Face-Ripping Rally on the JSE:
- Surge attributed to the formation of a coalition government involving ANC, DA, and IFP.
- Top 40 index rose 3.5%, a significant increase not seen since February 2018.
- The rally, likened to the start of a marathon, suggests potential long-term growth, despite possible volatility.
RAND and Resource Stocks:
- RAND trading under 18, affecting resources positively.
- Potential for RAND to strengthen further, possibly reaching 17.
Coalition Government and Market Impacts:
- The coalition’s stability is uncertain but critical for long-term market confidence.
- JP Morgan upgraded South Africa from underweight to overweight, signaling positive outlooks.
SA Inc Stocks and ETFs:
- Retailers like Shoprite*, Mr. Price*, Foschini Group*, and Truworths hitting 52-week highs.
- ETFs for local investors, focusing on SA Inc..
- Recommendations include avoiding heavy Rand Hedge dual-listed miners in a strong RAND environment.
RSA Retail Savings Bonds:
Inflation and Interest Rates:
- Local CPI stable at 5.2%, within the target band but aiming for 4.5%.
- US FOMC holds rates steady, hinting at a possible future rate cut.
- Prospects for lower local interest rates and their impact on retail stocks and disposable income.
Market Opportunities:
- Interest in retailers and brokers like Purple Group* and PSG Konsult, considering the potential increase in disposable income and trading volumes.
- Positive long-term outlook, but caution against immediate full investment.
Simon Brown
* I hold ungeared positions.