J200 Market Commentary: Equities Mixed As Tech Weighs

30 ต.ค. 2018

It was a mixed start to the week across global equity markets, with some major indices finding strong support from oversold levels (Europe) when viewed on a short term basis while US markets rose in the first hour of trade only to fail to hold it's intraday highs as sellers regained control and offload more stock at year-to-date lows. This time, fears around additional US-China tariffs coupled with a decline in US technology sector shares weigh heavily on markets. While the selling pressure was evident throughout the session, stocks managed to finish off their lows. In the final 15-minutes of the US trading session, the price action was as follows: S&P500 jumping by 27 points, the Dow Jones Industrial Average higher by 295 points while the Nasdaq Composite was pushed higher by 122 points as speculators shopped for end-of-day bargains.

On the local market, the JSE All Share Index closed higher by 1.01%, while the Top 40 Index added 1.13% however well off the their intraday highs. This strong performance comes despite Naspers trading lower to sideways for most of the day and taking a leg lower as the US market opened. On the day, winners included Absa (+4.79%), Mr Price (+4.67%), Firstrand (+4.33%) and Nedbank (4.10%) while Naspers (-3.63%), Anglogold Ashanti (-3.86%) and Growthpoint Properties (-0.87%) weighed on the Top 40.

On the currency front, the Rand strengthened throughout the day, reaching it's best level of R14.41 by 11:20am before weakening to 14:53 by the start of the US trading session. The Euro, which has been under pressure since the middle of October, held above it's 4-day support level of 1.1376 while the British Pound traded near seven-week lows as concerns around Brexit continued to linger.

In Europe, stocks closed higher, helped along by a rise in automakers as China indicated that it may be considering a 50% auto tax cut. For the session, the DAX closed higher by 1.20% while the FTSE 100 and CAC40 added 1.25 and 0.44% respectively.

This morning in Asia, stocks trade in mixed territory, largely shrugging off the sell-off on Wall Street. The Nikkei is higher by 1.44%, the Shanghai Composite by 1.04% while the Hang Seng has shed 0.68%. The Rand, with 15-min to go before the opening bell, trades at 14.67 versus the US Dollar.


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Company News

MTN GROUP LIMITED - Quarterly update for the period ended 30 September 2018 and renewal of cautionary announcement (extract):

Salient features

- Group subscribers increased quarter-on-quarter (QoQ) by 2,5 million to 225,4 million
- Active data subscribers increased QoQ by 5,0 million* to 74,2 million
- Active MTN Mobile Money customers increased QoQ by 1,7 million to 25,8 million
- Group service revenue increased year-on-year (YoY) by 10,0%
- Group data revenue increased YoY by 23,9%
- MTN South Africa service revenue increased YoY by 3,0% with an EBITDA margin of 34,5%
- MTN Nigeria service revenue increased YoY by 17,4% with an EBITDA margin of 43,2%
- MTN Ghana service revenue increased YoY by 22,9% with an EBITDA margin of 37,6%
- MTN Irancell service revenue increased YoY by 14,1% with an EBITDA margin of 35,3%

MTN Group president and CEO, Rob Shuter comments:

"MTN recorded an improved operational performance in many markets in the third quarter. Group service revenue grew by 10,0% year on year, ahead of our medium-term target of upper-single-digit growth, supported by continued strong growth in voice and data revenue. These results were delivered in challenging operating and currency conditions.

Group outgoing voice revenue increased by 5,2% and data revenue increased by 23,9%. Higher digital revenue was led by robust growth in MTN Mobile Money.

The group benefited from the particularly strong performance of operations in Nigeria and Ghana, while some operations in our West and Central Africa (WECA) region remained under pressure. MTN South Africa continues to execute on operational improvements.

We made good progress on our key growth drivers of data and digital services, adding 5,0 million active data
subscribers and 1,7 million new MoMo subscribers in the quarter.

We successfully completed the listing of MTN Ghana. MTN Nigeria's plans to list have been challenged by the recent Central Bank of Nigeria and Attorney General of the Federal Republic of Nigeria matters, however, MTN remains committed to the listing in Nigeria and work continues in this regard. In the quarter, the group engaged extensively with authorities in Nigeria to deal with the matters they raised.

Across our markets, we continued to invest in our networks, and now have the leading network net promoter score in 10 of our markets. Reported capital expenditure to the end of the September 2018 was R16,4 billion, a group capex intensity of 16,9%.

We continued to optimise our balance sheet structure and reduced our gross US dollar debt by approximately US$400 million. This was supported by proceeds from the sale of MTN Cyprus of US$303 million, the settlement of a loan from our Ugandan Tower Company of US$34 million as well as the proceeds from the MTN Ghana listing of US$202 million received after the quarter's end. We also concluded the refinancing of our US$1,25 billion revolving credit facilities that are maturing in 2019 with a new five-year revolving credit facility of US$1,25 billion at an improved margin, and with an option to increase to US$1,5 billion.

We continue to focus on operational improvements across our business and continue to develop our digital businesses."