Brait expects short-term earnings hit

As lockdown restrictions are loosened up, companies are slowly easing back into business. Non-critical industries that were closed completely during the initial lockdown period, such as restaurants, are now testing the waters to gauge demand for delivery-only services. So far, Spur says the response has been good but it wants to see if the momentum continues.

Investment group Brait has a number of iron in the fire. Premier, which manufactures a number of SA staples including bread, flour and mealie meal, has benefitted from strong demand. So too has Iceland Foods in the UK. Virgin Active is now getting ready to reopen gyms in some of the countries where it operates.

Meanwhile, dividends continue to be affected by the uncertainty caused by Covid-19 and the potential impact on companies' cashflows. Cartrack is paying a final dividend for its financial year but Transaction Capital is holding back on an interim dividend for now and Delta Property Fund is reviewing its distribution policy.

More on those stories to follow, along with a warning message from top trader Andrew Kinsey in "Why do central banks do what they do?". While the SA Reserve Bank is a pillar of rectitude, he says following central bank examples from around the world may not always be best practice and have all sorts of distorting effects, with implications for the local economy and financial markets.

Finally, if you thought the Covid-19 lockdowns were having a devastating impact on mining, including iron ore and the steel industry, Ingham Analytics has some surprising news for investors in BHP and Kumba: nothing of the sort. Iron ore and steel demand is up and so is pricing, while steel inventory is down. The driver? China. The decrease in oil prices too has had a positive effect. Why should this be so and how can you profit from firmer fundamentals than would be suggested by the negative headlines? In a punchy Trader, entitled "Iron ore and steel defies Covid-19 macro gloom", there are interesting data and graphs, latest fair values on both stocks and suggested trading strategy.

Have a good day and stay safe if you're venturing out.

Stephen Gunnion

Managing Editor, InceConnect

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