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Improved local business confidence boosts rand

10 September 2020

Improved local business confidence boosts rand

Daily Investment Update

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Market commentary

SA flag Icon
South Africa

Local markets ended the day strong, with banks and financials showing stellar performances of respective 7.75% and 4.82% increases. The All Share closed up 1.42%.

US flag Icon
United States

Wall Street opened strong on Wednesday as the three-day tech rout finally came to an end. Shortly after the JSE closed, the Dow Jones stood 1.87% higher.

EU flag Icon
Europe

European markets traded up on Wednesday due to investors keeping an optimistic eye out for the upcoming European Central Bank (ECB) meeting and AstraZeneca announcing it will continue its COVID-19 vaccine trials in the coming week. The STOXX Europe 600 Index ended the day 1.62% in the green.

HK flag Icon
Hong Kong

The Hang Seng closed down by 0.63% on Wednesday due to the extended tech selloff on Wall Street, which led to the IT sector falling 1.61%.

Japan flag Icon
Japan

The Nikkei ended trade 1.04% lower on Wednesday as investors’ risk-on appetites eased due to the continued tech rout in the US.

Rand Icon
Rand

The local currency climbed about 2% on Wednesday, recording its biggest one-day gain in over a week, thanks to an increase in SA business confidence boosting risk-on trade. At 17h50, the rand traded at R16.63/$, R21.64/£ and R19.65/€.

Precious metals Icon
Precious metals

Gold prices slid on Wednesday as investors awaited the ECB meeting and the US dollar losing strength. At 17h50, an ounce of spot gold cost $1 904.44.

Oil Icon
Oil

Despite making up losses on Wednesday, oil price gains were capped due to an increase in global COVID-19 cases damping hopes of a steady demand recovery. Brent Crude traded higher at 17h50 at $40.48 per barrel.


Market indicators

Local markets (R)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
ALSI 55 211.34 1.42 - 2.21 1.98 15.20 2.83
Gold mining 5 584.97 2.54 - 9.77 41.24 69.87 147.22
Basic minerals 39 763.30 0.58 - 5.04 11.33 48.39 33.08
Industrial index 77 175.92 0.91 - 1.71 - 0.37 10.71 1.54
Financial 26 192.53 4.82 2.99 - 8.77 - 15.29 - 28.52
Fin + Ind 30 6 671.70 2.01 - 0.48 - 2.78 2.11 - 9.04
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) 27 940.47 1.60 2.16 3.02 18.61 6.63
S&P 500 PR (USD) 3 398.96 2.01 1.60 6.44 24.95 16.33
NASDAQ (USD) 11 141.56 2.71 1.27 12.16 40.79 39.12
FT-100 (GBP) 6 012.84 1.39 0.25 - 4.09 2.30 - 14.02
Hang Seng (HKD) 24 468.93 - 0.63 0.15 - 0.71 0.17 - 5.16
Nikkei 225 (JPY) 23 032.54 - 1.04 3.19 - 0.09 18.20 10.31
MSCI World (USD) 7 098.03 1.68 1.76 5.60 21.08 11.75
Frankfurt (EUR) 5 734.57 2.07 4.44 4.91 24.59 8.27
Other markets
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Gold ($) 1 928.40 0.41 - 6.46 12.94 15.02 27.71
Platinum ($) 911.00 0.22 - 6.47 10.69 4.35 - 3.80
Brent Oil ($) 39.78 - 5.31 - 10.41 - 2.50 - 12.13 - 35.36
Rand/USD 16.66 1.67 5.46 2.73 - 2.17 - 13.91
Rand/GBP 21.65 1.46 6.13 - 0.51 - 7.59 - 19.78
Rand/EUR 19.70 1.31 4.90 - 1.79 - 8.53 - 21.83
ALBI (R) 715.11 - 0.02 1.09 2.04 2.05 3.64
  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. Gold production Jul
  2. Mining Production Jul
  3. Manufacturing Jul
  1. EU: ECB Interest Rate Decision
  2. US: Initial Jobless Claims 5/Sep

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 3.03 6.87 7.45 7.59 7.75 7.74
PSG Wealth Income FoF D 2.11 5.40 6.46 6.89 7.24 7.57
PSG Wealth Preserver FoF D 2.50 3.68 2.68 4.39 4.70 5.54
PSG Wealth Moderate FoF D 3.41 2.24 0.03 2.71 3.42 4.56
PSG Wealth Creator FoF D 4.54 1.13 - 1.77 0.79 1.97 3.28
PSG Wealth Global Preserver FF D 8.55 17.92 9.65 - - -
PSG Wealth Global Moderate FF D 13.18 22.61 10.36 13.60 10.08 9.42
PSG Wealth Global Flexible FF D 18.18 31.04 15.37 - - -
PSG Wealth Global Creator FF D 19.23 33.25 16.86 21.72 17.54 16.33
PSG Wealth Solutions ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Moderate FoF D 5.59 5.57 4.04 3.29 4.57 4.62
PSG Wealth Global Creator FoF D 13.16 14.33 10.48 10.70 11.66 11.16
PSG Wealth Global Preserver FoF (USD) D 0.67 1.38 3.15 2.20 2.82 4.57
PSG Wealth Global Flexible FoF (USD) D 11.10 13.20 9.17 8.69 9.98 10.51
PSG Wealth Solutions (£)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Preserver FoF (GBP) D 0.07 - 3.52 2.28 2.26 2.98 6.74
PSG Wealth Global Flexible FoF (GBP) D 11.02 7.03 8.69 8.63 9.90 12.89
PSG Asset Management
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Money Market A 2.68 6.21 6.76 6.95 7.13 7.11
PSG Income A 5.79 9.67 9.08 8.61 8.67 8.54
PSG Diversified Income 4.25 6.69 6.44 6.91 7.28 7.52
PSG Stable A - 0.45 - 2.40 - 2.75 0.94 2.33 3.61
PSG Balanced A - 0.43 - 6.67 - 9.54 - 3.58 - 0.85 1.08
PSG Flexible A - 3.10 - 12.45 - 11.73 - 5.02 - 1.81 0.68
PSG SA Equity D - 3.30 - 18.35 - 19.08 - 12.87 - -
PSG Equity A - 2.52 - 12.80 - 15.57 - 8.16 - 3.60 - 1.47
PSG Global Flexible FF A 10.13 10.87 - 2.78 4.63 4.83 -
PSG Global Equity FF A 5.05 3.83 - 7.34 2.16 3.35 4.86
PSG Asset Management ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Global Flexible USD A 3.78 - 5.16 - 8.55 - 4.91 - 0.32 1.61
PSG Global Equity USD 0.39 - 10.17 - 12.17 - 6.69 - 1.35 0.80
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 4.66 7.71 7.37 7.31 7.50 7.52
PSG Direct Low Equity 0.35 - 2.00 - 3.03 0.61 2.10 3.34
PSG Direct Managed - 1.31 - 8.55 - 10.49 - 4.37 - 1.53 0.53
PSG Direct Aggressive - 0.37 - 8.33 - 11.30 - 4.25 - 1.27 -
PSG Direct Global Managed 9.88 10.37 - 3.22 4.16 4.36 -
PSG Direct Global Aggressive 6.74 5.99 - 6.06 2.64 3.46 -
  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 - 3.85 - 9.73 - 10.45 - 5.18 - 2.63 0.25
PSG Wealth SA Property Equity Portfolio - 34.37 - 45.11 - 31.16 - 23.62 - 17.11 -
PSG Wealth Income Growth Equity Portfolio - 12.86 - 21.26 - 16.85 - 8.22 - 4.67 -
PSG Wealth Offshore Equity Portfolio (USD) 10.45 13.22 10.80 12.35 13.64 12.92
  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

  • We recommend an overweight position for N91 LN, Click here to read the full report on our secure site or log in to myBase.
  • Sixty per cent of group earnings comes from outside of SA, providing protection against idiosyncratic risks but does expose investors to exchange rate translation risks.
  • On a P/E basis, we estimate that the group is trading slightly ahead of its European peers and at a slight discount to Schroders, the only peer with a similar emerging market (EM) presence.
  • The group is trading at the lower end of its European peers in terms of market capital to assets under management (AUM).
  • Given its historically strong net client cash flow (NCCF), we feel the current valuation multiples do not fully capture the fundamentals of the group.


company logo

Highlights

  • We recommend an underweight position for BAM US, Click here to read the full report on our secure site or log in to myBase.
  • The group’s plan to significantly develop retail property and land comes at a time where the real estate sector has seen significant downside following the spread of COVID-19 as businesses are forced to close their doors and people to stay inside.
  • Real estate constitutes about 25% of our intrinsic value and around 35% of group operating income; thus, a slowdown in real estate will have a material impact on earnings for the group.
  • The current price appears undervalued; however, we feel that that the near-term downside risks from COVID-19 on the real estate operations outweigh any potential near-term rerating towards the implied value per share.


company logo

Highlights

  • We recommend a neutral position for both Naspers and Prosus. Click here to read the full report on our secure site or log in to myBase.
  • Despite the regulatory and political risks that come with investing in Chinese stocks, we acknowledge that, to a large extent, Prosus and Naspers provide an alternative risk and reward profile due to the exposure to structural growth trends, which are not available through alternative local counters.
  • Naspers and Prosus trade at discounts of 23% and 13% respectively.
  • Given that management is determined to reduce the discounts over time, we suspect there will eventually be large value unlock for shareholders.
  • The share price for both Naspers and Prosus moves with a fairly high correlation to the USD/ZAR exchange rate.


Corporate actions

Date Company Share code Expectation
16 September 2020 ABSA Bank Limited Non-Cumulative Non-Redeemable Preference Sares ABSP Cash Dividend
16 September 2020 Compagnie Financiere Richemont SA CFR Cash Dividend
16 September 2020 Compagnie Financiere Richemont SA CFR Bonus Issue
16 September 2020 Clientele Limited CLI Cash Dividend
16 September 2020 Capitec Bank Holdings Limited Non-Redeemable Non-Cumulative Non-Participating Preference Shares CPIP Cash Dividend
16 September 2020 Emira Property Fund Limited (REIT) EMI Cash Dividend
16 September 2020 Italtile Limited ITE Cash Dividend
16 September 2020 Lewis Group Limited LEW Cash Dividend
16 September 2020 Nedbank Limited Non-Redeemable Non-Cumulative Preference Shares NBKP Cash Dividend
16 September 2020 PSG Financial Services Limited Cumulative Non-Redeemable Non-Participating Preference Shares PGFP Cash Dividend
16 September 2020 Peregrine Holdings Limited PGR General Offer
16 September 2020 Resilient REIT Limited RES Cash Dividend
16 September 2020 Steinhoff International Holdings Limited Preference Shares SHFF Cash Dividend
16 September 2020 The Foschini Group Limited 6.5 percent Preference Shares TFGP Cash Dividend
  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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