The market woke up yesterday to the news of a strong rally by Tencent in Hong Kong. It closed 5.3% higher ahead of earnings being released today, a rare opportunity to smile for battered investors in Chinese tech stocks. Tencent is down 39% over the past year, having taken Prosus and Naspers with it. Prosus was 7.4% higher by afternoon trade yesterday, taking the one-year performance to -45.5%. Perhaps the worst thing about this scenario is that attempts to close the discount to net asset value that has plagued Prosus (and Naspers) only made it worse.
I managed to miss the Tencent trainwreck but I did catch the Alibaba one. A quick look on my EasyEquities app reminded me that I'm down 61% on that position. This is exactly why I advocate a highly diversified portfolio, as the percentage is terrible but the absolute value is something I can stomach. My favourite thing about EasyE quities is that the fractional ownership model and incredibly low fees make it possible to have a diversified portfolio without making your broker rich with high minimum trading fees. And in case you're wondering - I've been using EasyEquities since long before they came on board as headline partner to Ghost Mail. My comments on the product are sincere.
The first big story on SENS yesterday was the release of results by Pick n Pay. I drew this chart on Google Finance at around 2:30pm yesterday so it won't reflect yesterday's closing prices but gives enough of an idea of the year-to-date performance:
The Pick n Pay share price has been on a rampage since early March, having clawed back its position from sector laggard to sector leader this year. I'm waiting for the Spar trade to reward my patience, as I've held a long position for a few months now. The major pressure in Spar rerelates to previous disappointments in the business in Poland and there are now many more mouths to feed in that country, sadly for all the wrong reasons. Meanwhile, Pick n Pay has just released the strongest result I've seen from the company with the clearest indication of strategic priorities. The new CEO is clearly having a positive impact, as I elaborate on here.
There were several other interesting updates on the market as well. As you know by now, I cover them in reasonable detail in the daily Ghost Bites article - find it here.
The team at TreasuryONE has written on the pending rates decision by the Monetary Policy Committee (MPC). The debate focuses on whether the hike will be 25bps or 50bps, not whether there will be a hike at all. Of course, anything is possible in the market. As Andre Botha, Senior Dealer at TreasuryONE writes in this article, the market will focus on the tone of the MPC statement and not just the decision.
Here's a quick update on the currencies from Wichard Cilliers, Head of Market Risk at TreasuryONE:
"On a day when we saw a little bit of US dollar weakness, the emerging markets really came to the fore and erased some of the losses that they have endured in the past couple of weeks. The rand broke below the R16.00 level. The market will eagerly await the MPC tomorrow to see if interest rates are going up by 50 basis points or 25. We expect the SARB to be overly cautious and hike by 50 basis points."
With Westbrooke Alternative Asset Management joining us on Magic Markets again this week to discuss private equity, I thought it would be useful to take you back to their previous experience where we discussed the fascinating world of venture capital. Joined by Dino Zuccollo in Joburg and James Lightbody in the UK, it was an insightful show that you can enjoy at this link.
Have a lovely day.
