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SA downgraded further into junk

23 November 2020

SA downgraded further into junk

Daily Investment Update

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Market commentary

SA flag Icon
South Africa

The JSE ended the week down 0.24% as markets lacked guidance with investors torn between possible COVID-19 vaccine optimism and the alarming increase of the global infection rate.

US flag Icon
United States

Wall Street opened lower on Friday due to fading stimulus hopes and the economic fallout from the increasing number of COVID-19 infections. At 17h30, the Dow Jones was 0.56% in the red.

EU flag Icon
Europe

On Friday, European shares traded up thanks to a boost from commodity-linked shares. The STOXX 600 ended the day 0.52% higher – reporting gains for the third week in a row.

HK flag Icon
Hong Kong

The Hang Seng closed the week 0.20% higher at 26 410 points lifted by material and consumer companies on upbeat data from mainland China.

Japan flag Icon
Japan

The Nikkei ended trade on Friday 0.42% in the red as the third COVID-19 wave raised concerns that Japan might introduce new restrictions to curb the spread.

Rand Icon
Rand

The local currency lost ground late on Friday after both Moody’s and Fitch announced that they would be downgrading South Africa’s sovereign credit rating further; however, S&P Global kept its outlook and rating unchanged.

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Precious metals

After US Treasury Secretary Steven Mnuchin indicated on Friday that US stimulus negotiations would continue, gold prices climbed slightly. Gold traded at $1 878.95/oz at 17h30.

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Oil

Oil rose around 1% on Friday, trading at $44.31 a barrel at 17h30, as positive COVID-19 vaccine results boosted sentiment.


Market indicators

Local markets (R)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
ALSI 56 615.28 - 0.24 2.45 2.45 9.61 1.55
Gold mining 3 944.66 1.40 - 22.48 - 30.07 - 14.75 58.72
Basic minerals 37 088.23 0.01 - 4.60 - 8.51 9.44 14.21
Industrial index 83 414.75 0.28 4.55 8.26 7.44 11.28
Financial 28 195.29 - 2.08 11.93 11.22 16.46 - 29.12
Fin + Ind 30 7 203.02 - 0.37 6.45 9.04 9.72 - 3.70
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) 29 263.48 - 0.75 3.62 6.07 20.42 7.68
S&P 500 PR (USD) 3 557.54 - 0.68 3.49 5.52 20.75 16.60
NASDAQ (USD) 11 854.97 - 0.42 3.04 5.45 26.95 40.31
FT-100 (GBP) 6 351.45 0.27 8.14 6.16 6.31 - 9.69
Hang Seng (HKD) 26 451.54 0.36 7.74 7.39 11.31 1.58
Nikkei 225 (JPY) 25 527.37 - 0.41 8.34 12.33 24.94 12.46
MSCI World (USD) 7 552.23 - 0.25 4.96 6.69 22.29 13.48
Frankfurt (EUR) 5 685.51 0.39 3.14 2.39 17.05 - 0.16
Other markets
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Gold ($) 1 867.00 0.52 - 2.06 - 3.17 6.68 26.52
Platinum ($) 951.00 1.17 11.23 2.15 11.88 4.28
Brent Oil ($) 44.96 1.72 4.17 0.13 25.76 - 27.95
Rand/USD 15.38 0.16 5.37 9.11 11.72 -4.77
Rand/GBP 20.48 -0.19 3.26 7.64 4.55 -8.01
Rand/EUR 18.26 0.22 5.08 8.63 4.33 -12.44
ALBI (R) 745.82 0.31 3.99 5.14 6.11 7.96
  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 to be released.
  1. DE: Markit Manufacturing PMI Flash NOV
  2. EU: Markit Services PMI Flash NOV
  3. UK: Markit/CIPS UK Services PMI Flash NOV

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 2.41 6.14 7.06 7.36 7.55 7.62
PSG Wealth Income FoF D 4.30 5.35 6.73 6.97 7.39 7.53
PSG Wealth Preserver FoF D 5.95 3.33 5.16 3.94 5.32 5.35
PSG Wealth Moderate FoF D 9.30 2.50 4.83 2.27 4.79 4.64
PSG Wealth Creator FoF D 15.66 3.37 5.26 0.82 4.43 4.08
PSG Wealth Global Preserver FF D - 6.26 9.40 11.28 - - -
PSG Wealth Global Moderate FF D 0.01 14.17 14.62 8.66 8.80 7.42
PSG Wealth Global Flexible FF D 2.70 21.86 20.06 - - -
PSG Wealth Global Creator FF D 7.72 24.26 23.78 16.48 16.97 14.09
PSG Wealth Solutions ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Moderate FoF D 16.95 8.16 8.74 4.70 6.75 5.23
PSG Wealth Global Creator FoF D 23.34 17.35 17.26 11.90 14.52 11.57
PSG Wealth Global Preserver FoF (USD) D 9.61 3.09 5.12 3.18 4.31 4.80
PSG Wealth Global Flexible FoF (USD) D 19.18 15.38 14.11 9.90 12.41 10.91
PSG Wealth Solutions (£)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Preserver FoF (GBP) D 3.34 0.72 3.54 2.87 3.11 6.68
PSG Wealth Global Flexible FoF (GBP) D 10.57 12.95 12.36 9.53 10.48 12.98
PSG Asset Management
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Money Market A 2.11 5.62 6.44 6.73 6.95 7.00
PSG Income A 4.84 9.74 9.01 8.87 8.73 8.57
PSG Diversified Income 6.29 7.83 7.34 7.43 7.62 7.67
PSG Stable A 10.38 - 0.98 - 0.32 1.73 3.15 4.20
PSG Balanced A 17.35 - 4.17 - 4.90 - 2.35 0.39 2.31
PSG Flexible A 17.99 - 9.37 - 6.83 - 3.86 - 0.74 2.13
PSG SA Equity D 25.83 - 13.48 - 14.15 - 10.14 - -
PSG Equity A 20.24 - 9.45 - 10.05 - 6.78 - 2.83 0.89
PSG Global Flexible FF A 11.94 7.18 2.37 1.49 3.71 -
PSG Global Equity FF A 15.31 0.82 - 1.65 - 0.75 2.57 4.62
PSG Asset Management ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Global Flexible USD A 30.99 1.34 - 2.65 - 2.21 1.92 3.57
PSG Global Equity USD 33.28 - 3.48 - 5.68 - 3.94 1.13 2.95
  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 10.35 - 6.85 - 4.01 - 3.67 - 0.23 0.85
PSG Wealth SA Property Equity Portfolio 6.26 - 46.92 - 29.79 - 23.28 - 16.32 -
PSG Wealth Dividend Income Equity Portfolio 10.71 - 18.29 - 9.93 - 6.38 - 2.02 -
PSG Wealth Offshore Equity Portfolio (USD) 15.91 12.81 14.62 12.43 16.19 13.35
  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

  • There is a high level of uncertainty surrounding the resumption of economies and the impact on tourism in the future.
  • The balance sheet remains strong, which is essential to protect equity value during current events.
  • LVMH is trading at a forward P/E of approximately 36 times, which is nearly 60% above its five-year average.
  • The FCF yield also contracted to 2.6% and is now at a discount to peers compared with its historical 23% premium.
  • For more information about this counter, please contact your PSG Wealth adviser.


company logo

Highlights

  • Microsoft's operations benefitted from changing consumer behaviour, which is accelerating the rate of cloud adoption. However, we feel the group's attractive attributes are fully reflected in the current share price.
  • On an earnings basis, the share is currently trading at an 18% premium to its peers compared with its 10% historical discount over the past five years.
  • Microsoft's diverse and global operations, increasingly interlinked ecosystem, high margin, scalable operations and annuity-type revenue warrant a premium in our opinion.
  • For more information about this counter, please contact your PSG Wealth adviser.


company logo

Highlights

  • The local property sector was already constrained by an oversupply of stock within the retail and office space before the COVID-19 pandemic hit.
  • Although Growthpoint completed an equity issue, they would not necessarily be forced into another one.
  • Growthpoint has multiple listed investments, which could be disposed of at a discount to its market value if needed before another rights issue.
  • While we recognise a difficult valuation cycle ahead, we feel the share offers value trading at a 47% discount to its NAV post the equity issue.
  • For more information about this sector, please contact your PSG Wealth adviser.


Corporate actions

Date Company Share code Expectation
25 November 2020 Afrimat Limited AFT Cash Dividend
25 November 2020 Compagnie Financiere Richemont SA CFR Bonus Issue
25 November 2020 Cartrack Holdings Limited CTK Cash Dividend
25 November 2020 Investec Bank (Mauritius Limited Redeemable Cumulative Non-Participating No Par Value Preference Shares IMRP1 Cash Dividend
25 November 2020 Investec Bank (Mauritius Limited Redeemable Cumulative Non-Participating No Par Value Preference Shares IMRP3 Cash Dividend
25 November 2020 Investec Bank (Mauritius Limited Redeemable Cumulative Non-Participating No Par Value Preference Shares IMRP6 Cash Dividend
25 November 2020 Investec Holdings Limited Preference Shares IVTP Cash Dividend
25 November 2020 Naspers Limited NPN 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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