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Investors digested Trump’s stimulus shock

08 October 2020

Investors digested Trump’s stimulus shock

Daily Investment Update

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THE PSG THINK BIG SERIES

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Market commentary

SA flag Icon
South Africa

The local market reported gains on Wednesday after US President Donald Trump tweeted to stop US fiscal stimulus negations until after the election. The All Share closed up by 1.01%.

US flag Icon
United States

Wall Street opened strong on Wednesday morning, bouncing back from Trump’s stimulus shock in the previous session and Levi Strauss posting a surprisingly upbeat quarterly profit. At 17h50, the Dow Jones reported a gain of 1.57%.

EU flag Icon
Europe

European markets were mixed on Wednesday despite positive earnings reports from Tesco in the UK and Dialog Semiconductor in Germany. The European STOXX 600 stood 0.12% lower for the day.

HK flag Icon
Hong Kong

The Hang Seng ended 1.09% in the green on Wednesday as investor focus turned to the initial public offering (IPO) of Ant Group – possibly the largest IPO in the world.

Japan flag Icon
Japan

The Nikkei lost 0.05% on Wednesday due to the resurfacing of economic recovery fears after Trump halted additional US stimulus talks until after the election.

Rand Icon
Rand

The rand strengthened against a weaker US dollar on Wednesday as investors mulled over the possibility that the Democrats might win the November election in the US. At 17h50, the local currency traded at R16.66/$.

Precious metals Icon
Precious metals

Gold prices made up ground on Wednesday after it reported severe losses due to Trump’s tweet to halt US stimulus talks until after the US election. Spot gold moved to $1 888.39/oz by 17h50.

Oil Icon
Oil

The oil price negated the previous session’s gains on Wednesday due to a rise in US crude inventories and Trump dashing US stimulus hopes. A barrel of Brent crude traded at $41.33 at 17h50.


Market indicators

Local markets (R)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
ALSI 54 749.77 1.01 0.97 - 0.05 16.68 3.02
Gold mining 5 001.98 - 2.08 - 8.12 - 3.81 48.06 104.65
Basic minerals 38 235.08 1.31 - 4.10 3.77 33.95 26.14
Industrial index 78 690.00 0.93 3.53 - 2.20 11.22 7.27
Financial 25 705.72 0.60 5.38 - 1.62 3.20 - 30.71
Fin + Ind 30 6 733.34 0.85 4.01 - 2.05 8.99 - 6.38
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) 28 303.46 1.91 0.71 9.90 26.38 9.46
S&P 500 PR (USD) 3 419.45 1.74 - 0.10 9.17 29.75 18.59
NASDAQ (USD) 11 364.60 1.88 0.52 10.09 44.71 44.21
FT-100 (GBP) 5 946.25 - 0.06 0.25 - 3.02 5.99 - 14.55
Hang Seng (HKD) 24 242.86 1.09 - 2.64 - 8.19 3.95 - 3.99
Nikkei 225 (JPY) 23 422.82 - 0.05 1.60 3.82 27.12 11.61
MSCI World (USD) 7 153.99 1.13 0.20 7.82 28.20 13.85
Frankfurt (EUR) 5 595.61 0.17 - 1.31 2.47 24.83 6.87
Other markets
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Gold ($) 1 888.00 - 1.28 - 2.10 6.34 14.27 25.69
Platinum ($) 864.00 - 2.81 - 4.64 5.11 15.97 - 1.26
Brent Oil ($) 41.99 - 1.55 - 0.05 - 2.53 31.75 - 28.04
Rand/USD 16.64 0.09 0.67 1.56 7.65 - 9.02
Rand/GBP 21.51 - 0.23 2.24 - 1.16 4.94 - 15.43
Rand/EUR 19.58 - 0.21 1.02 - 2.80 0.66 - 17.04
ALBI (R) 705.11 0.06 - 1.70 3.17 10.34 1.73
  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 results scheduled for release.
  1. DE: Balance of Trade AUG
  2. EU: ECB Monetary Policy Meeting Accounts
  3. US: Initial Jobless Claims 03/OCT
  4. CN: Caixin Services PMI 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 2.73 6.60 7.30 7.49 7.67 7.69
PSG Wealth Income FoF D 5.17 4.72 6.36 6.62 7.15 7.41
PSG Wealth Preserver FoF D 9.76 2.19 2.76 3.29 4.58 5.16
PSG Wealth Moderate FoF D 14.50 1.65 0.70 1.52 3.55 4.09
PSG Wealth Creator FoF D 23.53 2.23 - 0.14 - 0.01 2.50 2.98
PSG Wealth Global Preserver FF D - 0.54 11.65 9.51 - - -
PSG Wealth Global Moderate FF D 7.08 17.30 10.27 9.63 9.69 8.86
PSG Wealth Global Flexible FF D 11.31 26.52 14.80 - - -
PSG Wealth Global Creator FF D 17.66 29.36 16.00 16.94 17.13 15.42
PSG Wealth Solutions ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Moderate FoF D 19.17 6.75 4.35 3.18 4.93 4.60
PSG Wealth Global Creator FoF D 34.83 18.72 10.69 10.29 12.28 11.05
PSG Wealth Global Preserver FoF (USD) D 11.71 1.34 3.12 2.03 3.09 4.72
PSG Wealth Global Flexible FoF (USD) D 25.59 16.12 9.37 8.70 10.59 11.17
PSG Wealth Solutions (£)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Preserver FoF (GBP) D 7.49 - 2.83 3.03 2.04 2.60 6.81
PSG Wealth Global Flexible FoF (GBP) D 19.66 10.92 9.50 8.64 9.73 13.50
PSG Asset Management
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Money Market A 2.33 5.93 6.61 6.85 7.05 7.06
PSG Income A 5.71 9.35 8.92 8.60 8.60 8.49
PSG Diversified Income 7.70 5.72 6.32 6.58 7.12 7.34
PSG Stable A 11.32 - 4.42 - 2.91 0.13 2.02 3.41
PSG Balanced A 18.94 - 7.89 - 9.14 - 4.29 - 1.04 1.10
PSG Flexible A 20.66 - 12.34 - 11.12 - 5.51 - 1.83 0.82
PSG SA Equity D 29.41 - 16.60 - 17.68 - 12.12 - -
PSG Equity A 23.43 - 12.64 - 14.84 - 8.51 - 3.77 - 0.86
PSG Global Flexible FF A 17.49 2.52 - 4.60 - 0.03 3.65 -
PSG Global Equity FF A 21.12 - 4.41 - 9.38 - 2.75 2.12 4.10
PSG Asset Management ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Global Flexible USD A 27.31 - 6.16 - 9.57 - 5.62 - 0.48 1.55
PSG Global Equity USD 28.17 - 11.52 - 13.40 - 7.72 - 1.61 0.65
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 5.83 7.16 7.22 7.17 7.40 7.42
PSG Direct Low Equity 12.09 - 3.66 - 3.05 - 0.10 1.84 3.19
PSG Direct Managed 19.09 - 9.42 - 10.04 - 5.02 - 1.68 0.58
PSG Direct Aggressive 20.55 - 9.70 - 11.13 - 5.51 - 1.57 -
PSG Direct Global Managed 17.23 2.06 - 5.03 - 0.48 3.18 -
PSG Direct Global Aggressive 19.50 - 2.27 - 8.01 - 2.16 2.25 -
  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 10.51 - 5.46 - 7.75 - 4.92 - 1.84 - 0.16
PSG Wealth SA Property Equity Portfolio 6.34 - 47.63 - 31.53 - 24.40 - 17.68 -
PSG Wealth Income Growth Equity Portfolio 8.58 - 18.93 - 13.87 - 7.78 - 4.06 -
PSG Wealth Offshore Equity Portfolio (USD) 19.39 13.44 9.60 11.07 13.70 13.13
  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.


  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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