Episode Overview:
In this episode, Simon Brown dives into the current economic landscape with a focus on interest rates, inflation, and the state of the South African Rand (ZAR). He also explores asset-light businesses and why they make great investments, followed by a breakdown of the latest market activity and local company results.
SA Prime and CPI September 2024
Palladium weekly chart | 18 September 2024
"Rate cuts are coming, and I think we'll see a short-term sell-off as markets react."
"Asset-light businesses like Santova and Shein are great investment opportunities because they don't carry the heavy burden of owning physical assets."
"Outsurance continues to impress with strong numbers and dividends, proving the strength of short-term insurers."
Chapters
00:00 Economic Landscape and Rate Decisions
03:09 Understanding Asset-Light Businesses
05:54 Market Psychology and Upcoming Events
09:11 Local Results and Investment Insights
11:52 Exploring New Investment Opportunities
15:10 Finbond and Market Speculations
17:59 Larry Ellison and Oracle's Rise
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Summary
In this episode of JSE Direct, Simon Brown discusses various topics including the troubles faced by Anglo Platinum, the performance of leisure stocks, Anglo Gold Ashanti's* acquisition of an Egyptian gold miner, and the impact of two pot withdrawals. He also touches on the future of PGMs, the growth of electric vehicles, and the psychology of markets.
"Anglo Platinum has a problem which is perhaps a little more unique than just the PGMs."
"There is that initial overhang. A whole lot of people will get Anglo-Platinum shares and say, 'I don't want these' and sell it."
"The World Platinum Council is saying we're gonna have deficit again, that's the important point."
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00:00 Challenges for Anglo Platinum and the PGMs Market
02:22 The Future of PGMs and the Impact of Electric Vehicles
07:54 The World Platinum Council's Projections
09:16 The Diminishing Role of Internal Combustion Engines
11:09 The Impact of Low Prices on Production
14:55 Anglo Gold Ashanti's Acquisition and the Use of Equity
17:56 Pot Withdrawals and their Effect on the Market
19:18 Performance of Leisure Stocks: City Lodge and Sun International
19:42 Concerns about Sports Betting and its Impact
20:10 Upcoming Events: Investment Goals and the Psychology of Markets
In this episode of JSE Direct, Simon Brown delves into the impact of anticipated interest rate cuts and how they may affect various sectors and stocks. He shares his thoughts on potential beneficiaries like consumer stocks, REITs, and companies with high levels of debt. The episode also covers key updates on Nvidia's earnings, Nike's stock valuation, and a new ETF listing by ETFSA.
Nike | Close 27 aug 24 | Weekly chart
ETFSA is listing an Actively Managed ETF, The ETFSA Balanced Foundation Prescient AMETF (JSE code: ETFSAB).
Simon spoke with Gareth Stobie from ETFSA about the ETF, the listing process, where it fits in a portfolio and what it will be holding.
In this landmark 600th episode of JSE Direct, Simon Brown reflects on the podcast's journey from its beginnings as a radio show in 2008 to becoming a leading podcast for market insights. The episode covers a range of topics, from South Africa's local CPI and a strengthening Rand to the surprising twists in the gold market and a mixed bag of corporate earnings.
South Africa's CPI has come in better than expected at 4.6%, fueling speculation on whether the next rate cut by the MPC might be more aggressive than anticipated.
The Rand has shown significant strength, dropping below 18 to the dollar, with Simon analyzing the contributing factors, including foreign investment in bonds and a weakening US dollar.
Simon reaffirms the current bull market, highlighting the JSE's all-time highs and advising listeners to stay invested while cautioning against the risks of sitting on the sidelines.
Top40 20 August 2024 | Weekly chart
Gold prices have surged above $2,500, driven by central banks' increased purchases and concerns about the US dollar's stability. Simon discusses the potential for further gains in the gold market.
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Sasol's Struggles:
Simon revisits Sasol's recent production and trading updates. Despite some positive news, the company's financials remain grim due to significant write-downs and a challenging pricing environment, especially in the chemical complex. With a forward PE ratio hovering around 3, Simon questions the actual value in Sasol and advises caution, emphasising the importance of waiting for a stock to show signs of recovery before investing.
Sasol weekly chart | 13 August 2024
Simon provides insights into ADvTech's latest trading update. Despite a voluntary update (not mandated by a 20% variance), the company shows strong growth in earnings per share. He discusses the stock's valuation, historical performance, and why he remains optimistic about its future prospects, even as it trades at a PE ratio of around 15.
ADvTech weekly chart | 13 August 2024
Simon shares his thoughts on CMH, a stock he has held for years. Despite a stagnant price movement over the past three years, the stock offers a solid dividend yield. He discusses the broader consumer environment, the potential impact of reduced interest rates, and why he continues to favour CMH over competitors like Motus.
CMH weekly chart | 13 August 2024
After a year and a half of delays, Renergen finally starts producing helium. While the stock has seen a recent uptick, Simon highlights the challenges that still lie ahead, including scaling up production and the company's upcoming NASDAQ listing. He also reflects on the broader sentiment in the junior mining sector.
Coronation has launched six actively managed ETFs on the JSE, a significant development in the local ETF market. Simon explains the concept of actively managed ETFs and why this move could be a game-changer for both Coronation and the JSE, even if he personally isn't planning to invest in them. Find details here.
The latest US CPI data shows a slight decrease to 2.9% for July, but core inflation remains elevated. Simon discusses the implications for future interest rate cuts by the Federal Reserve and the potential impact on South African monetary policy.
Simon pays tribute to Brett Duncan, a former stockbroker and warrants market leader at Standard Bank, who recently passed away. Brett was a key figure in Simon's early career and played a significant role in the South African warrants market. His passing is a significant loss.
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Jerome Powell's Statement:
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The South African President's recent speech emphasised making the country a hub of construction and infrastructure development.
The potential for public-private partnerships and the types of infrastructure that might be developed, including roads, energy transmission, and public buildings.
JSE Listed Construction Stocks | 1 year return | close 23 July 2024
Simon Brown wraps up the episode by emphasizing the importance of infrastructure development for South Africa's economy and reiterates his top stock picks to benefit from potential future construction projects: Raubex, Afrimat, and Reunert. He also touches on the potential 3% GDP growth for 2025 and the broader market implications.
Today is the last day to trade before Pick n Pay rights issue kicks in.
° If you hold at close tonight you will receive 51.11 rights per 100 PIK shares, code will be PIKN
° You can sell then in market
° Or pay 1596c per each to get a new PIK share
° HAVE to do so by 30 July— Simon Brown (@SimonPB) July 16, 2024
Impact:
Winners:
Challenges:
[caption id="attachment_42560" align="aligncenter" width="849"] Tesla weekly chart | 02 July 2024[/caption]
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Key Takeaways
Simon Brown
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dd
Simon Brown
SPAR:
Foschini Group:
[caption id="attachment_42378" align="aligncenter" width="849"] USDZAR | 12 June 2024[/caption]
Simon Brown
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New Two-Pot Pension System:
[caption id="attachment_42315" align="aligncenter" width="849"] Brent oil | weekly | Koyfin
[caption id="attachment_42316" align="aligncenter" width="849"] Santova daily | 06 May 2024 | Koyfin
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[caption id="attachment_42259" align="aligncenter" width="849"] Rand | 1pm 30 May 2024[/caption]
Changes in 10X ETFs: Local Dividend Aristocrat and Smart Beta merging into a Top 50 ETF.
Nvidia's Financial Performance
[caption id="attachment_42201" align="aligncenter" width="849"] Calgro M3 vs Balwin[/caption]
JSE Direct is an independent broadcast and is not endorsed or affiliated with JSE Limited. Views expressed are solely those of the presenter.
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[caption id="attachment_42112" align="aligncenter" width="849"] Top40 close 15 May 2024[/caption]
[caption id="attachment_42113" align="aligncenter" width="849"] Clagro M3 close 15 May 2024[/caption]
Notable events include Richemont*, Palo Alto, Netcare, Astral, Famous Brands, Coronation, UK and US inflation data, FOMC minutes, and Nvidia results.
Simon Brown
Introduction:
Clicks Results and Market Analysis
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Simon discusses the South African Reserve Bank's recent review, indicating a reluctance for rate cuts in the near future due to inflationary pressures and economic uncertainties.
Key takeaway from the bi-annual Monetary Policy Review of the @SAReserveBank:
Don’t bet on a domestic interest rate cut this year. https://t.co/mhRS5vKIFQ pic.twitter.com/sc5p9GPcf5
— Adrian Saville (@AdrianSaville) April 24, 2024
Simon touches on Tencent's positive performance, gold and oil price movements, and the potential impact on global markets
UK and Local Inflation:
[caption id="attachment_41866" align="aligncenter" width="849"] SA Inflation 5.3% for March 2024[/caption]
[caption id="attachment_41867" align="aligncenter" width="849"] Chinese GDP YearONYear per quarter[/caption]
kk
[caption id="attachment_41807" align="aligncenter" width="849"] PGM and miner moves for the month of April up to the 9th[/caption]
Simon Brown
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Simon Brown
* Simon holds ungeared positions.