| Good morning Voornaam, Happy Friday! I hope you've had as much fun this week as I have.
I'll tell you who hasn't been having much fun lately: Afrimat. They are risk-takers over there, but watching HEPS drop so severely still has to be causing some nerves. The Lafarge deal was a risk and the iron ore market has hurt them at the same time as the integration of that transaction. They are playing the long game here and thankfully the management team has quite the track record.
There was a lot of really good news on the local market yesterday. Growth is strong at Karooooo, Netcare, PPC, Sanlam and Southern Sun. Although in some cases that's due to operational efficiencies rather than growth in top-line revenue, what really counts at the end of the day is growth in profitability. It's lovely to see promising numbers coming through.
It wasn't all good news. Barloworld's numbers are dropping at speed and I genuinely cannot understand why major investors wouldn't accept the offer on the table for the company. Cyclical businesses can go in the wrong direction for years on end. I have no horse in that race, but if I did, you can be sure that my horse would be accepting the offer and running off into the sunset to enjoy a drink and a short holiday.
Finally, Equites Property Fund is a good example of the dilutionary impact of dividend reinvestment plans. They are basically just miniature rights offers, leading to more shares in issue that impact growth in the distribution (and net asset value) per share.
These details and the Nibbles are available in Ghost Bites at this link>>>
At some stage this year, we will be welcoming ASP Isotopes to the JSE. This is an exciting company that brings a fresh business model to the local market. The company joined us on the most recent edition of Unlock the Stock, with an engaging presentation and Q&A. Find it here>>>
Investec is celebrating 100 episodes of their excellent No Ordinary Wednesday podcast, hosted by Jeremy Maggs. This episode looks back on four years that have been anything but dull, while considering the regional trends that will shape the years to come. I always enjoy these episodes and I highly recommend making time for them. Find it here>>>
The latest episode of Magic Markets focuses on the property sector, where REITs are taking a breather. By looking internationally and locally, we discussed the reasons for the sideways action in the property sector at the moment. Find it here>>>
Finally, as is the case every Friday, DealMakers is here with their excellent work on the corporate finance industry and the deals being done by corporates. This week, there are the usual summaries of local M&A, local corporate finance and African deals. There's also an analysis of overall Q1 activity for the rest of Africa. And to add to your understanding of this world, there's a piece on the valuation gap between the US and emerging markets, as well as the recent approach being taken by the Competition Commission in transactions.
Have a great day and we look forward to seeing you for Weekender on Sunday! |
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| SATRIX: A Day in the Life of a Portfolio Manager at Satrix |
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| | | Ever wondered how the nuts and bolts of ETFs work? What goes into index tracking and making sure that it is achieved at the lowest possible cost? And are all indices created equal from a complexity perspective?
Lauren Jacobs (Senior Portfolio Manager at Satrix) shows you what a day in the life of a portfolio manager looks like.
Get ready to learn and be inspired at this link>>> |
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| GHOST WRAP: April's droppers and whoppers |
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| There may have been many public holidays in April, but that didn't stop the market from reacting to the broader geopolitical turmoil. With recession concerns as a key theme, which stocks did well and which ones delivered a nasty drop? This podcast is an overview of recent big share price moves among larger local companies on the JSE, revealing some interesting trends. Ghost Wrap is brought to you by Forvis Mazars. You can find the recording and the transcript at this link>>> |
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| GHOST BITES - Making sense of SENS on the local market |
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| | | Afrimat will banish the latest year from memory and will look to the future. The offer for Barloworld looks more appealing by the day. There were strong numbers from Karooooo, Netcare, PPC, Sanlam and Southern Sun, while growth at Equites was muted due to having more shares in issue. Get the details in Ghost Bites>>> |
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| Unlock the Stock - ASP Isotopes |
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| In the 52nd edition of Unlock the Stock, ASP Isotopes joined the platform for the first time to give investors insight into the company before it lists on the JSE later this year. The recording of the management presentation and interactive Q&A is available at this link>>> |
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| DOMINIQUE OLIVIER - Now is a great time to question our Chinese bias |
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| | | A wave of TikToks from Chinese factory owners is reshaping how we think about where the things we buy come from. By casually revealing that many brandnamed products are made in Chinese factories, these videos are forcing a reckoning with a deeper bias: our enduring discomfort with the words “Made in China”. Dominique Olivier uses MSG as a great example of the bias in this excellent piece>>> |
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| INVESTEC PODCAST: Episode 100 - a world in flux |
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| | | From a global pandemic to fractured supply chains, energy shocks, inflation spirals, rate hikes, AI disruption, war, and geopolitical realignment - the last four years have been anything but dull. The 100th episode of No Ordinary Wednesday is a discussion on regional trends that will shape the years to come. Get the insights in this podcast>>> |
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| International Business Snippet: |
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| Walmart released Q1 numbers that missed on revenue expectations and beat on earnings. Perhaps more importantly, their eCommerce business was profitable for the first time this quarter both in the US and internationally. It takes a while for eCommerce businesses to swing positive. The retail giant has cautioned that shoppers will start seeing the impact of tariffs towards the end of this month and certainly in June. Walmart is in a better position than many of its competitors to deal with a tariff environment, but it still looks rough out there for US retailers in terms of what could come.
Over in China, those who punted recently at Alibaba had a bad day after shares fell more than 7.5% in response to missed expectations for both earnings and revenue. Although Alibaba is primarily a Chinese operation, the tariff uncertainty is being felt on that side of the pond as well and is impacting demand.
This week in Magic Markets Premium, we've covered Novo Nordisk. With most of the hype around Ozempic/Wegovy out of the share price based on a more realistic picture of growth, is it finally a buy? As our subscribers will find out in the research, the US pharma sector is treacherous but certainly filled with opportunity. |
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| Magic Markets: Mesh.Trade - Unlocking Private Markets |
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| | | Magic Markets: As the recent trend in IPOs and delistings on public markets tells us, an increasing number of companies are looking to private markets for their capital raising needs. This means that retail investors are being shut out of these opportunities, which is particularly problematic as these early-stage opportunities usually offer the highest potential returns.
Mesh.Trade is committed to increasing access for investors, which is why the platform is designed to enable issuers to raise debt and/or equity funding.
Connie Bloem joined us to talk about why access to good quality private assets is so important in the South African market. To learn more, listen to this podcast>>> |
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| Macroeconomic indicators and IG Markets macro update |
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| Wall Street and European stock futures are mostly steady, while Asian markets are showing a mixed picture this morning. Hong Kong’s Hang Seng index fell 0.8% in early trade, weighed down by Alibaba’s sharp decline after disappointing earnings. Conversely, Australian shares outperformed with a 0.7% gain.
Markets seem to be largely ignoring tariff worries, as the MSCI Asia-Pacific index (excluding Japan) nears a seven-month peak. Chinese blue-chip stocks have fully regained losses sustained since April 2, when President Trump announced “reciprocal” tariffs that have since been put on hold.
Bond markets rallied following unexpected drops in US producer prices and weak core retail sales data. These data points have further led investors to increase expectations for Federal Reserve rate cuts this year.
The 10-year U.S. Treasury yield declined by 3 basis points to 4.424% on Friday, extending the prior day’s 7 basis point fall. The dollar weakened alongside Treasury yields amid softer US economic data, reinforcing bets on further Fed easing in 2025.
The rand has outperformed, strengthening significantly against the US dollar. The move follows comments from local Treasury which support the SARB’s long standing suggestion of lowering the inflation target within the country. The JSE All-Share Index is expected to open flat to marginally higher.
On the geopolitical front, President Trump’s active diplomacy in the Middle East, including talks on a potential nuclear deal with Iran, caused oil prices to drop 2% on Thursday. Oil prices stabilised on Friday and are set for a second straight weekly gain, supported by easing US-China trade tensions, although concerns about Iranian supply returning have capped further rises.
Gold prices rebounded yesterday due to a weaker dollar but remain on track for their worst weekly performance in six months, as reduced trade tensions have lessened demand for safe-haven assets.
Key Indicators: USD/ZAR R18.04/$ | US 10yr 4.41% | Gold $3,208/oz | Platinum $987/oz | Brent Crude $64.19
As often as practically possible, insights from the IG Markets morning macro update by Shaun Murison will be featured here. Where this isn't possible, only indicators will be provided. If you want to learn more about trading, refer back to The Trader's Handbook, a podcast series that takes you through many of the important principles in trading. |
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