Flash Briefing: China retaliation hits shares; Uber tanks again; Vodacom, Netcare, Astral

By Alec Hogg

Here’s your Biznews Flash Briefing:

  • Share prices globally took a hit yesterday as the US/China trade war sparked back into life. The Dow Jones Industrial Average fell more than 600 points, around two and a half percent, and the tech rich Nasdaq gave up more than 3%. The price declines came after China raised tariffs on roughly $60bn worth of US imports. This was in retaliation for US President Donald Trump’s decision, effective last Friday, to hike tariffs from 10% to 25% on $200bn of Chinese goods. China said it would set tariffs at an identical 25% on US imports that are currently taxed at between 5% and 10%. Despite the tit-for-tat reactions in a trade war that has now lasted more than a year, both sides say they want the often fractious trade talks to continue.
  • The US market slide came at the worst possible time for Uber Technologies, one of the New York Stock Exchange’s most anticipated new listings in years. After losing 7% on its Monday debut, Uber shares fell another 8% yesterday, lowering the company’s prelisting valuation of $100bn to the current $76bn, with shares sold to late investors at $45 now trading at $38. Drawing a line through Uber’s ride hailing competitor Lyft suggests there could be more pain in store. Lyft, which went public in March, fell 6% in price yesterday and now trades at just two thirds of its IPO price of $72 a share.
  • There were contrasting fortunes for two South African companies which released financial results yesterday. Investors were surprised on the upside by Vodacom’s numbers for the year to end March, pushing the shares up 3.3%, the best performer of the JSE’s Top 100 stocks. Although headline earnings per share fell 7%, Vodacom maintained an unchanged dividend and reported a 4% revenue improvement and a slight rise in operating profit to R24.5bn. At the other end, the share price of hospital group Netcare dropped 3% after it reported a 9% drop in pre-tax profit for the half year to end March. A R600m increase in the group’s debt to R6.2bn was ascribed to increases in capital expenditure and expansionary projects. Netcare expects what it calls a challenging healthcare landscape to continue in the second half of its financial year to end September.
  • Share prices on the JSE followed global markets lower, with a winning session turning negative after news broke of the Chinese trade retaliation. Losing shares outscored winners by 206 to 132. Investors in poultry business Astral Foods shrugged off an awful set of financials for the half year to end March. The stock gained more than 2% on a big buying order executed in the closing auction, despite a 51% collapse in the company’s profit. The company described its outlook as a mixed bag of both negative and positive prospects. Astral’s shares are down 38% on this time last year. Biggest losers yesterday were mining stocks with Exxaro leading the bad news list with a 5% price decline, ARM was off 3.5% and Sibanye lost 3%. Of the gainers, Woolworths picked up almost 2% and MTN, perhaps in sympathy with Vodacom, rose 1.6%.