Shares on the Johannesburg Stock Exchange ended the day much firmer on Friday, with the benchmark index closing at a 7-week high on the prospect of a faster recovery in the global economy. The day’s gains were led by commodity companies, which rose on higher gold and platinum prices. The JSE’s commodity index closed up 2.5%. Gold miner AngloGold Ashanti closed up more than 5% and Gold Fields rose more than 7%. Strong US earnings numbers and a rally in technology stocks added to the upbeat sentiment. The benchmark All-Share Index closed 1.5% higher at 67,050 points. The blue-chip Top 40 index ended the week up 1.66% at 60,525 points.
The Rand lost its opening momentum on Friday and was expected to close weaker as the euphoria surrounding the last-minute interest payment by Chinese construction company Evergrande gave way to caution. At the close of trading, the rand was trading around R14.85 to the dollar, 1.14% weaker.
Gold prices held steady today after falling in the previous session on the back of comments by US Federal Reserve chief Jerome Powell Reserve chief Jerome Powell that inflation could ease next year and that the central bank was on track to reduce its stimulus. Oil prices rose this morning, extending gains from the previous weekend. US crude prices hit a seven-year high as global supplies remain tight while economies around the world recover from the slumps caused by the coronavirus pandemic. Oil prices were also supported by concerns about coal and gas shortages in China, India and Europe, leading to a switch to diesel and heating oil for power generation.
Takeover of Bell Equipment minorities appears doomed to failure
A plan by IA Bell, the Bell family’s holding company and Bell Equipment’s largest shareholder, to acquire all the issued shares of the JSE-listed heavy equipment manufacturer for R10 per share and delist the company appears doomed to failure. In a joint announcement released on Friday, Bell Equipment and IA Bell made the long-awaited announcement that IA Bell has now indicated its firm intention to make the offer under a Scheme of Arrangement. IA Bell, however, stood by its initial indicative offer price of R10 per share, despite earlier criticism from minority shareholders that this price significantly undervalues the company. IA Bell has also not yet succeeded in obtaining irrevocable undertakings from any of the significant minority shareholders of Bell Equipment to support the proposed transaction.
Development Bank financials point to core stability, but high risks remain
The Development Bank of South Africa (DBSA) has received an unqualified audit opinion from the AuditorGeneral (AG) for the financial year ended 31 March 2021. Operating income amounted to R3,9 billion (2020: R5,5 billion), according to the statement of comprehensive income. Net profit for the year increased to R1,4 billion (2020: R504 million). Total comprehensive income after adjusting for gains/losses on unrealised and cash flow hedges and other minor adjustments was R1,6 billion for the year (2020: R405 million). Total development finance amounted to R84 billion (2020: R87.5 billion) and interest income calculated at the effective interest rate was R8.2 billion (2020: R8 billion).