Naspers could lead the JSE higher after upbeat Chinese data

There is sufficient good news in the market to give the JSE a boost on Wednesday, with a private gauge of Chinese services activity pointing to an uptick in activity in the world’s second-largest economy during August.

The Caixin China services purchasing managers index (PMI) beat expectations on Wednesday, with that release following a manufacturing PMI on Monday that also positively surprised the market.

Asian markets were firmer, while Hong Kong-listed Tencent, which influences the JSE via major shareholder Naspers, was up 1.8%.

Gold was 0.3% lower at $1,542.77/oz, while platinum was flat at $961.39/oz. Brent crude had added 0.19% to $58.35 a barrel.

Sentiment remains fragile, however, with the rand touching R15.07/$ in overnight trade, after data showed US manufacturing activity slipped to a three-year low in August. Along with anti-dollar flows as a result of this print, the rand was benefiting from the news that SA’s GDP rebounded 3.1% in the second quarter.

Another reason to be upbeat was the 6.1% growth in SA’s gross fixed capital formation over the quarter, which the first time in the past five quarters that a positive figure for this long-term determinant of growth had been posted, Citadel chief economist Maarten Ackerman said in a note.

There is no major local economic data due on Wednesday and the calendar is also light in terms of scheduled corporate releases.

Momentum Metropolitan Holdings is due to release its full-year results to end-June. It said in August that it expected a 65%-85% jump in basic headline earnings per share (HEPS). Momentum said at the time it had seen a solid performance in most business units during the year.

Discovery is due to release its results for the year to end-June later. It said in August it that it expected a decrease in normalised HEPS of between 5% and 10% for the period. The group had an unexpected spike in large mortality claims in the first half of the year, but has said it has taken various actions to reduce its exposure to such volatility, which would be reflected in its full-year results.

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