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IOL News
14-05-2025
- Business
- IOL News
JSE shatters records as global markets celebrate US-China trade deal
the JSE All Share Index soared by 0.5% to 93 072 points on Wednesday just after beginning early morning trade before snapping those gains to end at 92 441 points by 5pm. Image: Nicola Mawson / Independent Newspapers Stocks on the JSE defied disheartening local employment figures and rallied to a fresh record high on Wednesday, surging past the 93 000-points mark as the easing tensions between the US and China also buoyed global markets. The world's two largest economies have agreed to cut the hefty import tariffs on each other's goods for 90 days whilst negotiations for a permanent deal are underway. The US will lower those tariffs from 145% to 30%, while China's retaliatory tariffs on US goods will drop to 10% from 125%. US President Donald Trump said weekend talks had resulted in a "total reset" in trade terms between the US and China. As the markets cheered the news, the JSE All Share Index soared by 0.5% to 93 072 points on Wednesday just after beginning early morning trade before snapping those gains to end at 92 487 points by 5pm. Investec chief economist Annabel Bishop said the JSE tended to run on the momentum behind international stock exchanges due to the international companies' listings on it. 'When investor sentiment improves globally, such as the recent roll-back in many tariffs previously announced in April, then the outlook for global growth improves and so for equities, benefiting stock exchanges,' Bishop said. 'Over the past weekend the US and China agreed a trade deal to cut back most of the recent tariff hikes and the sharp de-escalation in the trade war has reduced risk aversion in financial markets.' Leading the rally on the JSE was Sappi, which rose 3.3% to R33.34 per share and followed by Datatec at 3% higher to R63.23 per share and Truworths rose 2.9% to R76.22 per share. Mike Gresty, fund manager at Anchor Capital, highlighted the JSE's biggest weighted stocks as one of the reasons for the rally. 'I note that Naspers/Prosus are up about 2.5% on the back of Tencent's move today and its results announced after the close Hong Kong time. I suspect that has a lot to do with the overall market being up today,' Gresty said. The market's cheer comes on the back of South Africa's unemployment rate increasing to 32.9% in the first three months of 2025 from 31.9% in the last three months of 2024 as the number of the employed fell more than the decline of the labour force. The rising unemployment rate brings into question the government's intervention to deal with structural constraints, deterioration in economic conditions and boost investor confidence. However, the JSE has risen 4.4% from a month ago and by 10.1% in the year-to-date as it has continued to break records until the onset of the trade war from the imposition of the US tariffs. Momentum Investments chief economist, Sanisha Packirisamy, also pointed to the global markets breathing a sigh of relief after the US and China temporarily suspended their tariffs. 'The SA equity market is very geared to what happens globally, with a majority of its earnings coming from offshore, rather than being tied to domestic developments,' Packirisamy said. 'Trump's backtracking on tariffs and an alleviation in volatility measures have seen the markets rebound strongly, including in South Africa.' Visit:
The Citizen
06-05-2025
- Business
- The Citizen
South Africa's commercial property sector holds steady amid political headwinds
Earlier this month, the rand approached a historic low of R19.93 against the U.S. dollar on April 9, 2025, before recovering to R18.97 by April 14. Simultaneously, the JSE All Share Index experienced significant volatility, dropping from 89,950.79 on March 31 to 82,485.81 on April 9, before rebounding to 88,162.30 by April 14. The catalyst? A 31% reciprocal trade tariff from the United States (effective April 9), that's sent shockwaves across emerging markets. It's a sharp departure from South Africa's average 7.6% tariff and effectively sidelines the benefits previously granted to Sub-Saharan African economies under AGOA. For Lesotho, where the textile and manufacturing sector makes up nearly 15% of GDP, a new 50% tariff could be devastating. That said, John Jack, CEO of Galetti Corporate Real Estate believes that 'it's not all doom and gloom'. 'South Africa kicked off 2025 on a high note, driven by lower interest rates, a stronger rand, reduced loadshedding and a boost in investor confidence,' he says. 'By mid-January, we saw solid traction, especially in the resources sector, which bolstered activity on the FTSE/JSE All Share Index. Fast-forward to now and we're seeing capital flow back into safe havens as risk-off behaviour takes hold,' As the year progressed, however, that momentum was tested. Flight to Stability: Real Estate in Focus Despite the volatility, commercial property is holding its ground—and may in fact be turning heads for the right reasons. 'The local CRE market came back strong in late 2024,' Jack notes. 'Vacancies dropped, net operating income improved, and there was a clear uptick in investor appetite. This was helped along by rate cuts, easing inflation, more consistent energy supply, and the formation of the GNU.' While global trade tensions will certainly disrupt some economic channels, Jack believes they also open the door for commercial real estate to shine: 'In periods like this, the smart money tends to chase yield and stability- and that's exactly what the right property assets offer. They're long-term, income-generating and tend to outperform when the broader market feels uncertain.' He adds, 'Not everyone is pulling their capital offshore. Many investors are simply re-evaluating—and that creates opportunity.' South Africa's real estate market continues to offer compelling yields—particularly in sectors with tight fundamentals. With bricks-and-mortar assets offering both predictability and protection, CRE is increasingly being seen as a strategic hedge. Staying Proactive in a Shifting Market In a market like this, discipline matters. Jack outlines several strategies for investors and developers looking to stay ahead of the curve: Monitor macro indicators to time moves with precision. to time moves with precision. Diversify portfolios —think retail, mixed-use, healthcare, and logistics. —think retail, mixed-use, healthcare, and logistics. Use fixed-rate debt to lock in costs while rates remain favourable. to lock in costs while rates remain favourable. Target demand-driven nodes with long-term growth fundamentals. with long-term growth fundamentals. Don't ignore regional markets —there's smart value outside of the metros. —there's smart value outside of the metros. Get flexible with leasing to keep income stable as tenant priorities evolve. 'South Africa's CRE market has been through its fair share of storms. It's proven itself resilient, especially in the face of structural constraints. Yes, short-term volatility might slow down certain deals or make tenants a bit more cautious, but the fundamentals are still there—particularly in logistics, repurposed office space, and tourism-driven assets' he concludes. Issued by: Jess Gois
IOL News
24-04-2025
- Business
- IOL News
Navigating South Africa's commercial real estate amidst political and global challenges
Between March 2017 and March 2020, SA REITs lost more than 70% of their value, and while it had clawed back nearly 68% in value excluding dividends, it remained 50% below March 2017 levels. Image: Supplied The commercial real estate sector in South Africa is being tested by a mix of local political uncertainty and mounting global trade pressure, but the market is holding up with investors adopting a wait-and-see approach. Earlier this month, the rand approached a historic low of R19.93 against the US dollar before recovering to R18.97 by April 14. Simultaneously, the JSE All Share Index saw significant volatility, dropping from 89 950.79 on March 31 to 82 485.81 on April 9, before rebounding to 88 162.30 by April 14. Meanwhile, the FTSE/JSE listed Property Index was down by only 1.34% year-to-date on Tuesday, while it was up 21.93% over a 12-month period. Over three months it was up 0.55%. The catalyst for the currency and volatility on the JSE? A 31% reciprocal trade tariff from the US (effective April 9), that's sent shockwaves across emerging markets. It's a sharp departure from South Africa's average 7.6% tariff and effectively sidelines the benefits previously granted to Sub-Saharan African economies under AGOA (African Growth and Opportunity Act). "South Africa's commercial real estate market has been through its fair share of storms. It's proven resilient, especially in the face of structural constraints. Yes, short-term volatility might slow certain deals or make tenants a bit more cautious, but the fundamentals are there—particularly in logistics, repurposed office space, and tourism-driven assets,' said Galetti Corporate Real Estate CEO John Jack in a statement. The local commercial real estate market came back strongly in late 2024, vacancies fell, net operating incomes improved, and there was an uptick in investor appetite. This was helped by rate cuts, easing inflation, more consistent energy supply, and the formation of the GNU. 'Not everyone is pulling their capital offshore; many investors are now simply re-evaluating—and that creates opportunity,' he said. 'South Africa kicked off 2025 on a high note, driven by lower interest rates, a stronger rand, reduced loadshedding, and a boost in investor confidence. By mid-January, we saw solid traction, especially in the resources sector, which bolstered activity on the JSE. Fast-forward to now and we're seeing capital flow back into safe havens as risk-off behaviour takes hold,' he said. "In periods like this, the smart money tends to chase yield and stability—and that's exactly what the right property assets offer. They're long-term, income-generating and tend to outperform when the broader market feels uncertain,' he said. The SA Reit Association's online publication said improving fundamentals in South Africa continue to point towards a return to net property income and dividend growth for the sector over the next 2 to 3 years, and the sector is better positioned to weather uncertainty that lies ahead. Jack said South Africa's real estate market continues to offer compelling yields—particularly in sectors with tight fundamentals. Bricks-and-mortar assets offered predictability and protection, and the sector was increasingly being seen as a strategic hedge. The association said SA REITs (real estate investment trusts) had rebounded 68% since the Covid-19 crash, and properties were still trading at significant discounts to net asset value, with many offering long-term upside despite short-term global market volatility.
IOL News
23-04-2025
- Business
- IOL News
Capitec Bank reports "extraordinary" 30% surge in earnings amid diversification successes
Capitec Bank has reported a 30% increase in headline earnings per share for the year to February 28, 2025, an "extraordinary" result in difficult trading conditions, said its CEO Gerrie Fourie. Image: Supplied Capitec, the digital bank with more than half of South Africa as clients, increased headline earnings 30% to R13.7 billion as its diversification initiatives over recent years started to unlock value for its clients and the bank. The share price surged 7.1% to R3 350.77 on the JSE Wednesday afternoon after the release of the results for the year to February 28, while the JSE All Share Index was only up by 0.28%, which indicated that investors were also optimistic about the bank's prospects. Over the past five years, the bank's journey has included the introduction of business banking, value-added services (VAS), Capitec Connect, and insurance under its own insurance licence. This diversification leveraged the group's active client base, which now exceeds 24 million, with 13 million of the clients actively engaging with their app. CEO Gerrie Fourie said in a presentation that the earnings for the financial year, were 'extraordinary' and the best set of results he had presented for the bank, despite the challenging economic climate. He said in an interview that the bank was currently performing as well as it did at year-end, and he did not foresee, at this stage, any major challenges that might disrupt them achieving another year of double-digit earnings growth. 'We have always believed that banking should be simple, affordable, accessible, and personal. Through our high-volume, low-margin business model, we are enabling everyone to access solutions that allow them to take control of their finances, protect their families, manage businesses, and unlock opportunities,' he said. Looking to the future, he said their strategy would remain in place, at least for the next two to three years, and included delivery on the eco system, establishing a single service platform, becoming a full data-led company, developing more innovative products, growing into further opportunities provided in the insurance, business banking, VAS and Capitec Connect markets, and continuing to build AvaFin, the international online lending business. 'Capitec was primarily recognised for disrupting traditional banking with its simple, affordable Global One account and accessible credit. Building on this foundation… we've embarked on a focused diversification strategy to create a comprehensive financial ecosystem,' Fourie said. Leveraging the bank's strengths to provide value in areas such as credit, insurance, and accessible digital platforms and branches had resulted in increasingly balanced contributions to earnings. Personal banking now constitutes 45% of total earnings, insurance accounts for 25%, strategic initiatives (VAS and Capitec Connect) contribute 23%, business banking makes up 5%, and AvaFin (consolidated from May 1, 2024) adds 2%. Capitec's focus on VAS and the Capitec Connect mobile virtual network operator (MVNO) delivered good results, and their combined net income surged by 61% to R4.4bn. Over 11 million clients now use the Capitec app to purchase airtime, data, electricity, vouchers, and to pay bills. The bank captures over 40% of South Africa's airtime and data transactions, and one in five digital vehicle licence renewals occur on its platform. The shift to digital payments continues to accelerate. Card payments at tills and online had risen 18% to more than 2.4 billion transactions, while cash transaction volumes increased by only 3%. E-commerce transactions, including those via Capitec Pay, surged by 47% to 488 million. More than 1 million clients were now actively using their Capitec cards through digital wallets such as Apple Pay, Google Pay and Samsung Pay. Capitec had also launched a new International Payments solution on the app, enabling payments to over 50 countries in 13 currencies. Capitec Life manages over 3.3 million active funeral and life cover policies, insuring 15 million lives and contributing R1.9bn in net insurance income to the group. 'Since May 2024, we added in excess of 600 000 active funeral and life cover policies on our own licence. This rapid uptake highlights the appeal of our simplified, affordable insurance products and positions Capitec as potentially the fastest-growing Life Insurer in the country,' he said. Active business bank clients increased to 218 207, up 15%, forex transactions grew by 92% and scored loan balances rose by 111% to R1.3bn. Fourie said credit for SME business clients was now being scored on their cashflow, and he anticipated good further growth in this business. Capitec's merchant commerce strategy involved selling new smart card machines outright rather than renting them, and providing competitive commission rates, which helped grow the number of active trading merchants by 124% to 63 000. 'The transactional data of these trading merchants enables us to provide an instant overdraft, or additional structured business finance within days in order to help the businesses grow, which in turn creates job opportunities that ultimately help the economy grow,' he said. Fourie announced his retirement last month and he steps down as CEO on July 18, 2025. His successor will be Graham Lee, who has been with Capitec since 2003 and has held various positions within the group. BUSINESS REPORT
