In this edition of Lens on Markets, we look at how Yum Brands is to sell Pizza Hut for US$2.7 billion as the chain battles tougher competition
Market Commentary
South African Market Summary
South African equities started the week on a firmer footing, with the JSE All Share index gaining 2.51% to 115,556.19 points and the Top 40 advancing 2.72% to 107,546.49 points on Monday, before markets closed for Youth Day. Investor attention now turns to a busy domestic data schedule, with Statistics South Africa due to release May inflation figures, expected by Reuters-polled analysts to accelerate to 4.7% year-on-year from 4.0% in April. Retail sales data will also be watched for signals on household demand and broader economic resilience. Separately, President Cyril Ramaphosa cautioned against scapegoating migrants for South Africa’s economic challenges amid recent anti-immigrant protests and sporadic violence.
European Market Summary
European equities extended their rally on Tuesday, with the pan-European STOXX 600 adding 0.3% after closing at a record high in the previous session. Sentiment was supported by a preliminary US-Iran agreement that could end the conflict and allow oil flows through the Strait of Hormuz to resume. The STOXX 600 is now up more than 7% year-to-date, compared with a 10% gain for the S&P 500. Cyclical sectors led the advance as investors rotated into areas likely to benefit from improving economic visibility, with banks up 1.7% and industrial goods and services gaining 1.1%. Defence stocks rose over 1.3%, while UniCredit advanced 4.2% after Germany rejected its offer for Commerzbank shares.
US Market Summary
US equity markets were mixed on Tuesday, as weakness in technology stocks weighed on the Nasdaq Composite and S&P 500, while the Dow Jones Industrial Average recorded its second consecutive record close. After Monday’s rally on optimism over a potential US-Iran peace deal, investors paused for breath despite oil prices falling to their lowest levels since early March. SpaceX rose 4.8% to US$201.80 after touching a record US$225.64, briefly overtaking Microsoft in market value and closing above Amazon to become the fifth-most valuable US company. Yum Brands gained 1.9% after announcing the US$2.7 billion sale of Pizza Hut. Market breadth was mixed, with Nasdaq decliners outnumbering advancers despite solid overall volumes.
Asian Market Summary
Japan’s export momentum strengthened in May, with shipments rising 17.0% year-on-year, ahead of Reuters-polled expectations of 16.2% and marking the fastest growth since November 2022. The headline gain was driven by robust demand for cars and semiconductors, with chip exports surging 61.2% in value terms and vehicle exports up 16.4%. However, export volumes rose just 0.5%, suggesting much of the increase reflected higher prices and currency effects from the weak yen. Exports to China climbed 17.9%, while shipments to the United States rose 12.5%, although Middle East exports fell 32.0% amid the US-Iran war. Manufacturing sentiment also improved, with the Reuters Tankan index rising to plus-13 in June.
Currency Market Summary
The US dollar softened on Wednesday ahead of the Federal Reserve’s first policy decision under Chair Kevin Warsh, as optimism over an interim US-Iran peace agreement supported risk appetite and reduced demand for the greenback. Currency moves were broadly subdued in early Asian trade, with investors reluctant to take large positions before the Fed’s rate decision, statement, updated projections and press conference. While rates are widely expected to remain unchanged, markets will watch closely for any signs that policymakers are moving away from an easing bias amid renewed inflation risks. The yen remained fragile at around 160.43 per dollar, despite the Bank of Japan raising rates to a 31-year high, leaving traders alert to possible intervention from Japanese authorities.
Commodity Market Summary
Gold extended gains for a fifth consecutive session on Wednesday, supported by reduced expectations of further US interest rate hikes as investors assessed progress towards a US-Iran peace agreement and awaited the Federal Reserve’s policy decision. Oil prices also edged higher in early trade, recovering part of the previous session’s losses as markets weighed whether the interim deal would hold and whether flows through the Strait of Hormuz would normalise. Early details suggest the agreement would prevent Tehran from developing a nuclear weapon while allowing Iran to resume oil sales upon signing. However, demand signals remain mixed, with China’s May crude throughput falling 9.1% year-on-year, while API data showed a larger-than-expected 8.3 million-barrel draw in US crude inventories.
Domestic Company News
Clientèle Limited (CLI) +0.66%
Clientèle has confirmed that the final offer consideration under its proposed share repurchase, delisting and related specific share issues remains unchanged at R19.90 per offer share. The company reminded shareholders that the consideration will generally be treated as a dividend for South African income tax purposes, meaning dividends tax may apply depending on each shareholder’s status and jurisdiction. For shareholders not exempt from dividends tax, the net consideration after the standard 20% withholding tax will be R15.92 per share. Clientèle will also pay securities transfer tax at 0.25% on the taxable amount. Shareholders seeking exemptions or reduced treaty rates must ensure the required declarations are submitted to their broker or CSDP within the relevant deadlines.
Global Company News
Yum Brands Inc. (YUM) +1.94%
Yum Brands will sell Pizza Hut for US$2.7 billion as the chain battles tougher competition, cautious consumers, higher commodity costs and shifting eating habits linked partly to GLP-1 weight-loss drugs. Yum China will acquire the Mainland China business for US$1.2 billion, while private equity firm LongRange Capital will buy the remaining operations for US$1.5 billion. The sale follows several quarters of declining Pizza Hut sales and is expected to close in the third quarter of 2026, subject to regulatory approvals. Yum will retain KFC and Taco Bell, while also announcing an additional US$4 billion share buyback. Yum China plans to expand Pizza Hut to more than 6,000 outlets by 2028.
Olin Corporation (OLN) -5.89%
Olin has agreed to acquire Huntsman in an all-share transaction valued at about US$2.43 billion, creating a larger US chemicals group as the industry seeks scale, cost efficiencies and stronger vertical integration. Huntsman shareholders will receive 0.5476 Olin shares for each share held, implying a price of US$13.85 per share, below Huntsman’s previous close. The combined company, to be named OlinHuntsman, is expected to generate more than US$12 billion in annual revenue and over US$400 million in cost synergies. The deal combines Olin’s chlorine, caustic soda, manufacturing and feedstock capabilities with Huntsman’s downstream formulation expertise. Olin shareholders will own 54.5% of the enlarged group, with completion expected in first-half 2027.
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Research Team