The Fed, the Banks & their Onlyfans from South Africa.
Let's talk about the fed's minutes, the banking financials and why only fans is set to ban some content.
Hey Hisa Fan,
Lots of stuff happened last week, both from a local and global markets standpoint. Well, let’s start from the sky, viewing the markets from a global standpoint before we land to local markets.
The Fed
Major markets globally remained mixed, on Wednesday, the Federal Reserve of the United States released minutes for the July meeting, sending chills across financial markets. The Fed minutes indicated that the Fed’s tapering of monthly asset purchases may start this year as most participants said the Fed has hit its objective on the inflation prong of its dual mandate.
Major benchmarks were down in the U.S despite Friday’s race to almost clinching record high levels. Some of the top draggers for the week included China’s Alibaba and Tencent Entertainment holdings.
Chinese firms continue to decline as investors continue to turn bearish on stocks over Beijing’s decision to tighten regulations on various sectors, with government-affiliated media signalling that China’s could be headed for an attack on the Alcoholic Beverage industry.
The Banks
Local banks came in ‘hot’ releasing blockbuster results. KCB Group Plc led the pack, posting a 102% growth in half-year profits with Equity Group Plc growing it’s half year returns by 98%.
Equity Group seems to have cemented its position as one of the largest financial institutions in East Africa following the successful acquisition of 66.5% ownership in Congo’s second-largest bank, Banque Commerciale Du Congo (BCDC) at a cost of $95 Million in August last year.
Equity’s non-performing loans however advanced to Kes 62.2 billion in the first half of this year from Kes 45.6 billion in the corresponding period last year. Its loan loss provisions fell to Kes 2.9 billion in June 2021 from Kes 8.0 billion the company posted in June 2020.
KCB Group on the other hand had its profits double in the first half of 2021, posting a net profit of Kes 15.3 billion in the first six months of the year, up from Kes 7.6 billion posted in HY2020.
In the earnings, Co-op bank posted rather flat earnings, with a marginal 3% growth in half-year earnings at Kes 7.4 Billion compared to net earnings of Kes 7.2 Billion over a similar period last year. The earnings for co-op were attributed to huge provisions for loan losses, with net non-performing loans rising sharply from Kes 15.6 Billion in 1H2020 to Kes 18.6 Billion in 1H21.
Coffee Break…Onlyfans
London based platform onlyfans informed content creators on the platform that they will be banning sexually suggesting & explicit content from their platform beginning October this year.
The company said they are implementing the changes due to mounting pressure from their banking partners and payment providers, according to the company.
A the same time, OnlyFans is trying to raise money from outside investors at a valuation of more than $1 billion, with the possibilities of an IPO rumoured.
So, a platform got popular because of a specific industry and now they’re banning that industry from their platform because they want to go public and conform to regulatory standards; good for them, the house always wins.
You’re probably wondering why this is a concern, yeah, me too. Sip your coffee and relax, let’s hope it’s an IPO.
South Africa
Africa’s largest bourse by market capitalization the JSE was in the global spotlight this week, making moves valued at $9.7 billion in equity sales on Tuesday; the largest for the JSE in 15 years! The turnover was due to a share-swap agreement between Naspers Limited and Amsterdam Stock Exchange-listed Prosus Limited.
The deal caused over 4 hours delay in the market opening on Wednesday and a sweep across financial markets in Amsterdam & China. Tencent holdings which Naspers is the majority shareholder saw a decline in share price after shareholders showed concerns over the regulatory impact of China’s tech crackdown.
Meanwhile, JSE has indicated they will be introducing new caps on the SWIX All Share Index and SWIX Top 40 Index to 6% from the current 10%, this is aimed at levelling the ceiling so as to avoid a similar situation leading to a halt of trading on the exchange.
What Cowries Are we collecting this week?
Global Markets - This week, we are all watching stocks on wallstreet. Stocks in U.S Markets have been touching all-time highs. Goldman Sachs economists recently lowered their tracking estimate of U.S. economic growth in the third quarter to 5.5% from 9% due to the impact of the Delta variant.
Local Stocks - The benchmark indices of the NSE moved above various psychological benchmarks; the NSE20 share index closing way above the 2000 bps benchmark and the NSE25 share index staying clear above the 4,000 bps mark.
Safaricom Plc - Safricom hit a record high in the previous week, with the ongoing concerns over the conflicts in Northern Ethiopia, will this hold? The telco has been one of the market’s top boosters and our cowrie collectors will also be watching if the company’s share price will keep the hold.
JSE - Our cowry collectors are extending their camp stay in South Africa for another week. After the activity in S.A in last week’s markets, we are definitely on the look for more with JSE saying they will be making few reforms to reduce the likelihood of another trade delay on the market.
Who wins for you, the bulls or the bears? What are you watching this week?
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