It feels like not too long ago, I was writing the first market update blog of 2022. Now here we are reflecting on the last quarter of the year. As of 31 December 2022, the price of the Satrix 40 ETF was R67.28, an increase of 14.87% from the previous quarter (R58.57) and almost identical to 31 December 2021 (R67.29). Let’s analyse what happened in the last quarter of 2022.
This quarter produced positive returns for most of the companies listed on the JSE Top 40 as 36 of these companies were in the green. Investec was the biggest winner this quarter with a share price growth of 48.78% from R72.37 to R107.67 quarter-on-quarter; and year-on-year growth of 32.48% from 31 December 2021. This substantial increase is due to Investec announcing a record interim dividend after its half-year profit almost doubled and extending its share buyback program. Shareholders were extremely happy as headline earnings per share rose 29.6%.
AngloGold Ashanti also had a very positive quarter as their share price gained 32% from quarter-on-quarter, although flat year on year. This can be attributed to an increase in production from their mines globally. However, inflation dampened which could’ve been an even better quarter for the mining company as increased fuel and reagent prices decreased earnings.
Another mining company, Kumba Iron Ore, also performed well this quarter as their shares soared 27%. This may be attributed to Kumba’s impressive Return on Equity (ROE shows the profit each Rand generates with respect to its shareholder investments), which is 46%, whilst the industry average is at 26%. This accompanied by a 25% net income growth, has really attracted some attention.
Another big winner this quarter is Richemont (luxury goods company), whose shares soared to the highest since February 2022. Their share price gained just over 30% this quarter. This was due to impressive sales figures, which gained almost 25% since March 2022. Looks like there were many people who received some nice Christmas gifts!
Naspers and its subsidiary, Prosus, also saw big gains as Naspers' share price grew almost 25% this quarter and 14.25% from December 2021. This is due to the news that Naspers will receive a R100 Billion payday after Tencent unveiled a plan to distribute its stake in Meituan (Chinese food delivery business) to shareholders.
For the second consecutive quarter, Sasol’s share price was in the red. After falling 23% the previous quarter, their share price fell an additional 5.71%. However, year-on-year growth is still positive at 4.03% from 31 December 2021. Sasol shares took their biggest hit in more than a year after the synthetic fuels and chemicals giant unveiled plans to raise around R14 Billion in convertible bonds to replenish capital reserves and refinance debt. Investors are concerned about the dilutive effect of the fundraising, which resulted in the slump. Furthermore, Sasol’s AGM - which took place last month - was dominated by Sasol’s lack of commitment to climate change. This made shareholders feel that Sasol’s climate change targets weren’t ambitious or clear enough. Safe to say the climate of that meeting was as heated as global warming (ba dum tss).
Sanlam’s share price fell close to 6% this quarter and is down almost 18% compared to this time last year. This was due to the company releasing its operational update, which warned of a profit decline. The net result from their general insurance operations (Santam) fell by 50%, amid high levels of damage due to electrical power surges, vehicle theft-related claims, and the catastrophic floods in KwaZulu-Natal. Sanlam says the operating environment remained difficult, as higher inflation and the resulting interest rate increases hit investment markets and the ability of its clients to "commit to new insurance and investment products and retain existing arrangements".
In addition to this, Clicks and Pepkor were the only other Top 40 companies in the red. Clicks shares were down 5.4% this quarter and down 14.4% compared to December 2021. While Pepkor shares were down 3.7% this quarter and down 8.6% compared to this time last year.
2022, that's a wrap!
This quarter was mostly good for the Top 40 companies. This was due to promising financial results and companies rewarding shareholders. However, increased inflation, increased interest rates, and the ongoing Russia-Ukraine conflict dampened the mood of 2022 as a whole. However, don't forget that investing in the equity market is a long-term exercise so let’s see what 2023 and beyond have in store for us.