Sasfin : Visa and Mastercard suspend Russian operations

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MARKET COMMENTARY

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SOUTH AFRICAN MARKET COMMENTARY

The Johannesburg All-Share index slumped 3.43% to 74,734 points on Friday, while the Top-40 index fell 3.56% to 68,357 points. The major decliners were market heavyweights Naspers which tumbled 10.64% to its lowest level since October 2018, while Prosus sunk 9.47% to a record low. In fixed income, the yield on the benchmark 2030 government bond was up a single basis point to 9.68%, reflecting slightly weaker prices.

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EUROPEAN MARKET COMMENTARY

European markets closed sharply lower on Friday after Russian forces attacked and seized control of Europe’s largest nuclear power plant. The pan-European Stoxx 600 closed down 3.6%, with banks plunging 6.7% to lead losses as all sectors and major bourses fell into negative territory. For the week, the benchmark lost 7% and suffered its worst week since March 2020, the onset of the coronavirus pandemic.

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US MARKET COMMENTARY

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US stocks fell on Friday despite a stronger-than-expected jobs report as worrisome developments in Ukraine weighed on sentiment. Travel stocks were another weak spot on Friday, with shares of United Airlines falling more than 9%. Shares of Delta Air Lines and American Airlines dropped 5.6% and 7.1%, respectively. Major tech shares also declined, with Microsoft losing 2% and Apple falling 1.8%. Energy stocks rose along with oil prices.

ASIAN MARKET COMMENTARY

Shares in Asia-Pacific declined this morning as oil prices surged, with the ongoing Russia-Ukraine war continuing to weigh on investor sentiment globally. The Australian stock market was modestly lower, extending the losses in the previous session. Among the major miners, BHP Group gained almost 1%, while Rio Tinto edged 0.4% higher.

CURRENCY MARKET COMMENTARY

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The rand weakened on Friday, while stocks posted their biggest daily drop since Jan. 24, after Russian invasion forces seized Europe’s biggest nuclear power plant in Ukraine in what Washington called a reckless assault that risked catastrophe. At the close of the session, the rand was trading at R15.40 to the dollar, 1.32% softer. The risk-off appetite battered markets across the globe while bonds, commodities and crude rallied as the escalating war in Ukraine raised concerns about slowing growth and faster inflation as investors bought up commodities as a hedge.

COMMODITIES MARKET COMMENTARY

Oil prices soared more than 10% in hectic trading today, as the risk of a U.S. and European ban on Russian product and delays in Iranian talks triggered what was shaping up as a major stagflationary shock for world markets. Meanwhile, palladium jumped to a record high this morning, while gold hit the key level of $2,000 per ounce, as concerns over Russia-Ukraine conflict pushed investors towards safe-haven assets.


LOCAL COMPANIES

HAMMERSON PLC (HMN) -2.2%

Adjusted earnings up 122% to £81m (FY20: £37m), benefiting from increased net rental income, a strong recovery in Value Retail earnings, and lower finance costs. 2021 earnings benefit from a £17m year-on-year increase in surrender premiums and a £12m net rental income contribution from in year disposals. Adjusted earnings per share up 38% to 1.8p. IFRS loss of £429m (FY20: £1,735m loss) largely due to £470m Group portfolio revaluation deficit (H1 £361m, H2 £109m). Basic loss per share of (9.8)p (2020: (62.4)p). Group portfolio value of £5.4bn, with capital returns beginning to stabilise in the second half: FY – 7.9%, H2 -1.7%. EPRA net tangible assets (NTA) per share reduced to 64p from 69p at 30 June and 82p at FY20. Subject to shareholder approval, the Board is proposing a final dividend of 0.2 pence per share in cash with an enhanced scrip dividend alternative of 2.0 pence per share. Both the Final 2021 Dividend and the Enhanced Scrip Dividend Alternative will be paid as a Property Income Distribution (‘PID’), net of withholding tax where appropriate. Rita-Rose Gagné, Chief Executive of Hammerson, said: “Since the beginning of 2021, we have made fundamental changes in our business, realigning our portfolio with £623m of disposals, significantly strengthening the balance sheet, re-setting our organisation and putting in place a clear strategy for value creation focused on our prime urban estates. The pandemic has accelerated trends in our operating environment, with people engaging with physical space in new ways. Our role is to create and curate relevant, appealing and sustainable spaces for the future. We are already seeing the tangible results from our strategy with strong occupier leasing demand, reduced vacancies, improved collections, a lower cost base and clear path to value creation from our land bank. We have more to do. Today we are a forward-looking organisation with our assets at the heart of driving value creation.”


INTERNATIONAL COMPANIES

PAYPAL (PYPL) -1.4%

PayPal said Saturday it was suspending its services in Russia, adding to the number of firms retreating from the country in response to its invasion of Ukraine. “Under the current circumstances, we are suspending PayPal services in Russia,” Dan Schulman, PayPal’s CEO, said in a letter addressed to the Ukrainian government. The letter was posted on Twitter by Ukraine’s minister of digital transformation, Mykhailo Fedorov, who has pressured businesses including Apple to Microsoft to cut ties with Russia. “So now it’s official: PayPal shuts down its services in Russia citing Ukraine aggression,” Fedorov tweeted Saturday. “Thank you @PayPal for your supporting!”

VISA(V) -3.4% AND MASTERCARD (MA) -3.0%

Visa and Mastercard have announced they will suspend all operations in Russia in protest at its invasion of Ukraine. But Russia’s major banks, including state-backed Sberbank, have already downplayed the impact the move will have on consumers. Shoppers will still be able to use Mastercard and Visa-branded cards for purchases within Russia until they reach their expiry dates. But cards issued abroad will no longer work at businesses or ATMs in Russia. Clients will no longer be able to use their Russian Visa or Mastercard-linked cards abroad or for international payments online either. Together, the two companies control about 90% of credit and debit payments in the world, outside of China.

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