It's Monday, which means Chris Gilmour got the typewriter out this weekend and wrote something for us. Ok, he probably did it on something more modern, but his experience in the market goes back so far that he was certainly on a typewriter at some point. This historical context is why his articles are always worth a read, whether he is writing on geopolitical topics or sectors on the JSE. This week, Chris decided to focus on non-discretionary retailers on the JSE. This includes the three major supermarket groups (Shoprite / Pick n Pay / Spar), food and general merchandise retailer Massmart as well as the two pharmacy groups (Clicks and Dis-Chem). Within that group of course, business models and performance vary wildly. Interestingly, local retailers have tended to find the strongest support among international investors. Local investors seem to be shy of the sector, perhaps because we are exposed to South Africa's many risks almost every day of our lives. If you are ready for an excellent overview of this sector on the JSE, be sure to read this feature article. In local market news, we saw an excellent trading statement out of PBT Group on Friday. This company offers exposure to exciting global tech trends, without demanding the kind of multiples seen on the Nasdaq. Another technology company with a totally different investment thesis is Etion Limited, which has been a value investor's dream. We also saw updates from two companies that have been wonderful examples of long-term value destruction: Steinhoff and Tongaat. The former has one foot left in the fire and the latter is standing squarely in the middle of it. I would strongly suggest being careful with both. For these updates and several others, make sure you read Ghost Bites today. On Friday afternoon, I joined the SABC News team for a live TV discussion on recession risks, the timing of share buybacks, my assessment of local vs. offshore retailers, the way I think about different sectors in this environment and whether I'm selling any shares at the moment. The recording is available on YouTube and I've incl uded the video at this link to help you find it. Trying to understand the links between inflation, currencies and commodities isn't easy. Luckily, we have daily updates from the team at TreasuryONE to keep us informed. On Friday, the rand traded sideways until University of Michigan CPI data led to them lowering their five- to ten-year inflation forecast to 3.1%, which caused the US dollar to lose some ground. The rand was a benefactor of a weaker dollar, trading down to R15.77 against the US dollar. This data eased the market's anticipation of aggressive hikes, suggesting that a softer landing may be possible. Commodit ies went into the green after the release, including oil trading over $113 per barrel. Remember, the team at TreasuryONE is ready to talk to you about the impact of these risks on your business and how you can mitigate them to the greatest extent possible. For a podcast that I'm certain will teach you new things about financial structuring, Episode 81 of Magic Markets a> is a great discussion with the team from Westbrooke Alternative Asset Management about the concept of "hybrid capital" - a combination of debt and equity instruments designed to manage downside risk while achieving upside potential. The only way to move forward in your journey is to learn new things. In Magic Markets, we are proud to offer you a platform to do exactly that. Have a great Monday! |