 2.49 -14.44 0.70 28.22 2.49
SHP : Shoprite Holdings Ltd 180.75 0.25 0.25 -18.28 -12.04 27.89 0.25
SLM : Sanlam Ltd 75.30 1.40 1.40 -13.45 5.43 36.30 1.40
SOL : Sasol Ltd 483.52 -0.10 -0.10 12.92 15.67 5.32 (0.10)
SPP : Spar Group Limited/The 178.31 1.41 1.41 -12.31 6.45 2.82 1.41
TBS : Tiger Brands Ltd 269.40 2.21 2.21 -41.43 -30.92 16.65 2.21
TFG : The Foschini Group Ltd 165.18 2.46 2.46 -16.29 15.75 24.11 2.46
TRU : Truworths International Ltd 81.74 1.01 1.01 -13.48 9.42 17.70 1.01
VOD : Vodacom Group Ltd 124.25 -0.12 -0.12 -14.71 -19.84 -3.27 (0.12)
WHL : Woolworths Holdings Ltd 52.10 2.30 2.30 -20.23 -8.27 -9.09 2.30

Source: Bloomberg & Nedbank CIB Time 2018/11/02 06:52

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Global

 Global PMIs softened further in October, as uncertainty over trade conditions between the US and China weighed on confidence. A slowdown in global
growth in Q3 also hampered trade and industrial activity, along with adverse weather conditions in some parts of the world.
 In China, the manufacturing PMI fell to 50.2 points in October, from 50.8 points previously, worse than consensus of 50.6. Output, new orders, inventories
and employment are among key subcomponents which slowed. New export orders were also lower, an indication that trade war with the US may be costing
China substantially.
 The Japanese PMI was surprisingly higher, rising to 52.9 points, from 52.5 previously. Adverse weather conditions in September may have paved the way for
a bit of a recovery in manufacturing activity in October, hence the rebound in the index. The PMI was supported by higher output and new orders.
 The UK PMI fell to 51.1 points in October, from 53.6 in September, worse than consensus of 53. The new orders subcomponent saw a sharp decline and is
now in contractionary territory. Businesses seem quite concerned over the uncertainty that has shrouded the Brexit negotiations, along with a weaker
demand for cars.
 The US ISM manufacturing index fell to 57.7 points in October, from 59.8 previously, worse than consensus of 59.0. The index is currently the lowest in six
months, driven in-part by weather related weakness, as production, new orders and new export orders were sharply lower. Imports however remained
unchanged.

Synopsis: Global trade tensions, geopolitical risks, and weakness in global demand are some of the reasons for the slowdown in global manufacturing activity,
with weather-related issues further hampering industrial production. Q4 may present a temporary uptick in manufacturing activity, however the medium-
term outlook remains dismal.

UK

 The BOE unanimously kept interest rates unchanged at 0.75% and maintained its asset purchase programme but continued to sound increasingly hawkish as
policymakers outlined concern over Brexit scenarios and rising wage and price pressures.
 The core focus of the BOE’s statement was due to Brexit, with the BOE expecting a negotiated transition and any deviation from that expectations may cause
the BOE to react to any disorderly outcome.
 Global growth has become increasingly disorderly and downside risks to growth have increased. As a result, growth is expected to average 1.75% over the
next three years, and that the output gap has closed, which would imply higher wage pressures, keeping inflation elevated.
 CPI is expected to remain above 2% over the next three years. The market still expects 3 rate hikes of 25bps each until 2021, but the pace may be picked up if
inflation continues to accelerate, or Brexit development hamper growth substantially.
 Importantly, the conditioning path for the BOE’s bank rate has risen marginally in 2019 and 2020, to 1% and 1.2% (up by 10bps in both years). Growth
estimates were marginally lower for 4Q19, while inflation was assessed to end this year higher than previously forecast (2.5% vs. 2.3% in August).

Synopsis: While the BOE remains committed to tightening monetary policy gradually over the medium term, it is faced with the dilemma of an uncertain
Brexit outcome, rising inflationary pressures, and easing growth. It has committed to react to any disorderly Brexit outcome, meaning that it could raise rates
faster than projected if runaway inflation is seen, or reduce rates in the case of a sharply weaker economy. For now, our base case is for one rate hike per
year until 2021.

SA

 The manufacturing PMI declined to 42.4 points in October, from 44.5 in September, worse than consensus of 44. The PMI remains below the 50-index point
level which separated expansion from contraction.
 The weak PMI is an extension of subdued confidence levels in the local economy, that may not recover in the absence of policy certainty. Expected business
conditions in 6 months’ time fell to the lowest level since January 2016, while local demand is also assessed as weak as the new sales orders index declined
to 39 index points, from 42.1 in September. Furthermore, weaker export sales were also recorded, which is an extension of the weaker global economy.
 As we saw from the trade data yesterday, lower exports to Africa and Asia is a key concern, as these two regions consume the bulk of SA export products.

Synopsis: Unfortunately, the domestic manufacturing industry is likely to remain weak in the absence of investment and growth. However, bigger headwinds
in the form of stagnating global trade activity and a slowdown in global demand will still weigh on the manufacturing industry even if we see some uptick in
domestic demand. The outlook over the medium term remains constrained, with short-term green shoots likely to be a reflection of the seasonal inventory
build.

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 ECONOMIC CALENDAR back to top

Nedbank CIB Market Commentary | [email protected] | +27 11 537 4091

"" Country Event Period Survey Actual Prior Revised

01-November
12:00 AM SA Naamsa Vehicle Sales YoY OCT -1.7% 1.7% -1.9% -
02:30 AM JN Nikkei Japan PMI Mfg OCT F - 52.9 52.9 -
03:45 AM CH Caixin China PMI Mfg OCT 50.0 50.1 50.0 -
11:00 AM SA Barclays Manufacturing PMI OCT 44.0 42.4 43.2 44.5
11:30 AM UK Markit UK PMI Manufacturing SA OCT 53.0 51.1 53.8 53.6
02:00 PM UK Bank of England Bank Rate NOV 1 0.75% 0.75% 0.75% -
02:00 PM UK BOE Asset Purchase Target NOV GBP 435b GBP 435b GBP 435b -
02:00 PM UK BOE Corporate Bond Target NOV GBP 10b GBP 10b GBP 10b -
03:45 PM US Markit US Manufacturing PMI OCT F 55.8 55.7 55.7 -
04:00 PM US ISM Manufacturing OCT 59.0 57.7 59.8 -
02-November
10:55 AM GE Markit/BME Germany Manufacturing PMI OCT F 52.3 - 52.3 -
11:00 AM EC Markit Eurozone Manufacturing PMI OCT F 52.1 - 52.1 -
02:30 PM US Trade Balance SEP USD -53.6b - USD -53.2b -
02:30 PM US Average Hourly Earnings YoY OCT 3.1% - 2.8% -
02:30 PM US Change in Nonfarm Payrolls OCT 200k - 134k -
02:30 PM US Labor Force Participation Rate OCT 62.7% - 62.7% -
02:30 PM US Unemployment Rate OCT 3.7% - 3.7% -
04:00 PM US Factory Orders SEP 0.5% - 2.3% -
04:00 PM US Factory Orders Ex Trans SEP 0.0% - 0.1% -
05-November
12:00 AM CH BoP Current Account Balance 3Q P - - USD 5.3b -
03:45 AM CH Caixin China PMI Services OCT 52.8 - 53.1 -
11:30 AM EC Sentix Investor Confidence NOV 8.8 - 11.4 -
11:30 AM UK Markit/CIPS UK Services PMI OCT 53.4 - 53.9 -
04:45 PM US Markit US Services PMI OCT F 54.7 - 54.7 -
06-November
01:30 AM JN Overall Household Spending YoY SEP 1.50% - 2.80% -
09:00 AM GE Factory Orders WDA YoY SEP -2.8% - -2.1% -
10:55 AM GE Markit Germany Services PMI OCT F 53.6 - 53.6 -
11:00 AM EC Markit Eurozone Services PMI OCT F 53.3 - 53.3 -
12:00 PM EC PPI YoY SEP 4.3% - 4.2% -
05:00 PM US JOLTS Job Openings SEP 0 - 7136 -

Source: Bloomberg 2018/11/02 06:52

Daily Market Commentary| Page 9

 CONTACTS

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