PDD Holdings Revenue Misses as China Competition and Temu Pressures Mount

Market Commentary

South African Market Summary

South African equities ended Monday weaker, with the JSE All Share falling 0.88% to 116,712.04 and the Top 40 declining 0.90% to 109,389.61. Corporate developments remained in focus, led by MTN Group, which approved a R6 billion share buyback after reporting a 21.3% increase in adjusted first-half earnings and strong cash generation. Sabvest Capital also announced a R754 million investment in Frogfoot Holdings and Vox Telecommunications, securing an interest of at least 8.97% in the businesses. Elsewhere, Johannesburg Mayor Dada Morero said the city’s financial position was improving, with cash reserves now sufficient to cover 16 days of operating costs. However, persistent infrastructure deterioration, weak revenue collection and broader fiscal pressures continue to pose significant challenges for the metro.

European Market Summary

European equities ended Monday broadly unchanged as investors balanced geopolitical uncertainty surrounding U.S.-Iran developments against a busy regional economic calendar. The STOXX 600 closed flat at 654.21, extending its recent consolidation after an earnings-driven rally pushed the benchmark to record highs earlier in August. Inflation risks remain central, with money markets increasingly pricing a more hawkish European Central Bank stance as geopolitical tensions and higher energy costs threaten renewed price pressures. Investors will watch German and French GDP figures, the German Ifo survey and Spanish inflation data for further policy signals. Bond markets also remain in focus after a recent surge in European yields, while the UK’s FTSE 100 edged higher as gains among mining shares helped offset broader geopolitical concerns.

US Market Summary

US equities came under pressure on Monday as technology stocks weakened and investors assessed geopolitical, fiscal and monetary-policy risks ahead of several major catalysts. Nvidia fell 2.9%, Micron Technology declined 5.8% and Broadcom lost 2.6%, dragging semiconductor shares lower as concerns around AI valuations and political opposition to data centres weighed on sentiment. Attention also remained on long-dated Treasury yields, with the 30-year yield holding above 5% despite speculation that Treasury could use its General Account to support bond buybacks. Investors are now focused on Wednesday’s Personal Consumption Expenditures inflation report, Nvidia’s quarterly results and Federal Reserve Chair Kevin Warsh’s Jackson Hole speech on Friday. Trade tensions also resurfaced after President Trump threatened 50% tariffs on Canadian automotive imports from January.

Asian Market Summary

Asian equities weakened on Tuesday as investors reacted to a less forceful-than-feared U.S. sanctions announcement on Iran and renewed concerns around regional growth and monetary policy. In Australia, minutes from the Reserve Bank’s August meeting showed policymakers were divided over whether further tightening may be needed, although the board ultimately held the cash rate at 4.35%. In China, sharp volatility in humanoid robot maker Unitree raised fresh concerns over speculative excess in AI-related shares after its valuation swung dramatically following its Shanghai debut. Beijing also opened applications for an 800 billion yuan policy-financing programme aimed at supporting local government projects and economic activity. The measure comes as China’s fixed-asset investment contracted 6.7% during the first seven months of 2026, underscoring persistent domestic growth pressures.

Commodity Market Summary

Oil prices stabilised on Tuesday after falling more than 2% in the previous session, as investors assessed tougher U.S. secondary sanctions against Iran and their implications for global supply. Treasury Secretary Scott Bessent announced expanded measures aimed at cutting Iran’s economic lifeline, although targeted countries and implementation dates were not disclosed. The increased emphasis on economic pressure helped ease immediate concerns over disruptions to Middle Eastern oil flows, despite Washington keeping military options open. Meanwhile, U.S. Strategic Petroleum Reserve crude inventories fell by 3.7 million barrels to 289.7 million barrels, their lowest since November 1982. Gold extended its rally to a more than three-month high, supported by Treasury buyback measures, while markets awaited key U.S. inflation data and Federal Reserve Chair Kevin Warsh’s Jackson Hole speech.

Currency Market Summary

The South African rand began the week on a firmer footing, trading near its strongest level since the start of the Iran war as higher gold prices, broad emerging-market currency strength and a subdued U.S. dollar provided support. The dollar index slipped marginally to 98.96 in Asian trade on Tuesday after gaining 0.16% overnight, with investors assessing expanded U.S. sanctions against Iran and efforts to relieve pressure on longer-dated Treasury yields. The euro edged up to $1.1668, close to a three-month high, while sterling strengthened 0.1% to $1.3639 near a six-month peak. The Japanese yen also firmed slightly to 159.21 per dollar, remaining stronger than its recent multi-decade low of around 164 as broader dollar momentum struggled to build.

Domestic Company News 

MTN Group Limited (MTN) -1.71%
MTN delivered strong first-half growth, with reported service revenue rising 9.7% to R115.3 billion and increasing 17.5% in constant currency. EBITDA before once-off items advanced 20.0% on a reported basis and 24.4% in constant currency, while the reported EBITDA margin improved 4.4 percentage points to 47.1%. Adjusted HEPS increased 21.3% to 793 cents, although reported HEPS declined 5.8% to 615 cents. Data revenue rose 21.0% to R57.6 billion, while fintech revenue increased 1.4% to R14.9 billion. Customers grew 6.7% to 317.7 million, with Mobile Money active users reaching 70.8 million. Equity free cash flow increased 32.7%, net debt-to-EBITDA remained low at 0.3x, and management reaffirmed medium-term guidance while confirming plans to commence a share buyback programme.

Sabvest Capital Limited (SBP) +2.63%
Sabvest Capital has agreed to invest R754 million in Frogfoot Holdings and Vox Telecommunications through subscriptions for new shares, giving it an interest of at least 8.97% in the businesses. The investment forms part of a broader consortium transaction valuing Frogfoot, Vox and Hypa at an enterprise value of R14.4 billion and an after-debt equity value of R8.4 billion. Sabcap will fund the investment through newly raised term bank debt, with completion targeted for 1 October 2026, subject to conditions precedent being met by 24 September. The companies operate across fibre infrastructure, internet services and prepaid broadband. Sabcap expects the transaction to be materially value accretive, supported by growth opportunities, fresh capital for expansion and experienced management. The deal is classified as a Category 2 transaction and requires no shareholder approval.

Advtech Limited (ADH) +1.01%
Advtech delivered solid interim growth for the six months ended 30 June 2026, with revenue increasing 8% to R5.06 billion from R4.68 billion. Operating profit before interest and non-trading items rose 14% to R1.12 billion, outpacing revenue growth and supporting stronger earnings. Normalised earnings advanced 16% to R717 million, while normalised earnings per share increased 16% to 130.8 cents. Headline earnings per share also rose 16% to 130.8 cents, with earnings per share up 15% to 129.4 cents. Reflecting the group’s strong cash generation and capital structure considerations, the board maintained annual dividend cover at 2.0 times and declared an interim dividend of 53.0 cents per share, representing an 18% increase from 45.0 cents in the comparable period.

Mpact Limited (MPT) -0.18%
Mpact reported a mixed first-half performance, with revenue from continuing operations increasing 1.1% to R5.96 billion, while EBITDA declined 4.4% to R614 million and operating profit fell 15.7% to R284 million. Headline earnings per share decreased to 48.1 cents from 104.1 cents, reflecting pressure in Paper Manufacturing from lower selling prices, higher input costs and increased depreciation. Cash generation improved materially, with cash generated from operations rising to R448 million from R173 million, while net debt declined to R2.6 billion from R3.0 billion. Plastics performed strongly, with operating profit increasing to R45 million from R7 million. Mpact closed its BM6 coated cartonboard machine and continues portfolio optimisation initiatives. The board declared an interim dividend of 15 cents per share, down from 30 cents previously.

Global Company News

PDD Holdings Inc. (PDD) -1.48%
PDD Holdings reported weaker second-quarter growth as intense competition in China and mounting regulatory pressure overseas weighed on performance. Revenue rose 8% year on year to 112.36 billion yuan, below the 116.35 billion yuan market estimate, while net income attributable to ordinary shareholders declined 12% to 27.2 billion yuan. Adjusted earnings per American Depositary Share of 19.33 yuan nevertheless exceeded expectations. Domestic conditions remain challenging, with subdued consumer confidence and aggressive discounting across China’s e-commerce sector squeezing margins and prompting additional investment in platform governance and merchant support. Internationally, Temu faces higher tariffs, shipping and compliance costs, alongside tougher regulation in the U.S. and Europe. Management cautioned that these pressures could slow fulfilment and materially increase costs in affected markets.

Xpeng Inc. (9868) -0.87%
Xpeng forecast third-quarter revenue of between 21.7 billion yuan and 23.4 billion yuan, below analysts’ average estimate of 26.61 billion yuan, as intense competition and weak demand continue to pressure China’s automotive market. The EV maker delivered 103,295 vehicles during the second quarter, within its guidance range of 100,000 to 106,000 units. However, its net loss attributable to ordinary shareholders widened to 1.34 billion yuan, substantially exceeding expectations for a 511.8 million yuan loss. Xpeng also recalled 264,842 vehicles as part of a wider Chinese recall linked to emergency door-release concerns. The company recently launched its MONA L03 AI SUV coupe, while its robotics unit raised more than $900 million in its first funding round, highlighting expansion beyond the core vehicle business.

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