View in web browser

Good morning Voornaam,

The rhetoric on X around "the markets" has been quite something to behold. Populist political groups hate them, of course, as the markets are quite the inconvenience. Business-friendly political groups argue out that without investment, we will all be poorer. You get no points for guessing where I stand on this. With Nedbank reporting subdued credit demand from corporates in the build-up to elections, the hope is that we are in a GNU dawn for investment in South Africa. If things can at least hold steady and the lights stay on, it's not unreasonable to expect companies to hit the go button on local projects. Here's hoping.

There are a couple of events this week that you can register for. The first is a bizval webinar on Wednesday at 12pm, with yours truly in a panel discussion on preparing a business for exit (sale). The second is Unlock the Stock on Thursday at 12pm, featuring the management teams of Spear REIT and Adcorp.

Fresh out the oven:

Ghost Bites: Nedbank released a pre-close update, as did Attacq and Exxaro. Brait, KAP and RECM and Calibre all released numbers as well. Together with the important Little Bites, you can get all the details in Ghost Bites>>>
Twelve B Energy Fund II: The fund is closing on 30 June. The solar investment trend in South Africa remains an imperative, as Tivon Loubser explains in this article. If you want to invest in the fund, be sure to contact them this week. Get full details here>>>

Unlock the Stock: Oceana Group recently presented on Unlock the Stock for the first time. To get to grips with this fishing group and the strong recent performance, watch the insightful presentation and Q&A here>>>
Dominique Olivier: Sometimes, businesses are here for a good time rather than a long time. For insights into trends that end and what that means for businesses (EskomSePush, anyone?) you can read this article>>>

In case you missed it:

Magic Markets: With my travels abroad in the past week and the incredible improvement in sentiment back home, this was the perfect opportunity to focus on the dangers of home country bias in the latest episode of Magic Markets. For offshore vs. SA financial insights (including life on the ground), find it here>>>
Ghost Stories with Kingsley Williams of Satrix: There is only one free lunch in investing. Aside from the benefits of diversification, we discussed many other elements of investing. You can enjoy it here>>>
Ghost Stories with Michael Field of Fedgroup: There are different ways to think about portfolio construction and how important elements like yield and inflation protection can be brought in. Learn more here>>>

The Current brought to you by Investec: This year, SA is set to become the tenth-largest solar market in the world. In episode 4, Iman Rappetti spoke with Investec's Melanie Humphries, Bernard Geldenhuys and De Wet Taljaard from SAPVIA to explore SA’s apparent solar boom. Enjoy it here>>>

Learn all about Oceana Group

Oceana Group recently reported record first-half performance. To understand it properly and to assess the group's prospects, you can watch the presentation and Q&A on Unlock the Stock. The recording is available here.

Local company news:

Nedbank has been keeping shareholders very well informed about the state of play. A month after releasing a four-month update, they've now released a pre-close update. It's filled with important information about the performance of the bank and trends in our economy.

KAP is a great example of how diversification only really works if your major exposure isn't underperforming. Safripol is continuing to suffer in this environment for polymers, leading to a lack of recovery in KAP's earnings despite other divisions all looking better.

At Attacq, the portfolio is performing well and there are interesting insights into how they've had to tweak their residential development to respond to demand.

Exxaro is expecting to be down vs. the second half of 2023, with reduced demand from Eskom in the Waterberg region as one of the drivers.

Brait needs more time to exit its portfolio. Of course, the management fees continue to be paid each year, which directly incentivises the group to hold on to assets for as long as possible.

At RECM and Calibre, Goldrush has had to contend with the impact of loadshedding in the past financial year, which doesn't do the gaming business any favours.

All these stories, plus the Little Bites, are available in Ghost Bites at this link>>>

Trends that end: businesses with short shelf lives

What happens when a business finds itself offering a solution that no longer seems to have a problem? Can it adapt, or will it die? With the sudden disappearance of loadshedding, Dominique Olivier dug into this concept. Read it here>>>

The only free lunch in investing

With volatility as the theme in markets in a year of elections, it’s important to keep your head as an equity investor. Take a long-term view and let the market do its job. Easier said than done, of course. Kingsley Williams joined me to share practical tips and important insights into investing. The podcast and full transcript are available here.

International business news:

Microsoft finds itself as the latest example of Big Tech getting on the wrong side of regulators. The EU has accused Microsoft of breaching antitrust rules through the "abusive" bundling of Teams and Office. Zoom would certainly concur with that assessment, as Teams did a pretty good job of obliterating Zoom's growth. Oddly enough, the complaint that triggered the investigation actually came from Slack, which is owned by Salesforce. Perhaps Zoom has just resigned itself to its fate.

This is a tricky one, as Microsoft's core strength is the enterprise software platforms that allow it to launch new products to a vast user base. Regulators always have to walk a tightrope, as you can't punish a company for being successful, but you also can't allow a scenario where competitors are squashed and monopolies are formed.

Either way, I'm happy to have Microsoft as one of my largest positions. Would you rather be invested in the conqueror, or the company that got bliksemed and had to complain to the regulator for help?

We covered Stellantis in Magic Markets Premium this week. To get access to this research and the rest of the vast library, subscribe to the platform here.

Macroeconomic Update

The dollar index is up this morning, with the French elections keeping the euro under pressure. This week sees the first presidential debate between Joe Biden and Donald Trump, but the major impact on US markets will come from Friday's US PCE price index release.

The rand closed on a softer note yesterday as uncertainty around the GNU continues. It is trading in a R18.00 to R18.30 range.

In commodities, copper has continued to fall on fears of lower Chinese demand. There are also broader concerns around a renewed trade war between the West and China, with tariffs on EVs as the flash point. Oil is trading in a narrow range.

Key indicators: USD/ZAR R18.23; US 10-year 4.26%; Gold $2,317; Platinum ZAR R17,971; Brent Crude $85.35

This macroeconomic update is based on TreasuryONE's morning update.