13
December 2023
Markets mixed after US CPI in line with expectations
Adriaan Pask, Chief Investment Officer
PSG Wealth
Market commentary
Markets were mixed on Tuesday after the latest data showed that inflation in the largest economy in the world, the US, decreased to the lowest level in five months, while core inflation remained the same as the level recorded in October. Data showed that the annual inflation rate in the US slowed to “3.10% in November 2023, from 3.20% in October and in line with market forecasts, (while) the annual core inflation rate, which excludes volatile items such as food and energy, remained unchanged from the 4% seen in October, matching market forecasts,” Trading Economics added. This increased bets that the US Federal Reserve (Fed) could keep interest rates higher for longer at their meeting scheduled for later tonight.
The local bourse closed down by 1.70% yesterday after the release of the latest US inflation data, with most investors waiting for the latest local inflation data, expected this morning, for indications of whether monetary policy tightening by the South African Reserve Bank (SARB) is yielding any results on dampening local inflation levels. The latest data also showed that local mining and manufacturing production exceeded expectations.
European markets closed down on Tuesday as investors waited to see what decisions the European Central Bank (ECB) could take regarding interest rates on the continent. In contrast, markets in the US traded higher at 20h30, despite the latest US inflation data coming in as expected.
The Hang Seng closed up by 1.07% yesterday after an “upbeat (mood among investors) as they awaited decisions from a gathering of policymakers in China that could reveal a more proactive role for fiscal policy next year, including more front-loading of funding and strengthening implementation to improve economic policies,” added Trading Economics.
Comments from Bank of Japan officials, saying they “don't feel compelled to swiftly implement policy tightening unless there's substantial evidence of wage growth capable of backing sustainable inflation”, supported the Nikkei on Tuesday which closed up by 0.16%.
Gold traded at $1 979 an ounce at 21h00, while Brent crude traded hands at $72.95 a barrel at the same time.
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Market indicators
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| Date | Index | Current Level | 1 Day Move | 1 Month Move | 6 Month Move | 1 Year Move |
|---|
Some data may be delayed, the above table reflects the latest information available from Morningstar.
Please note 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.
Collective investment schemes
Local funds
| ASISA category | Fund name | NAV (Rands) at 26 Apr 2024 | Performance –As at 2024/03/31 | |||
|---|---|---|---|---|---|---|
| 1 year % | 3 year % | 5 year % | Inception % | |||
| South Africa - Equity - General | PSG Equity Fund Class A | 16.30 | 5.43 | 15.72 | 9.73 | 12.71 |
| PSG Equity Fund Class A | 16.30 | 5.43 | 15.72 | 9.73 | 12.71 | |
| PSG Equity Fund Class E | 16.29 | 4.33 | 15.16 | 9.79 | 8.58 | |
| PSG Equity Fund Class F | 16.35 | 5.91 | 16.25 | 10.23 | 9.55 | |
| PSG SA Equity Class F | 1.52 | 2.14 | 15.97 | 8.69 | 6.79 | |
| PSG Wealth Creator Fund of Funds Class D | 51.28 | 6.61 | 9.40 | 10.37 | 11.86 | |
| South Africa - Multi Asset - Flexible | PSG Flexible Fund Class A | 7.83 | 5.12 | 14.65 | 9.77 | 11.16 |
| PSG Flexible Fund Class A | 7.83 | 5.12 | 14.65 | 9.77 | 11.16 | |
| PSG Flexible Fund Class E | 7.84 | 5.40 | 14.96 | 10.06 | 9.88 | |
| South Africa - Multi Asset - High Equity | PSG Balanced Fund Class A | 94.92 | 4.85 | 13.93 | 10.11 | 12.69 |
| PSG Balanced Fund Class A | 94.92 | 4.85 | 13.93 | 10.11 | 12.69 | |
| PSG Balanced Fund Class E | 95.00 | 5.45 | 14.59 | 10.74 | 9.56 | |
| PSG Wealth Moderate Fund of Funds Class D | 40.36 | 9.93 | 10.12 | 9.17 | 10.72 | |
| South Africa - Multi Asset - Low Equity | PSG Stable Fund Class A | 1.62 | 5.23 | 9.90 | 7.44 | 8.23 |
| PSG Stable Fund Class A | 1.62 | 5.23 | 9.90 | 7.44 | 8.23 | |
| PSG Stable Fund Class E | 1.62 | 5.83 | 10.54 | 8.05 | 7.95 | |
| PSG Wealth Preserver Fund of Funds Class D | 24.44 | 8.61 | 8.68 | 7.73 | 9.01 | |
| South Africa - Multi Asset - Income | PSG Diversified Income Fund Class A | 1.31 | 7.40 | 8.23 | 7.82 | 7.83 |
| PSG Diversified Income Fund Class A | 1.31 | 7.40 | 8.23 | 7.82 | 7.83 | |
| PSG Diversified Income Fund Class E | 1.31 | 8.07 | 8.84 | 8.39 | 8.26 | |
| PSG Wealth Income Fund of Funds Class D | 12.38 | 7.81 | 7.50 | 7.01 | 7.79 | |
| South Africa - Interest Bearing - Short Term | PSG Income Fund Class A | 1.08 | 7.76 | 6.73 | 7.28 | 7.10 |
| PSG Income Fund Class A | 1.08 | 7.76 | 6.73 | 7.28 | 7.10 | |
| PSG Income Fund Class E | 1.08 | 8.07 | 7.04 | 7.59 | 7.76 | |
| PSG Wealth Enhanced Interest Fund of Funds Class D | 1.02 | 8.96 | 6.59 | 6.49 | 6.71 | |
| South Africa - Interest Bearing - Money Market | PSG Money Market Fund Class A | 1.00 | 8.28 | 5.98 | 5.83 | 7.94 |
| PSG Money Market Fund Class A | 1.00 | 8.28 | 5.98 | 5.83 | 7.94 | |
| PSG Money Market Fund Class F | 1.00 | 8.59 | 6.26 | 6.10 | 5.28 | |
| South African - Multi Asset - Low Equity | PSG Investment Management Cautious Fund of Funds Class D | 1.29 | 5.22 | 9.01 | — | 9.62 |
| PSG Investment Management Cautious Fund of Funds Class D | 1.29 | 5.22 | 9.01 | — | 9.62 | |
| South African - Multi Asset - High Equity | PSG Investment Management Growth Fund of Funds Class D | 1.47 | 2.95 | 11.00 | — | 11.35 |
| PSG Investment Management Growth Fund of Funds Class D | 1.47 | 2.95 | 11.00 | — | 11.35 | |
| South African - Multi Asset - Income | PSG Investment Management Multi-Asset Income Fund of Funds Class D | 1.13 | 6.96 | 7.34 | — | 7.57 |
| PSG Investment Management Multi-Asset Income Fund of Funds Class D | 1.13 | 6.96 | 7.34 | — | 7.57 | |
Performance data on local funds is shown up to the last market close minus 1 day.
Some data may be delayed, the above table reflects the latest information available from Morningstar.
Please note 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.
Global funds
Through our tried-and tested investment philosophy, we have built competitive global solutions to help clients achieve their investment goals.
The following funds are rand-denominated, but invest internationally:
| ASISA category | Fund name | NAV (Rands) at 26 Apr 2024 | Performance –As at 2024/03/31 | |||
|---|---|---|---|---|---|---|
| 1 year % | 3 year % | 5 year % | Inception % | |||
| Global - Equity - General | PSG Global Equity Feeder Fund Class A | 4.84 | 13.50 | 18.16 | 13.88 | 13.07 |
| PSG Global Equity Feeder Fund Class A | 4.84 | 13.50 | 18.16 | 13.88 | 13.07 | |
| PSG Global Equity Feeder Fund Class E | 5.01 | 14.16 | 18.84 | 14.44 | 12.79 | |
| PSG Wealth Global Creator Feeder Fund Class D | 4.57 | 31.95 | 14.40 | 16.71 | 15.72 | |
| Global - Multi Asset - Flexible | PSG Global Flexible Feeder Fund Class A | 3.75 | 11.50 | 15.71 | 13.27 | 12.83 |
| PSG Global Flexible Feeder Fund Class A | 3.75 | 11.50 | 15.71 | 13.27 | 12.83 | |
| PSG Global Flexible Feeder Fund Class B | 3.94 | 12.14 | 16.38 | 13.77 | 13.33 | |
| PSG Wealth Global Flexible Feeder Fund Class D | 4.77 | 16.82 | 8.82 | 11.36 | 11.51 | |
| PSG Wealth Global Moderate Feeder Fund Class D | 4.88 | 19.10 | 10.30 | 10.72 | 12.77 | |
| Global - Multi Asset - Low Equity | PSG Wealth Global Preserver Feeder Fund Class D | 1.54 | 15.10 | 9.24 | 8.30 | 7.48 |
| PSG Wealth Global Preserver Feeder Fund Class D | 1.54 | 15.10 | 9.24 | 8.30 | 7.48 | |
Performance data on offshore funds is shown up to the last market close minus 2 days.
Some data may be delayed, the above table reflects the latest information available from Morningstar.
Please note 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.
Invest in other currencies
The following funds invest internationally using foreign currency
| ASISA category | Fund name | NAV (Rands) at 25 Apr 2024 | Performance –As at 2024/03/31 | |||
|---|---|---|---|---|---|---|
| 1 year % | 3 year % | 5 year % | Inception % | |||
| EAA Fund GBP Cautious Allocation | PSG Wealth Global Preserver FoF (GBP) Class D | 2.04 | 6.23 | 2.28 | 2.49 | 5.01 |
| PSG Wealth Global Preserver FoF (GBP) Class D | 2.04 | 6.23 | 2.28 | 2.49 | 5.01 | |
| EAA Fund GBP Flexible Allocation | PSG Wealth Global Flexible FoF (GBP) Class D | 3.69 | 7.61 | 3.14 | 6.39 | 9.38 |
| PSG Wealth Global Flexible FoF (GBP) Class D | 3.69 | 7.61 | 3.14 | 6.39 | 9.38 | |
| EAA Fund Global Flex-Cap Equity | PSG Global Equity Sub-Fund Class A | 2.18 | 6.31 | 8.80 | 8.10 | 5.87 |
| PSG Global Equity Sub-Fund Class A | 2.18 | 6.31 | 8.80 | 8.10 | 5.87 | |
| PSG Global Equity Sub-Fund Class B | 2.25 | 6.92 | 9.42 | 8.72 | 7.09 | |
| EAA Fund Global Large-Cap Blend Equity | PSG Wealth Global Creator Fund of Funds Class D | 2.80 | 23.38 | 5.16 | 10.46 | 9.82 |
| PSG Wealth Global Creator Fund of Funds Class D | 2.80 | 23.38 | 5.16 | 10.46 | 9.82 | |
| EAA Fund USD Cautious Allocation | PSG Wealth Global Preserver FoF (USD) Class D | 1.65 | 7.71 | 0.33 | 2.30 | 3.54 |
| PSG Wealth Global Preserver FoF (USD) Class D | 1.65 | 7.71 | 0.33 | 2.30 | 3.54 | |
| EAA Fund USD Flexible Allocation | PSG Global Flexible Sub-Fund Class A | 18.91 | 4.80 | 6.92 | 7.47 | 5.79 |
| PSG Global Flexible Sub-Fund Class A | 18.91 | 4.80 | 6.92 | 7.47 | 5.79 | |
| PSG Global Flexible Sub-Fund Class B | 20.03 | 5.29 | 7.42 | 8.05 | 6.41 | |
| PSG Investment Management Global Flexible Fund of Funds (Dollar) | 1.55 | 7.92 | -1.45 | 3.38 | 2.65 | |
| PSG Wealth Global Flexible FoF (USD) Class D | 2.99 | 9.46 | 0.13 | 5.54 | 7.87 | |
| EAA Fund USD Moderate Allocation | PSG Wealth Global Moderate Fund of Funds Class D | 1.97 | 11.27 | 1.35 | 4.74 | 5.25 |
| PSG Wealth Global Moderate Fund of Funds Class D | 1.97 | 11.27 | 1.35 | 4.74 | 5.25 | |
Performance data on offshore funds is shown up to the last market close minus 2 days.
Some data may be delayed, the above table reflects the latest information available from Morningstar.
Please note 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.
Non-Collective investment schemes
House view equity portfolios
| Fund display name | Performance –As at 2024/04/26 | |||
|---|---|---|---|---|
| 1 year % | 3 year % | 5 year % | Inception % | |
| PSG Wealth Income Growth Equity Portfolio | 1.39 | 4.52 | -0.71 | 1.17 |
| PSG Wealth Offshore Equity Portfolio (USD) | 11.12 | 4.15 | 9.96 | 11.59 |
| PSG Wealth SA Equity Portfolio | -5.21 | 1.25 | 0.11 | 2.73 |
| PSG Wealth SA Property Equity Portfolio | 12.07 | 7.04 | -2.81 | -3.33 |
* PSG Wealth equity portfolio performance are shown gross of management fees, but net of brokerage and other trading costs.
The House view portfolios are bespoke solution portfolios and not part of the Collective Investment Schemes’ portfolios.
Recent investment ideas
MTN
In this report, we look at MTN's 3Q23 results, which were characterised by the following:
- Top line was on par with management's expectations but cost inflation was elevated in this period from various Opcos weighing in on margins.
- Blended inflation of 17.3% year-to-date (YTD) compared to 14.2% in 2022.
- EBITDA growth (+11.2% y/y) is trending ahead of expectations.
- The balance sheet remains robust. Group net debt/EBITDA at holding company (Holdco) level held firm at 1.5x (30 June:1.5x).
- Up streamed cash of R3.8 billion from our operating companies in the third quarter. In addition, the group repatriated R987 millions of localisations proceeds from MTN Nigeria in Q1. Elected for a scrip dividend option increase the group’s effective shareholding from 75.6% to 76.2%. Signs of cash repatriation issue.
- Process underway for Initial Public Offer (IPO) of MTN Irancell which is expected to be completed by end 2024.
Our research supports a buy recommendation.
Please join us on Thursday at 11h30 for our Microsoft Teams Q&A sessions. Click here to join. <https://www.psg.co.za/wealthonline#investment-research>
Naspers and Prosus
On 29 November 2023, Naspers and Prosus released its half-year results for the period ending 30 September 2023. Since our previous report in July 2023, in which we issued a hold recommendation and which detailed the proposed collapse of the complicated holding structure, the following has taken place:
- The proposed transaction was approved by shareholders and implemented, resulting in a simplified holding structure. As part of the implementation, Prosus ordinary shareholders received 1.7960 new shares for each existing share resulting in ~50% drop in price (and not value).
- In an unexpected announcement, Bob van Dijk stepped down as CEO of both companies but will remain as a consultant to the group until 30 September 2024. Ervin Tu has been appointed interim CEO. There are concerns about this sudden change.
- The Naspers share price is flat, currently at R3 400 (previous report R3 399).
- Prosus has decreased by 3.4% (from R632.2, adjusted).
- Share repurchases of both companies have continued.
Our research supports a hold recommendation.
Please join us on Thursday at 11h30 for our Microsoft Teams Q&A sessions. Click here to join. <https://www.psg.co.za/wealthonline#investment-research>
PPC
In this report, we look at PPC's recent positive results that alleviated any balance sheet concerns, however, macro environment pressure persist. The key takeaways are as follows;
- Management shake-up with new group CEO Matias Cardarelli taking office in 1Q24. Managing Director of SA and Botswana, Mr Njombo Lekula will also relinquish duties before the end of the year. The position will be consolidated with the CFO of the region.
- International businesses performed resiliently but South Africa and Botswana are experiencing challenges in a competitive market.
- Dispose of PPC 51% stake in CIMERWA (Rwanda) for US$ 42.5 million.
- Increase in revenue due to bi-annual increases of 8.8%, but cost pressures persist.
- Strong cash generation is supportive of the balance sheet.
Our research supports a hold recommendation.
Please join us on Thursday at 11h30 for our Microsoft Teams Q&A sessions. Click here to join. <https://www.psg.co.za/wealthonline#investment-research>
Economic Calendar
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Corporate Actions
| Date | Company | Share code | Expectation |
|---|
The information above is to the best of our knowledge correct.
The Corporate Actions are updated weekly.
Fund performance
Collective Investment Schemes in Securities (CIS) are generally medium-term to long-term investments. The value of participatory interests (units) may go down as well as up and past performance is not a guide to future performance. Collective Investment Schemes are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from PSG Collective Investments (RF) Limited. Commission and incentives may be paid, and if so, are included in the overall costs. Forward pricing is used. The Portfolios may be capped at any time in order for them to be managed in accordance with their mandate.
Performance is calculated for the portfolio and individual investor performance may differ as a result thereof. Different classes of participatory interest can apply to these portfolios and are subject to different fees, charges and possibly dividend withholding tax and will thus have differing performances. Annualised performances show longer term performance rescaled over a 12-month period. Individual performance may differ as a result of initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. The portfolio is valued at 15h00 daily. Income distributions are net of any applicable taxes. Investment performance data is for illustrative purposes only. Actual performance figures are available on request. Always refer to the fund fact sheet (Minimum Disclosure Document) for full details, fees and risks of the fund.
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