Berkshire Hathaway’s third-quarter operating earnings declined 6% to US$12.71 billion

Market Commentary

South African Market Summary

South African equities weakened on Friday, with the All Share declining 0.48% to 112,739.38 and the Top 40 losing 0.49% to 104,713.98. Johannesburg’s coalition negotiations remained in focus after the DA secured approximately 35%, the ANC 20% and ActionSA 16%. ActionSA’s opposition to Helen Zille’s mayoral candidacy complicates agreement within the 14-day council formation window.

European Market Summary

European equities declined on Friday as concerns over AI investment following the Democratic sweep of Congress prompted broad selling, led by insurers. The STOXX 600 fell 1% to 648.33, while Germany’s DAX lost 1.9%. Britain’s FTSE 100 declined approximately 1% and recorded a weekly loss after touching a low of more than three weeks. German industrial production increased 0.7% month-on-month in September, exceeding expectations of stagnation, although August’s growth was revised down to 1.0% from 2.0%. Eurozone retail sales fell 0.7%, substantially worse than the anticipated 0.1% decline, with non-food purchases excluding fuel down 1.2%. In Britain, Lloyds reported that house prices recorded their fastest annual decline in a year during October, as higher mortgage costs continued to weigh on housing demand.

US Market Summary

US technology shares rebounded on Friday, with the Nasdaq gaining 1.1%, although it recorded a fourth consecutive weekly decline. The semiconductor index rallied 4.2%, led by an 11% advance in AMD, while Nvidia rose 2.8%. October payrolls increased by 165,000, exceeding forecasts of 65,000, and unemployment fell to 4.1%. Annual wage growth of 3.1% remained below consumer inflation of 3.7%, maintaining pressure on purchasing power. The University of Michigan’s preliminary November consumer sentiment index improved to 51.0 from 48.0, based on interviews conducted before the election. Berkshire Hathaway reported a 6% decline in quarterly operating earnings to US$12.71 billion on Saturday. It repurchased US$9.6 billion of shares during the quarter and approximately US$2 billion in October, with September cash and equivalents totalling US$356.9 billion.

 Asian Market Summary

Asian markets edged into positive territory on Monday after a volatile week marked by concerns over semiconductor demand and AI investment. China’s producer inflation accelerated to its fastest pace in nearly four and a half years in October, while consumer inflation eased. Elevated oil prices increased costs across energy-intensive industries, but weak domestic demand limited their transmission to consumers. South Korea said contracted Nvidia GPU deliveries should remain uninterrupted, with 10,000 units funded through a 2025 supplementary budget already operating. Finance Minister Lee Hyoung-il said a proposed US$10 billion advance payment for a US nuclear power project remained preliminary and required a full commercial feasibility review. Investors awaited results from CoreWeave, Applied Materials and Cisco to assess whether substantial AI infrastructure expenditure was generating sustainable returns.

Commodity Market Summary

Gold gained more than 1% on Monday as lower oil prices eased inflation concerns, with investors awaiting US inflation data and Federal Reserve policy signals. Oil declined after President Donald Trump indicated further attacks on Iran were unlikely if peace talks progressed, despite continued reports of shipping incidents near the Strait of Hormuz. Brent’s decline followed a 17% weekly fall, its steepest since the pandemic began. JPMorgan estimated global oil surpluses of 1.1 million barrels per day in September and 1.4 million in October, reflecting recovering supply and weak demand. Iraq said an understanding with Washington would permit exports through a shipping lane near Oman. Meanwhile, the Houthis claimed an attack on Saudi Aramco’s Riyadh offices, causing damage but no reported casualties.

Currency Market Summary

The rand weakened against a firmer dollar on Friday as South Africa’s municipal election count indicated a further decline in ANC support. The dollar index held at 102.20 early on Monday after gaining approximately 0.7% on Friday, supported by stronger October employment growth and lower unemployment, which increased expectations of higher US interest rates. The dollar remained near an 18-month high against the euro and a seven-month high against the Australian dollar. Separately, Japanese data released on Monday detailed earlier currency intervention, including a record ¥7.98 trillion of yen purchases on 30 July. Authorities spent another ¥5.55 trillion on 31 July and ¥1.87 trillion on 3 August. The breakdown clarified previously disclosed intervention totalling approximately ¥15.4 trillion, rather than signalling fresh action.

Domestic Company News 

Shoprite (SHP) -1.80%
Shoprite increased sales from continuing operations by 6.4% in the four months ended October 2026, supported by 7.1% growth in Supermarkets RSA despite internal selling price inflation of just 0.7%. South African sales growth exceeded the rest of the market by 5.3 percentage points during July–September, while Sixty60 sales rose 33.4%. The group opened 71 net new stores, including 61 in South Africa. Supermarkets Non-RSA sales increased 7.0% in rand terms and 4.3% at constant currencies. Other operating segments recorded a 1.5% sales decline following franchise closures, although OK Franchise trading profit growth remained positive. Pharmacy sales rose 17.6%. Strong cash generation supported lower net borrowing costs, while the disposal of the South African furniture division remained subject to Competition Tribunal approval.

The Foschini Group (TFG) +6.98%
TFG reported revenue growth of 0.1% to R31.4 billion for the half-year ended 30 September 2026, while sales declined 0.4% to R29.0 billion, rising 1.4% in constant currency. Operating profit fell 6.5% to R2.1 billion, and headline earnings per share declined 6.8% to 272.8 cents. The interim dividend was reduced 6.9% to 121.0 cents per share. TFG Africa increased operating profit by 2.7% and gained 20 basis points of South African apparel market share. Online sales surged 53.3%, supported by Bash, reaching 10.9% of African sales. The group closed 120 underperforming African stores, with another 60–80 closures planned. Operating cash generation increased to R3.7 billion, while pre-IFRS 16 net debt declined R0.9 billion to R9.1 billion. London and Australia maintained broadly flat trading expenses.

Sappi (SAP) -13.66%
Sappi’s revenue declined 3% to US$5.277 billion for the year ended September 2026, while adjusted EBITDA fell 41% to US$294 million. The net loss widened to US$747 million from US$177 million, reflecting impairments, a US$269 million forestry fair value loss and higher finance costs. Profitability faced pressure from a stronger rand, input cost inflation and subdued paper demand. Net debt increased 7% to US$2.05 billion, while liquidity stood at US$707 million. Fourth-quarter adjusted EBITDA reached US$99 million, improving sequentially but declining 11% year-on-year. Durban port congestion delayed approximately 38,000 tonnes of dissolving wood pulp sales into FY2027. Despite improving pulp and North American packaging conditions, first-quarter adjusted EBITDA is expected to fall sequentially, with planned maintenance forecast to reduce earnings by approximately US$41 million.

Purple Group (PPE) 0.00%

Purple Group expects basic earnings per share of between 5.37 cents and 5.80 cents for the year ended 31 August 2026, representing growth of 24.9%–34.9% from 4.30 cents in the previous financial year. Headline earnings per share are forecast at 5.26–5.69 cents, an increase of 22.3%–32.3% from the comparative 4.30 cents. Both earnings measures are therefore expected to exceed the prior year by more than 20%, triggering the requirement for a trading statement under JSE Listings Requirements. The announcement provides earnings ranges but does not disclose the operational drivers behind the anticipated improvement. Audited annual results are expected to be published on SENS on or about 11 November 2026. The financial information underpinning the trading statement has not been reviewed or reported on by the company’s auditors.

Global Company News

Berkshire Hathaway (BRK-B) -0.25%
Berkshire Hathaway’s third-quarter operating earnings declined 6% to US$12.71 billion, while net earnings fell 28% to US$22.11 billion, reflecting weaker insurance performance and lower investment gains. Revenue increased 11% to US$105.65 billion, supported by acquisitions. The conglomerate repurchased US$9.6 billion of shares during the quarter and approximately US$2 billion in October, signalling greater capital deployment under chief executive Greg Abel. Cash and equivalents totalled US$356.9 billion at September’s end. Geico’s pretax profit declined 45% as lower premiums supported efforts to regain customers, while its loss ratio increased to 76.6%. BNSF profit rose 19%, Berkshire Hathaway Energy earnings increased 8%, and Precision Castparts lifted pretax profit 30%. Several retail businesses faced sluggish demand, with economic and geopolitical uncertainty continuing to weigh on consumer confidence.

Moderna (MRNA) +5.27%
Moderna raised its 2026 revenue-growth forecast to 15%–25%, from up to 10%, after stronger international COVID-19 vaccine demand and partnership payments supported a return to quarterly profitability. Third-quarter revenue reached US$1.3 billion, exceeding analysts’ expectations of US$885.1 million, while net profit totalled US$162 million against a loss of approximately US$200 million a year earlier. Shares rose more than 10% following the results. Attention remained on intismeran autogene, its personalised cancer vaccine developed with Merck, which reduced melanoma recurrence or death by 42% when combined with Keytruda in late-stage testing. Moderna aims to submit a US marketing application this year, targeting a 2027 commercial launch with Merck. The company also abandoned plans for an additional norovirus vaccine trial cohort after an interim analysis failed to meet the early-success threshold.

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