JSE to contend with mixed Asian markets ahead of budget announcement

The JSE looks set to start to mixed, though mostly higher, Asian markets on Thursday morning, with local attention squarely on the medium-term budget policy statement later.

Newly appointed finance minister Enoch Godongwana is expected to report a tax windfall as high as R160bn as SA miners cash in on booming prices for many commodities, while a recent statistical revision to SA’s GDP has also painted debt metrics in a more positive light.

The state, however, is still grappling with Eskom’s R400bn debt burden, even as load-shedding continues, as well as increased costs related to the recent public sector wage settlement and social relief programmes related to Covid-19.

The figures are likely to show expenditure overruns eating up at least a third of the anticipated revenue overrun, and the government needs to use the money to reduce the budget deficit and borrowings trajectory to avoid credit rating downgrades, which would bring even higher borrowing costs, Investec chief economist Annabel Bishop said in a note earlier this week.

Internationally, markets have been reacting to a faster-than-expected rise in US consumer inflation, which hit a more than three-decade high in October. This has added to concerns that global central banks will need to move to combat price pressures amid surging energy costs and supply-chain disruptions.

In morning trade, the Shanghai Composite was up 0.59% and Japan’s Nikkei 0.64%, while the Hang Seng had slipped 0.15%.

Tencent, which gives direction to the JSE via the Naspers stable, had fallen 2.89%.

Gold was flat at $1,848.20/oz, while platinum had risen 0.19% to $1,068.98. Brent crude was 0.15% higher at $82.79 a barrel.

The rand was 0.25% weaker at R15.44/$.

Private hospital group Mediclinic is due to release its interim results to end-September later, saying in a recent trading update that revenue had recovered to pre-pandemic levels in all three of its divisions — SA, the Middle East and Switzerland.

Fashion group TFG is due to release its half-year results to end-September later, saying in a recent trading update that retail turnover was up almost a fifth year on year, despite the effects of civil unrest in July.

Mining and manufacturing data for September are due later, and expectations are that annualised mining production will accelerate from August’s 2% rise, while manufacturing is expected to decline, after August’s better-than-expected 1.8% amid a recovery from July’s civil unrest.

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