The JSE seems set to be buoyed on Monday by a rally in Tencent, which influences the JSE via Naspers and Prosus, after both SA companies slumped on Friday.
The Hang Seng in Hong Kong gained 0.89%, the Nikkei in Japan 1.69%, while the Shanghai composite in mainland China was flat. Year to date, the Hang Seng is down more than one-third (35.57%), the Shanghai composite almost one-fifth (19.75%) and the Nikkei 5.94%.
Tencent, which jumped 4.18%, has more than halved (53.94%) in 2022. Some traders have gone bargain shopping in Hong Kong as the Hang Seng recently hovered around a 13½-year low amid concerns over mainland China, particularly President Xi Jinping being elected for a historic third term and new Covid-19 lockdowns.
Stocks in mainland China hovered around a six-month low after the latest PMI data missed market forecasts, coming in lower than expected. The reading of 49.2 in October comes amid strict Covid-19 restrictions in big cities hampering output, new orders and export sales decreasing, and buying activity retreating.
“We don’t expect the zero-Covid-19 policy to be abandoned until 2024, which means virus disruptions will keep in-person services activity subdued. In addition, the deepening global downturn will continue to weigh on exporters,” Capital Economics China economist Zichun Huang said in a note.
“And officials are still struggling to put a floor underneath the property market. Concerns about the renminbi’s weakness against the US dollar will also prevent the PBOC from cutting rates in the near term,” she added.
The ING Group noted the rise in Covid-19 cases and that “some infection cases from a Foxconn factory have returned to their hometowns, which may increase the number of Covid-19 cases further in the less healthcare-equipped rural areas”. Foxconn is where iPhones are manufactured.
“This will drag on production and exports for the economy in November. Depending on the number of Covid-19 cases in big cities and therefore the scale of possible lockdowns, we should be cautious about the growth prospects of the economy in the coming months,” ING Group added.
The Nikkei was on the up as it followed Wall Street's lead while markets await the latest interest rate decision by the US Federal Reserve this week. In domestic data, annual retail sales beat forecasts in September.
In local market news, the JSE all share index on Friday lost 1.1% to 66,385 points, pulled lower by miners and drops for Naspers and Prosus. Naspers slumped 6.28% to R1,760 and Prosus 5.03% to R744.40. The top 40 was down 1.29%.
The Nasdaq ended 2.87% higher on Friday, the Dow Jones 2.59% and the S&P 500 2.46%. The Nasdaq has lost 29.88% so far this year, the S&P 500 almost one-fifth (18.67%) and the Dow Jones just more than one-tenth (10.18%).
The rand weakened against the dollar on Monday morning as it traded at R18.19. The rand has depreciated by 12.02% against the greenback so far this year.
In commodities, the price of gold was flat, while platinum and Brent crude fell 0.13% and 1.24%, respectively. Gold was trading at $1,645.30/oz, Brent crude at $92.97 a barrel, and platinum at $941.20.
In corporate news, human resources company Adcorp, sectional title developer Balwin Properties and investment company RECM & Calibre will all release results on Monday.
On the economics front, the SA Reserve Bank will publish the September data for private sector credit extension and the M3 money supply. Private sector credit extension came in stronger than expected in August, increasing to 7.9% from July’s 7.1%.
The SA Revenue Service (Sars) will release the balance of trade numbers for September.
Contrary to expectations, the merchandise trade surplus narrowed sharply in August, falling to R7.2bn from R24.8bn in July.
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