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Global markets rally on Powell’s testimony

12 July 2019

Global markets rally on Powell’s testimony

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Market commentary

SA flag Icon
South Africa

The JSE closed in the red on Thursday following an 8% decline in local bond yields, while the local currency peaked at an intra-day best of R13.85/$. Shortly after the closing bell, the All Share lost 0.56%.

US flag Icon
United States

US stocks traded higher on Thursday after the main indexes on Wall Street peaked at record highs, following US Federal Reserve (Fed) chair Jerome Powell’s dovish stance on monetary policies, affirming the case for an interest rate cut in the near future. At 18h50, the Dow was trading 0.72% in the green.

EU flag Icon
Europe

European shares maintained a four-day losing streak on Thursday following apprehensions over corporate earnings and trade countered a rally sparked by Powell’s testimony. At 18h55, the FTSE 100 Index and the DAX had lost 0.28% and 0.33% respectively.

HK flag Icon
Hong Kong

Hong Kong’s main indexes closed in the green on Thursday thanks to a stellar performance by the energy, financial and property sectors while investors cheered Powell’s testimony as he opened the door to a potential interest rate cut later this month. At 19h05, the Hang Seng gained 0.76%.

Japan flag Icon
Japan

Expectations of an interest rate cut by the Fed boosted Japan’s Nikkei on Thursday, but gains were trimmed by an admission of the mismanagement of insurance policies by heavyweight life insurance company, Japan Post Insurance. At the closing bell, the Nikkei had gained 0.51%.

Rand Icon
Rand

The rand continued to strengthen against major global currencies on Thursday, reaching its strongest level in five months boosted by Powell’s surprisingly dovish tone during his testimony before congress. At 19h20, the rand traded at R13.95 against the dollar.

Precious metals Icon
Precious metals

Gold prices endured selling pressure on Thursday after US inflation rose higher than expected in June. At 19h25, spot gold was trading in the red at $1 407.80 an ounce.

Oil Icon
Oil

Oil prices peaked at a six-week high on Thursday following an evacuation of oil rigs in the Gulf of Mexico ahead of a storm, amid heightened tensions in the Middle East. At 19h30, a barrel of Brent crude was trading at $67.22.


Market indicators

Local markets (R)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
ALSI 57 273.14 - 0.56 - 2.38 - 1.27 8.47 3.43
Gold mining 1 995.34 - 1.67 13.30 33.78 44.70 86.97
Basic minerals 32 619.33 - 1.52 - 2.20 - 3.83 15.01 18.46
Industrial index 78 033.65 - 0.04 - 2.10 0.53 9.72 - 2.77
Financial 41 244.19 - 0.59 - 3.14 - 2.05 0.17 2.60
Fin + Ind 30 7 749.69 - 0.22 - 2.45 - 0.32 6.38 - 1.05
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) 27 088.08 0.85 4.13 4.26 14.26 12.27
S&P 500 PR (USD) 2 999.91 0.23 4.12 4.38 16.73 10.35
NASDAQ (USD) 8 196.04 - 0.08 4.85 3.41 18.22 7.39
FT-100 (GBP) 7 509.82 - 0.28 1.71 2.32 11.30 3.34
Hang Seng (HKD) 28 431.80 0.81 3.16 - 2.72 9.30 4.03
Nikkei 225 (JPY) 21 643.53 0.51 2.31 - 0.08 7.51 0.81
MSCI World (USD) 6 411.95 0.19 3.19 - 2.05 13.99 6.23
Frankfurt (EUR) 5 523.92 - 0.33 1.45 3.33 13.27 - 0.68
Other markets
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Gold ($) 1 395.45 0.54 5.03 6.95 7.97 11.31
Platinum ($) 830.00 2.09 3.36 - 8.19 0.85 - 1.31
Brent Oil ($) 67.01 4.44 7.58 - 6.58 8.64 - 15.03
Rand/USD 13.94 0.02 4.91 0.06 - 0.77 - 3.01
Rand/GBP 17.49 - 0.04 6.23 4.29 0.99 2.14
Rand/EUR 15.72 0.05 5.42 0.39 1.47 0.58
ALBI (R) 687.96 0.64 2.74 3.50 7.24 11.49

  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. No economic data scgeduled for release
  1. CN: Balance of Trade JUN
  2. US: PPI JUN

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 3.94 8.02 8.03 8.11 7.92 7.59
PSG Wealth Income FoF D 4.47 7.84 7.98 8.15 8.20 8.10
PSG Wealth Preserver FoF D 4.82 4.09 5.85 5.81 6.38 6.75
PSG Wealth Moderate FoF D 6.06 1.44 5.06 5.25 5.56 5.95
PSG Wealth Creator FoF D 5.56 - 0.53 4.55 5.19 3.92 3.89
PSG Wealth Global Moderate FF D 8.76 6.95 6.38 4.74 6.21 7.42
PSG Wealth Global Creator FF D 17.69 12.30 13.10 11.54 12.44 -
PSG Wealth Solutions ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Moderate FoF D 7.72 2.01 3.71 5.86 2.74 1.88
PSG Wealth Global Creator FoF D 16.20 6.53 10.04 12.76 8.65 7.41
PSG Wealth Global Preserver FoF (USD) D 5.89 5.15 3.27 4.34 4.62 3.40
PSG Wealth Global Flexible FoF (USD) D 10.43 5.78 8.11 11.09 8.85 6.40
PSG Wealth Solutions (£)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Preserver FoF (GBP) D 7.21 9.20 4.40 5.09 8.47 7.65
PSG Wealth Global Flexible FoF (GBP) D 12.88 12.07 9.04 11.59 13.08 12.33
PSG Asset Management
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Money Market A 3.58 7.30 7.35 7.45 7.30 7.10
PSG Income A 4.15 8.31 8.40 8.45 8.23 7.88
PSG Diversified Income 3.73 6.78 7.65 7.92 7.88 7.71
PSG Stable A - 0.11 0.48 4.65 5.72 5.66 6.25
PSG Balanced A - 3.42 - 5.79 1.43 4.31 3.85 5.30
PSG Flexible A - 3.08 - 5.20 1.59 4.91 4.61 6.03
PSG SA Equity D - 10.12 - 13.64 - 3.68 1.53 - -
PSG Equity A - 6.60 - 10.05 - 1.28 3.90 1.74 3.00
PSG Global Flexible FF A 0.21 - 3.56 1.56 4.80 5.33 -
PSG Global Equity FF A - 0.14 - 5.28 1.76 5.98 5.34 5.93
PSG Asset Management ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Global Flexible USD A - 1.05 - 8.45 - 0.96 6.00 2.04 1.27
PSG Global Equity USD - 1.38 - 9.90 - 0.71 7.19 1.98 0.92
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 3.70 7.14 7.51 7.65 7.51 7.24
PSG Direct Low Equity - 0.39 - 0.27 4.01 5.33 5.19 5.84
PSG Direct Managed - 3.55 - 6.07 1.01 3.99 3.57 5.01
PSG Direct Aggressive - 3.56 - 6.55 0.46 4.26 3.67 -
PSG Direct Global Managed - 0.01 - 3.99 1.10 4.32 4.85 -
PSG Direct Global Aggressive - 0.23 - 5.07 1.23 5.07 4.87 -

  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 - 1.38 - 5.57 3.06 3.89 - -
PSG Wealth SA Property Equity Portfolio - 0.73 - 10.01 - 5.83 - 2.50 - -
PSG Wealth SA Dividend Income Equity Portfolio - 1.59 - 4.76 5.28 5.78 - -
PSG Wealth Offshore Equity Portfolio (USD) 12.37 12.26 13.08 14.69 - -
PSG Wealth Managed Volatility Equity Portfolio - 2.96 - 10.72 - 3.24 - - -

  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 positioning for CAT US; click here to read the full report on our secure site.
  • The company has increased dividends for the past 25 consecutive years (including the GFC of 2008) and it trades at a dividend yield of 2.8%.
  • Dividend growth is targeted to range in the high-single digits in each of the next four years, while management has indicated it will continue to do share buybacks as it is still creating value at this stage.


company logo

Highlights

  • We recommend a neutral positioning for GRT SJ; click here to read the full report on our secure site.
  • Although the current distribution yield of 8.84% is enticing (well ahead of its long-term average and is guided to grow by 4.50% in the current year), locally, property fundamentals are deteriorating.
  • We feel that weak property fundamentals are fairly reflected in the valuation and would recommend a neutral position relative to the benchmark.


company logo

Highlights

  • We recommend an overweight positioning for MMI SJ; click here to read the full report on our secure site.
  • Strong growth was seen in Momentum Life, which constitutes a third of the total earnings, due to management tightening expenses, improving productivity and enhancing the product offering.
  • The improved earnings are likely to support higher dividend payments, which are likely to underpin the share price.


Corporate actions

Date Company Share code Expectation
17 July 2019 Alexander Forbes Group Holdings Limited AFH Cash Dividend
17 July 2019 Alexander Forbes Group Holdings Limited AFH Special Cash Dividend
17 July 2019 Delta EMD Limited DTA Cash Dividend
17 July 2019 Delta EMD Limited DTA Liquidation Dividend
17 July 2019 Investec Bank Limited Redeemable Non-Participating Preference Shares IBRP1 Cash Dividend
17 July 2019 Lewis Group Limited LEW Cash Dividend
17 July 2019 Nictus Limited NCS Cash Dividend
17 July 2019 Primeserve Group Limited PMV Cash Dividend
17 July 2019 The Foschini Group Limited TFG 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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