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Powell’s economic warning weighs on trade

14 May 2020

Powell’s economic warning weighs on trade

Daily Investment Update

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Market commentary

SA flag Icon
South Africa

On Wednesday, the JSE’s losses were offset by Naspers and Prosus, which together make up over a tenth of the index. The All Share fell 0.33% on Wednesday.

US flag Icon
United States

Wall Street fell at its open on Wednesday after US Federal Reserve (Fed) Chairman, Jerome Powell, warned of "a prolonged recession due to the coronavirus and dispelled speculation over negative interest rates”. Shortly after the JSE closed, the Dow was 1.47% lower.

EU flag Icon
Europe

European markets reported losses on Wednesday, led by travel, automakers and banks. The STOXX 600 Index closed at -1.94%.

HK flag Icon
Hong Kong

Asian indices tumbled on Wednesday as investor concerns flared up about the economic impact of a possible second COVID-19 wave. The Hang Seng closed 0.26% in the red.

Japan flag Icon
Japan

Japanese markets tracked Wall Street’s overnight losses on Wednesday in light of renewed COVID-19 fears. The Nikkei traded 0.12% down.

Rand Icon
Rand

The local currency strengthened on Wednesday on optimism that some countries are beginning to ease lockdown regulations. At 17h50, the rand traded at R18.48/$.

Precious metals Icon
Precious metals

Gold rose on Wednesday on the back of Powell’s pledge to implement more stimulus measures, if required, to counter the economic impact of the current pandemic. An ounce of spot gold cost $1 716.36 at 17h50.

Oil Icon
Oil

Oil prices were hit on Wednesday after the Fed warned that “economic recovery from the coronavirus pandemic would take many months”. At 17h50, a barrel of Brent crude traded at $27.66.


Market indicators

Local markets (R)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
ALSI 50 152.05 - 0.33 4.78 - 11.93 - 9.31 - 7.73
Gold mining 4 560.39 - 1.60 28.38 65.29 84.86 235.80
Basic minerals 30 965.37 - 1.74 5.18 - 9.84 - 6.03 4.44
Industrial index 77 903.82 0.93 9.16 - 1.29 5.84 4.45
Financial 23 815.62 - 1.49 - 6.97 - 35.22 - 38.90 - 40.70
Fin + Ind 30 6 554.31 0.31 4.62 - 12.85 - 10.71 - 12.18
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) 23 247.97 - 2.17 - 0.42 - 20.53 - 15.29 - 5.94
S&P 500 PR (USD) 2 820.00 - 1.74 2.26 - 16.00 - 7.94 2.31
NASDAQ (USD) 8 863.17 - 1.55 8.27 - 8.50 5.03 17.13
FT-100 (GBP) 5 904.05 - 1.51 1.35 - 20.00 - 18.29 - 14.20
Hang Seng (HKD) 24 180.30 - 0.26 - 0.36 - 12.60 - 8.69 - 12.36
Nikkei 225 (JPY) 20 267.05 - 0.12 4.45 - 13.79 - 12.39 - 2.43
MSCI World (USD) 5 895.94 - 1.74 2.30 - 17.29 - 11.11 - 2.46
Frankfurt (EUR) 4 641.75 - 2.56 - 0.21 - 23.30 - 20.31 - 11.23
Other markets
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Gold ($) 1 703.45 0.27 2.46 8.73 17.08 32.52
Platinum ($) 760.00 - 0.91 3.26 - 21.24 - 13.04 - 10.90
Brent Oil ($) 29.98 1.18 - 4.76 - 46.26 - 51.69 - 57.55
Rand/USD 18.51 - 0.02 - 2.73 - 23.91 - 25.90 - 29.93
Rand/GBP 22.60 - 0.04 0.13 - 15.99 - 18.96 - 22.88
Rand/EUR 20.00 - 0.02 - 1.49 - 23.60 - 23.04 - 25.31
ALBI (R) 692.89 - 0.70 7.45 - 2.29 0.83 4.22
  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 scheduled for release.
  1. US: Jobless Claims 4-Week Average 09/MAY
  2. CN: Unemployment Rate APR (Friday 04h00)

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 3.66 7.71 7.84 7.90 7.98 7.83
PSG Wealth Income FoF D 1.07 4.83 6.27 6.84 7.38 7.45
PSG Wealth Preserver FoF D - 2.30 - 0.29 2.66 3.65 4.25 4.83
PSG Wealth Moderate FoF D - 6.12 - 5.06 - 0.68 1.34 2.52 2.97
PSG Wealth Creator FoF D - 11.79 - 12.05 - 5.83 - 1.96 0.68 - 0.24
PSG Wealth Global Moderate FF D 13.75 23.77 19.94 11.99 7.90 8.94
PSG Wealth Global Creator FF D 16.58 29.81 26.75 18.52 14.21 -
PSG Wealth Solutions ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Moderate FoF D - 7.75 - 3.04 - 2.21 0.77 2.73 0.37
PSG Wealth Global Creator FoF D - 4.49 2.26 3.55 6.92 8.94 6.22
PSG Wealth Global Preserver FoF (USD) D - 6.22 - 3.27 - 0.27 0.66 2.43 2.03
PSG Wealth Global Flexible FoF (USD) D - 3.27 1.31 3.51 5.83 8.00 6.16
PSG Wealth Solutions (£)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Preserver FoF (GBP) D - 3.47 0.50 2.84 1.65 5.21 5.05
PSG Wealth Global Flexible FoF (GBP) D 1.24 7.31 8.52 6.85 11.45 9.69
PSG Asset Management
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Money Market A 3.45 7.14 7.21 7.30 7.37 7.23
PSG Income A 4.76 8.81 8.47 8.48 8.56 8.27
PSG Diversified Income 1.71 4.65 5.74 6.58 7.10 7.14
PSG Stable A - 9.75 - 10.39 - 4.24 - 0.26 1.85 2.40
PSG Balanced A - 18.06 - 20.99 - 11.96 - 5.82 - 1.98 - 1.52
PSG Flexible A - 23.24 - 25.45 - 14.23 - 7.43 - 3.00 - 2.04
PSG SA Equity D - 31.26 - 40.34 - 26.70 - 16.03 - -
PSG Equity A - 24.76 - 30.56 - 18.95 - 10.86 - 4.46 - 5.57
PSG Global Flexible FF A - 3.96 - 2.42 2.17 1.28 2.46 -
PSG Global Equity FF A - 12.16 - 11.32 - 3.35 - 1.68 1.06 1.51
PSG Asset Management ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Global Flexible USD A - 23.73 - 25.36 - 17.58 - 9.27 - 2.62 - 4.72
PSG Global Equity USD - 28.85 - 30.64 - 21.08 - 11.25 - 3.40 - 6.28
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 3.27 6.61 6.84 7.16 7.40 7.25
PSG Direct Low Equity - 9.74 - 10.57 - 4.62 - 0.70 1.52 1.95
PSG Direct Managed - 19.55 - 22.46 - 12.92 - 6.64 - 2.68 - 2.09
PSG Direct Aggressive - 20.02 - 22.85 - 12.64 - 6.92 - 2.55 -
PSG Direct Global Managed - 4.18 - 2.87 1.71 0.82 1.99 -
PSG Direct Global Aggressive - 9.34 - 8.46 - 1.74 - 1.01 1.14 -
  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 - 14.48 - 19.75 - 12.53 - 5.75 - 2.11 -
PSG Wealth SA Property Equity Portfolio - 52.03 - 53.68 - 35.89 - 25.58 - 20.17 -
PSG Wealth Growth Income Equity Portfolio - 25.17 - 30.62 - 19.04 - 7.82 - 4.52 -
PSG Wealth Offshore Equity Portfolio (USD) - 2.48 4.69 6.69 11.04 11.96 -
  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 in the PSG Wealth House View SA Equity Portfolio. Click here to read the full report on our secure site or log in to myBase.
  • OMU SJ has less than 10% of the unsecured lending market, which provides a significant opportunity to drive future growth.
  • Due to Old Mutual’s size, balance sheet strength, historically low discount to group equity value and the low relative price to group equity value or embedded value compared with peers, we feel that the group will be more resilient to economic challenges in 2020 and offer a better potential for upside relative to peers.


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Highlights

  • Our recommendation for BID SJ is Neutral; click here to read the full report on our secure site.
  • Bidcorp is well-diversified and highly cash generative business. It is the largest foodservice distributor outside of the USA, with the largest geographic footprint when compared with its global peers.
  • We do remain cautious given the macroeconomic headwinds taking place at present.
  • We believe Bidcorp is a good-quality company with a stable ROE and a sustainable operating margin, although further margin expansion from this higher base is going to be more difficult.


company logo

Highlights

  • Our recommendation for ANH SJ is overweight; click here to read the full report on our secure site.
  • We believe AB InBev is a good-quality company with an attractive and sustainable operating margin and a reliable cash conversion.
  • Operating margins across the group geographies are well ahead of peers, making further efficiency-enabled outperformance less likely.
  • Despite management believing that acquisitive growth and the extraction of synergies from acquisitions is a core competency of the group, balance sheet flexibility will likely limit such growth.


  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


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