Private sector seeks credit again; Eskom averts grid collapse

A GAUGE measuring manufacturing sentiment recovered after losing momentum in December as demand for goods rose and Covid infections eased, signalling a strong start to the year. Absa’s purchasing managers’ index rose three points to 57.1 in January, an expansion in an industry accounting for 13% of GDP.

DEMAND for privatesector credit rose for a sixth consecutive month in December, buoyed by renewed appetite among corporations. Privatesector credit extension rose 2.6% year on year, versus 2.5% the previous month.

SHARES of Aspen Pharmacare rose the most in a month after SA’s biggest maker of pharmaceuticals said it expected headline profit to rise by more than a third in its 2022 halfyear. Headline EPS for the six months to December would be 34%-38% higher than the prior comparative period, the group said in a trading update.

ESKOM resumed power cuts to prevent a total collapse of the grid as its coal-fired plants remain prone to breakdowns. Its reserves of diesel, used to fuel turbines, and water at pump-storage plants had been depleted to the point where the system “wouldn’t be able to cover additional extensive losses”, said CEO André de Ruyter.

DRDGOLD expects headline profit to roughly halve in the six months to end-December, weighed down by lower selling prices and higher input costs, including chemicals. Headline earnings per share are expected to fall by 43%53%, from 111c in the prior comparative period.

ABSA expects SA’s economic growth to more than halve in 2022, but says inflation has probably peaked and the rand could perform a lot better than many predict despite a “tumultuous political year” ahead. The bank expects GDP to expand by 2.1% in 2022, down from an estimated 4.7% in 2021.