| Good morning Voornaam, City Lodge has been such an interesting story in the post-pandemic period. Credit where credit is due: management pursued the food and beverage strategy and did it well, with that part of the business now making a meaningful contribution. But of course, what they really need to do is get the occupancy rate up, along with decent increases in room rates. This is the classic art of balancing pricing and demand, with the recent period reflecting higher rates and disappointing occupancy levels - a different trend to what we saw in the prior year. What will be their approach going forward?
The other really interesting story on Friday was Caxton, where the share price has gone mental after the news a few days prior that Peregrine Capital now has 9.6% in the company. This has led to plenty of speculation around a potential corporate action, so the share price has jumped despite Caxton releasing what I felt were disappointing numbers. They are struggling with revenue in one segment and margins in the other - not a great combination. The share price is now trading mainly on speculation, not earnings.
Along with those stories, I've also written on the results at African Rainbow Minerals, the shock management change at Calgro, as well as financial services updates at Clientele and Momentum.
Get all this and more in Ghost Bites>>>
In case you missed it last week, the latest Magic Markets episode is a discussion on the opportunities presented by India. For emerging markets enthusiasts, it's fascinating to compare India to China at the moment. Find the discussion here>>>
As a light read this morning, Dominique Olivier's latest piece is an entertaining look at how Julius Caesar using an unfortunate experience with a group of pirates to make himself far more valuable. This was a good excuse to discuss the Veblen Effect, the psychology upon which the luxury goods industry is built. Get it here>>>
Don't forget to register for free to attend Unlock the Stock this week with CA Sales Holdings!
Have a great Monday. |
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| FEATURED: The Trader's Handbook Ep 5 |
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| | | IG Markets Episode 5: Pairs trading offers a great opportunity to play one stock off against another, a strategy that means you can take short positions even in a more bullish market. Learn all about it at this link>>> |
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| FEATURED: Mastering your portfolio with ETFs and single stocks |
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| Ghost Stories: Doing your own research is a great concept and all, but how do you actually do it for both ETFs and single stocks? In this podcast with Siyabulela Nomoyi of Satrix, we dug into this topic. Find it here>>> |
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| FEATURED: Julius Caesar and the Veblen Effect |
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| | | If LinkedIn was around in the days of Julius Caesar, he would've been a pro at it. Self-promotion was a skill he learnt quickly, with a few pirates along the way to add to the story. Dominique Olivier tells the story here>>> |
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| FEATURED: Focus on the future - SARB's annual report on organisational resilience |
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| Forvis Mazars: Within the banking sector, organisational resilience is becoming increasingly critical in South Africa, as highlighted in the SARB’s Annual Report. Get the Forvis Mazars team's views and client experiences in this article. |
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| Ghost Bites: The latest on African Rainbow Minerals, Calgro, Caxton, City Lodge, as well as financial services duo Clientele and Momentum, along with various Little Bites in Ghost Bites here>>> |
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| | | Ghost Wrap: In this fast-paced podcast, I covered CA Sales Holdings, RCL Foods + Rainbow Chicken, Motus and Bidvest. Made possible by the support of Forvis Mazars, you can find it here>>> |
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| Investec Podcast: As part of the Investec No Ordinary Wednesday series, you can enjoy Jeremy Maggs in conversation with Tinus Rautenbach, head of Investec's online platform Clarity, as they discuss the rise of self-directed investing. Find it here>>> |
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| Nico Katzke of Satrix: The GNU has driven significant optimism around the South African market. To help us understand where this is playing out and how the carry trade protects the rand, Nico Katzke joined me on Ghost Stories. Find it here>>> |
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| International Business Snippet: |
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| It's easy to forget just how enormous the US market actually is. The S&P 500 is the equivalent of our JSE Top 40, except it has over 12x more companies in it. Companies at the bottom of the S&P 500 would be major listings on an exchange like the JSE, as evidenced by the latest changes to the index.
On the way out are American Airlines and Etsy, with market caps of $7bn and $6bn respectively. One of the replacements is Dell, which now returns to the index after a period of private ownership. It's taken Dell since 2018 to work its way back up to index inclusion. The other is Palantir, the fascinating AI-focused group that is about as cloak-and-dagger as you can get.
The US market is a daunting thing to try and understand and navigate, which is exactly why I built Magic Markets Premium alongside experienced markets analyst and good friend Mohammed Nalla. Each week, we release a research report and podcast focusing on a company on the US market. You can get the entire library plus the new work each week for just R99/month, a price chosen to make our work accessible to retail investors. Take advantage of that opportunity! |
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| IG Morning Call: daily macroeconomic update |
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| While US and European equity markets were lower on Friday, after a miss on US Jobs data, we are expecting a partial rebound from oversold territory this morning, with the JSE All-Share Index likely to open marginally higher. Asian benchmarks are however lower today as they play catch up to Friday’s market moves.
The dollar has continued to firm, along with a move higher in US Treasury Yields. The move comes as the probability of a 50 basis points rate cut out of the US this month moves to 30%, as implied by Fed Fund Futures. Comments from Fed officials on Friday have softened the dovish sentiment. The rand is in turn weaker against the greenback.
Oil prices remain depressed, hovering around their lowest levels in more than a year on weaker economic data that suggested waning demand to follow.
Gold is marginally lower this morning in an inverse correlation to movements on the US dollar.
There is no high impact economic data scheduled for release today.
Key Indicators: USD/ZAR R17.86/$ | US 10yr 3.74% | Gold $2,491/oz | Platinum $929/oz | Brent Crude $71.50
The macroeconomic update is based on IG's morning call update |
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