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US rate-cut optimism short-lived

01 November 2019

US rate-cut optimism short-lived

Daily Investment Update

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Market commentary

SA flag Icon
South Africa

Despite concerns around Finance Minister Tito Mboweni’s medium-term budget speech on Wednesday, the local bourse made gains on Thursday, boosted by strong performances in the mining sector and certain rand hedges. At the closing bell, the Top 40 had gained 0.99%.

US flag Icon
United States

US equities opened slightly stronger on Thursday thanks to strong quarterly reports from Apple and Facebook, however, took a hit from rising uncertainty around a possible trade deal between the US and China. At 19h10, the Dow Jones was 0.80% down.

EU flag Icon
Europe

European indices reversed earlier gains on Thursday afternoon as renewed concerns surrounding the ever-present US-China trade war spooked investors. At 19h10 the STOXX 600 was down by 0.49%.

HK flag Icon
Hong Kong

Following in US footsteps, Hong Kong’s central bank also cut their interest rate by 25bps to 2%, boosting their local market. At the close of trade, the Hang Seng Index was 0.81% in the green.

Japan flag Icon
Japan

Although investors looked to lock in profits after the past month’s superb performance, the Nikkei closed up boosted by the Fed’s announcement to cut the US interest rate. The Nikkei closed up 0.37%.

Rand Icon
Rand

The rand continued to lose momentum on Thursday after Mboweni’s dire midterm budget speech from the previous day rose concerns amongst investors and ratings agencies. At 19h10, a dollar traded at R15.10.

Precious metals Icon
Precious metals

Bullion prices continued to climb on Thursday due to the US interest rate cut putting the greenback under pressure combined with new US-Sino tariff dispute troubles. At 19h10, gold traded at $1 510.37 per ounce.

Oil Icon
Oil

Oil prices dropped by almost 2% on Thursday due to weak factory activity in China and a leak on a major US pipeline disrupting the supply flow. A barrel of Brent crude traded at $59.86 at 19h10.


Market indicators

Local markets (R)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
ALSI 56 425.00 0.99 2.13 - 0.96 - 2.82 13.95
Gold mining 2 595.18 6.23 15.15 20.85 81.50 122.88
Basic minerals 33 117.73 1.18 6.08 3.53 3.81 23.95
Industrial index 74 541.49 0.79 - 0.96 - 5.11 - 5.81 14.45
Financial 39 763.83 - 1.53 3.35 1.93 - 4.65 2.77
Fin + Ind 30 7 435.64 - 0.07 0.57 - 2.74 - 5.28 10.42
International markets (Base currency)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Dow Jones (USD) 27 186.69 0.43 1.11 0.57 3.50 11.96
S&P 500 PR (USD) 3 046.77 0.33 2.47 1.62 4.46 15.91
NASDAQ (USD) 8 303.98 0.34 3.85 0.64 3.14 17.24
FT-100 (GBP) 7 330.78 0.34 - 0.77 - 2.76 1.19 9.07
Hang Seng (HKD) 26 667.71 - 0.44 2.38 - 4.33 - 7.43 12.42
Nikkei 225 (JPY) 22 843.12 - 0.57 5.00 6.08 3.71 8.79
MSCI World (USD) 6 537.39 0.23 2.71 1.93 3.71 14.28
Frankfurt (EUR) 5 760.94 - 0.23 3.88 6.28 4.59 14.38
Other markets
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Gold ($) 1 490.15 - 0.17 0.17 4.32 15.95 22.14
Platinum ($) 921.00 0.55 - 0.43 4.54 2.56 10.56
Brent Oil ($) 60.61 - 1.59 - 0.28 - 6.35 - 16.74 - 20.16
Rand/USD 15.06 - 0.66 1.71 - 1.38 - 3.61 - 2.27
Rand/GBP 19.52 - 0.89 - 3.71 - 8.11 - 3.01 - 3.14
Rand/EUR 16.81 - 0.64 - 0.37 - 1.71 - 3.54 - 0.63
ALBI (R) 686.05 - 1.56 - 0.08 1.30 3.60 12.55
  1. Some data may be delayed, the above table reflects the latest available information
  2. Performance reported during the first week of each month may be impacted by distributions. Distributions are fully accounted for by the second week of each month


Economic calendar

Local International
  1. ABSA Manufacturing PMI OCT
  2. Total New Vehicle Sales OCT
  1. US: Non-farm payrolls OCT
  2. UK: Markit/CIPS Manufacturing PMI OCT
  3. US: ISM Manufacturing PMI OCT

Source: Reuters, Business Day, Trading Economics


PSG Product Matrix

Fund matrix

PSG Wealth Solutions
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Enhanced Interest D 3.88 8.00 7.97 8.05 7.99 7.74
PSG Wealth Income FoF D 3.69 8.15 7.63 8.07 8.05 8.15
PSG Wealth Preserver FoF D 1.03 6.54 3.97 6.05 5.66 6.94
PSG Wealth Moderate FoF D - 1.18 6.11 1.66 5.44 4.53 6.27
PSG Wealth Creator FoF D - 3.67 6.14 - 1.02 4.41 3.11 4.43
PSG Wealth Global Moderate FF D 6.78 11.27 5.64 8.08 6.07 9.44
PSG Wealth Global Creator FF D 7.87 18.25 11.61 15.27 11.49 -
PSG Wealth Solutions ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Moderate FoF D 2.29 9.32 2.30 5.51 4.01 2.79
PSG Wealth Global Creator FoF D 3.63 17.67 8.20 12.68 9.35 8.34
PSG Wealth Global Preserver FoF (USD) D 2.19 7.16 2.95 3.89 4.90 3.76
PSG Wealth Global Flexible FoF (USD) D 2.18 14.13 6.74 10.64 9.11 7.49
PSG Wealth Solutions (£)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Preserver FoF (GBP) D 3.19 5.66 3.84 2.74 8.14 6.73
PSG Wealth Global Flexible FoF (GBP) D 3.35 12.73 7.19 8.44 12.49 11.19
PSG Asset Management
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Money Market A 2.99 7.30 7.31 7.42 7.20 7.16
PSG Income A 3.89 8.34 8.30 8.39 8.26 7.92
PSG Diversified Income 3.07 7.10 7.10 7.68 7.65 7.73
PSG Stable A - 1.09 1.10 2.94 4.92 5.38 6.30
PSG Balanced A - 4.85 - 5.35 - 1.80 2.49 3.44 5.21
PSG Flexible A - 4.39 - 4.28 - 1.24 3.07 4.61 6.15
PSG SA Equity D - 13.52 - 15.09 - 10.12 - 3.41 - -
PSG Equity A - 9.11 - 10.61 - 5.92 0.69 2.28 2.87
PSG Global Flexible FF A - 0.21 - 1.82 - 0.19 5.65 5.61 -
PSG Global Equity FF A - 1.20 - 2.87 - 0.41 6.36 6.12 7.93
PSG Asset Management ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Global Flexible USD A - 5.08 - 4.97 - 3.27 3.07 3.83 1.82
PSG Global Equity USD - 5.98 - 6.16 - 3.41 3.74 4.28 1.68
PSG Direct Portfolios
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Direct Flexible Income 3.25 7.28 7.26 7.53 7.43 7.28
PSG Direct Low Equity - 1.40 0.25 2.17 4.41 4.90 5.85
PSG Direct Managed - 4.95 - 5.51 - 2.10 2.17 3.27 4.97
PSG Direct Aggressive - 5.08 - 5.94 - 2.67 2.58 3.88 -
PSG Direct Global Managed - 0.43 - 2.26 - 0.64 5.17 5.13 -
PSG Direct Global Aggressive - 1.05 - 2.91 - 0.77 5.62 5.46 -
  1. The PSG Wealth Solutions are exclusively available through registered PSG planners and/or advisers
  2. The above information reflects the latest available data at time of distribution, as such product performance data reflects T-2 numbers
  3. Performance reported during the first week of each month may be impacted by distributions. Distributions are fully accounted for by the second week of each month
  4. The PSG Best Ideas Portfolios were renamed to the PSG Direct Portfolios in February 2018

Equity portfolio matrix

PSG Wealth House View Portfolios
Portfolio 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth SA Equity Portfolio - 8.69 - 3.07 - 3.24 0.98 1.72 -
PSG Wealth SA Property Equity Portfolio - 5.89 - 8.82 - 8.15 - 3.49 - -
PSG Wealth SA Dividend Income Equity Portfolio - 7.94 - 3.28 - 0.27 3.14 - -
PSG Wealth Offshore Equity Portfolio (USD) 2.98 14.56 9.85 14.86 11.81 -
PSG Wealth Managed Volatility Equity Portfolio - 8.11 - 8.82 - 7.32 - 3.68 - -
  1. The PSG Wealth equity portfolios are exclusively available through registered PSG planners and/or advisers
  2. PSG Wealth equity portfolio performance are shown gross of management fees, but net of brokerage and other trading costs
  3. PSG Wealth SA and Offshore Equity Portfolio Inception date: 30 August 2015
  4. PSG Wealth SA Listed Property Portfolio Inception date: 1 December 2015
  5. PSG Wealth Dividend Income Equity Portfolio Inception date: 29 April 2016
  6. PSG Wealth Managed Volatility Equity Portfolio Inception date: 28 July 2016
  7. PSG Wealth Funds are exclusively available through registered PSG planners and/or advisers


Recent Investment Ideas

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Highlights

  • Our recommendation for INGA AMS is neutral; click here to read the full report on our secure site.
  • The group’s high dividend yield remains attractive and management is committed to maintaining a Return On Equity between 10% and 12%.
  • Adjusted earnings per share were up 3% to 66 cents and the group declared a flat interim dividend of 12 cents.


company logo

Highlights

  • Our recommendation for SPG SJ is overweight; click here to read the full report on our secure site.
  • Management believes that recent contract wins in the consumer-facing operations and the strong African commodities environment, combined with improved operational efficiencies, should support earnings.
  • Trading at a forward P/E of 7.19 times and an implied rump P/E of 6.15 times (i.e. excluding SG Fleet), we feel that the share offers value and would recommend an overweight exposure.


company logo

Highlights

  • Our recommendation for VKE SJ is neutral; click here to read the full report on our secure site.
  • The group declared a year-end dividend of 103.38 cents per share, reflecting a 7.50% growth on the prior year.
  • The group is focussing on strengthening the balance sheet by reducing debt. The group’s see-through LTV ratio is 38.80%.


Corporate actions

Date Company Share code Expectation
06 November 2019 Atlantic Leaf Prperties Limited ALP Cash Dividend
06 November 2019 Ecsponent Limited Class A Preference Share ECSP10 Cash Dividend
06 November 2019 Ecsponent Limited Class C Preference Share ECSP12 Cash Dividend
06 November 2019 Ecsponent Limited Class A Preference Share ECSP13 Cash Dividend
06 November 2019 Ecsponent Limited Class C Preference Share ECSP15 Cash Dividend
06 November 2019 Ecsponent Limited Class C Preference Share ECSP18 Cash Dividend
06 November 2019 Ecsponent Limited Class C Preference Share ECSP21 Cash Dividend
06 November 2019 Ecsponent Limited Class C Preference Share ECSP24 Cash Dividend
06 November 2019 Ecsponent Limited Class A Preference Share ECSP4 Cash Dividend
06 November 2019 Ecsponent Limited Class C Preference Share ECSP6 Cash Dividend
06 November 2019 Ecsponent Limited Class A Preference Share ECSP7 Cash Dividend
06 November 2019 Ecsponent Limited Class C Preference Share ECSP9 Cash Dividend
06 November 2019 London Finance Investment Group Plc LNF Cash Dividend
06 November 2019 PSG Group Limited PSG Cash Dividend
06 November 2019 Spear REIT Limited SEA Cash Dividend
06 November 2019 Trencor Limited TRE Odd-Lot Offer
Option 1 - Sell Odd Lot holdings (less than 100 shares) at the Offer Price:Gross - TBALess 20% SA Tax - TBANet - TBA
Option 2 - Retain Odd lot holdings Default - Option 1
06 November 2019 Trencor Limited TRE Specific Repurchase Offer
Option 1 - Sell Specific Offer Shares (holdings from 100 to 635 shares) at the Offer Price:Gross - TBALess 20% SA Tax - TBANet - TBA
Option 2 - No Action Default - Opton 2
  1. The information above is to the best of our knowledge correct at the time of distribution but due to the nature thereof cannot be guaranteed.
  2. This document only contains general information and not the opinion of the distributor.

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Author
author

Adriaan Pask PhD

Chief Investment Officer


At PSG Wealth
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