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JSE kicks off the week on a high

13 October 2020

JSE kicks off the week on a high

Daily Investment Update

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THE PSG THINK BIG SERIES

Sign up to attend our next Think Big webinar in which PSG Wealth CIO, Adriaan Pask, will be interviewing global economist and multi-asset investment professional Lawrence Hatheway. They will discuss the future of the global economy and provide insights ahead of the US elections.


Market commentary

SA flag Icon
South Africa

The JSE kicked off the week on a high note amid hopes of additional US stimulus following Trump’s request for a “stripped-down COVID-19 package”. The All Share gained 0.67%.

US flag Icon
United States

Shrugging off uncertainty around the upcoming election, the Nasdaq gained nearly 3% on Monday thanks to a tech stock rally and upbeat sentiment over the prospect of more COVID-19 relief spending to aid the US economy.

EU flag Icon
Europe

Notwithstanding a surge in new COVID-19 infections across the region, the pan-European STOXX 600 gained 0.70% on Monday as investors cheered news of a sturdy economic rebound in China.

HK flag Icon
Hong Kong

The Hong Kong stock market channelled a mainland rally on Monday as investors welcomed “Beijing’s latest policy support for its capital markets.” At close of business, the Hang Seng index gained 2.20%.

Japan flag Icon
Japan

The Nikkei ended the day 0.26% lower as investors opted to lock in profits ahead of the impending corporate earnings season, while anxiety caused by the imminent US election put a further strain on sentiment.

Rand Icon
Rand

At 17h30, the rand weakened to R16.51/$, R19.51/€ and R21.58/£ following the release of data showing that local manufacturing production fell 10.80% year-on-year in August 2020, compared to market predictions of a 7.50% decline.

Precious metals Icon
Precious metals

At 18h00, spot gold lost 0.20% trading at $1 925.56 per ounce due to a stronger dollar, while the possibility of supplementary US fiscal stimulus measures trimmed losses.

Oil Icon
Oil

Brent crude lost 2.28% to trade and $41.53 a barrel at 18h15 as Libyan production was anticipated to surge after a “force majeure at the Sharara oilfield was lifted”.


Market indicators

Local markets (R)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
ALSI 55 552.35 0.67 - 0.69 1.05 17.13 2.89
Gold mining 5 409.53 - 0.22 - 4.88 0.60 52.87 129.47
Basic minerals 39 460.07 0.30 - 2.55 6.10 36.17 26.52
Industrial index 79 468.08 0.82 1.07 - 0.33 12.03 8.28
Financial 25 473.83 1.06 - 1.48 - 5.17 - 0.22 - 33.27
Fin + Ind 30 6 766.29 0.89 0.39 - 1.63 8.56 - 6.92
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) 28 837.52 0.88 4.32 11.19 22.99 10.12
S&P 500 PR (USD) 3 534.22 1.64 5.93 11.43 27.83 21.26
NASDAQ (USD) 11 876.26 2.56 9.49 12.08 46.29 48.82
FT-100 (GBP) 6 001.38 - 0.25 - 0.40 - 0.67 4.47 - 14.44
Hang Seng (HKD) 24 649.68 2.20 0.76 - 3.63 4.42 - 3.27
Nikkei 225 (JPY) 23 558.69 - 0.26 3.17 5.51 23.03 12.25
MSCI World (USD) 7 358.70 1.23 4.79 10.07 26.70 15.59
Frankfurt (EUR) 5 686.50 0.67 - 0.49 3.99 24.36 5.01
Other markets
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Gold ($) 1 919.80 0.39 - 1.27 6.32 15.48 28.13
Platinum ($) 888.00 1.02 - 4.52 5.46 20.65 - 1.55
Brent Oil ($) 42.85 - 1.13 5.05 1.18 36.12 - 26.53
Rand/USD 16.56 - 0.39 1.80 0.85 11.45 - 12.34
Rand/GBP 21.60 - 0.44 0.07 - 2.90 7.37 - 16.22
Rand/EUR 19.53 - 0.20 2.13 - 2.65 3.95 - 20.13
ALBI (R) 711.98 0.33 - 0.10 2.54 10.44 2.76
  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. Mining Production AUG
  1. UK: Unemployment Rate AUG
  2. US: Inflation Rate 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 2.68 6.51 7.27 7.49 7.68 7.68
PSG Wealth Income FoF D 4.73 4.71 6.34 6.64 7.18 7.43
PSG Wealth Preserver FoF D 7.99 2.43 3.02 3.38 4.77 5.19
PSG Wealth Moderate FoF D 11.57 2.06 1.22 1.64 3.85 4.05
PSG Wealth Creator FoF D 19.55 2.95 0.76 0.20 2.97 2.83
PSG Wealth Global Preserver FF D 1.90 11.20 8.94 - - -
PSG Wealth Global Moderate FF D 8.00 17.16 10.13 9.78 9.91 9.13
PSG Wealth Global Flexible FF D 11.67 26.28 15.12 - - -
PSG Wealth Global Creator FF D 18.13 28.90 16.88 17.25 17.58 16.04
PSG Wealth Solutions ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Moderate FoF D 16.54 8.76 5.41 3.70 5.38 4.54
PSG Wealth Global Creator FoF D 26.90 21.25 12.28 10.89 12.78 11.13
PSG Wealth Global Preserver FoF (USD) D 9.50 2.19 3.50 2.26 3.25 4.45
PSG Wealth Global Flexible FoF (USD) D 21.90 18.25 10.73 9.25 11.00 10.87
PSG Wealth Solutions (£)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Preserver FoF (GBP) D 5.94 - 3.13 3.32 2.29 2.66 6.62
PSG Wealth Global Flexible FoF (GBP) D 16.89 11.19 10.78 9.05 9.98 13.23
PSG Asset Management
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Money Market A 2.33 5.93 6.61 6.85 7.05 7.06
PSG Income A 5.49 9.42 8.97 8.65 8.64 8.50
PSG Diversified Income 6.94 6.01 6.47 6.72 7.22 7.42
PSG Stable A 8.71 - 3.53 - 2.46 0.44 2.27 3.45
PSG Balanced A 14.21 - 6.68 - 8.57 - 3.89 - 0.71 1.04
PSG Flexible A 15.76 - 11.18 - 10.45 - 5.08 - 1.46 0.80
PSG SA Equity D 23.20 - 16.12 - 16.90 - 11.83 - -
PSG Equity A 18.06 - 11.59 - 14.11 - 8.09 - 3.47 - 1.21
PSG Global Flexible FF A 11.83 4.35 - 4.68 0.43 4.13 -
PSG Global Equity FF A 13.12 - 2.26 - 9.30 - 2.19 2.68 4.32
PSG Asset Management ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Global Flexible USD A 20.69 - 2.26 - 8.15 - 4.67 0.40 1.46
PSG Global Equity USD 20.56 - 7.45 - 11.88 - 6.66 - 0.65 0.56
  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

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 7.48 - 5.00 - 7.23 - 4.90 - 1.74 - 0.59
PSG Wealth SA Property Equity Portfolio - 12.23 - 48.72 - 32.80 - 25.06 - 18.15 -
PSG Wealth Income Growth Equity Portfolio 1.98 - 18.85 - 13.96 - 8.01 - 4.20 -
PSG Wealth Offshore Equity Portfolio (USD) 20.00 17.26 11.42 11.97 14.55 13.85
  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
14 October 2020 AVI Limited AVI Cash Dividend
14 October 2020 Global Trade Centre S.A. GTC Tender Offer
14 October 2020 Investec Bank (Mauritius) Limited IMRP2 Cash Dividend
14 October 2020 Investec Property Fund Limited (REIT) IPF Cash Dividend
14 October 2020 Trellidor Holdings Limited TRL Cash Dividend
14 October 2020 Vukile Property Fund Limited (REIT) VKE Cash Dividend
14 October 2020 Zarclear Holdings Limited ZCL General Offer
  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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