Daily Investment Update 22 November 2023

Market commentary

US stocks ended lower on Tuesday, snapping a five-day winning streak amid mixed quarterly results from major retailers and the release of Federal Open Market Committee (FOMC) minutes that showed members expressed a cautious stance on future interest rate hikes. Fed funds futures pricing data also suggests that the central bank will keep interest rates unchanged at its December meeting. The Dow Jones closed 62 points lower, while the S&P 500 and the Nasdaq dipped by 0.20% and 0.60%, respectively.

European stocks remained muted on Tuesday, with the pan-European STOXX 600 near a two-month high amid expectations that central banks in the US and Europe have likely concluded their interest rate hikes. However, European Central Bank President Christine Lagarde urged caution on inflation, emphasising a focus on reaching targets.

Asian stocks were mostly higher on Tuesday, after financial regulators, including the People’s Bank of China, created a list of property developers who were eligible to get low-cost financing. “The move is aimed at giving financial institutions more confidence in lending to the struggling sector. However, it’s unclear whether more distressed players like Country Garden would be included,” Reuters added. The attempts to ease lending come as the real estate market is embroiled in a crisis exacerbated by a crackdown on excessive borrowing and by a general economic slump. Hong Kong’s Hang Seng jumped 1%, while the Shanghai Composite added 0.50% for the day.

The local bourse finished lower on Tuesday as investors' attention was drawn to the release of the Fed’s most recent meeting minutes, while focus also turned to CPI data to be released later today and the South African Reserve Bank's interest rate decision on Thursday. Most economists expect the central bank to keep rates unchanged. At 19h00, the rand had weakened 1.08% to R18.54/$, 1% to R20.26/€ and 1.38% to R23.23/£.

Oil prices dipped on Tuesday, erasing the previous two sessions' sharp gains, as investors grew cautious ahead of an OPEC+ meeting later this week, where the cartel is set to consider more supply cutbacks due to sluggish global growth. Brent crude was 0.18% weaker at $81.84 a barrel, while bullion added 1.28% to trade at $2 002.67/oz at 19h00.

Navigation

ALBI (R) 927.33 -0.47 Brent Oil ($) 90.21 0.52 Gold ($) 2384.78 0.52 Platinum ($) 988.47 0.54 Rand/EUR 20.11 0.15 Rand/GBP 23.54 -0.11 Rand/USD 18.77 -0.14

Market indicators

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Date Index Current Level 1 Day Move 1 Month Move 6 Month Move 1 Year Move
2024-04-12 ALSI 75303.25 -0.29 3.73 3.81 0.35
2024-04-12 Basic minerals 45638.55 -0.11 15.98 7.66 -7.20
2024-04-12 Fin + Ind 30 9659.82 -0.33 0.24 3.46 4.50
2024-04-12 Financial 40103.79 -0.29 -3.04 0.95 8.71
2024-04-12 Industrial index 109002.72 -0.36 2.53 3.58 1.33

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

ASISA categoryFund nameNAV (Rands)
at 12 Apr 2024
Performance –As at 2024/03/31
1 year %3 year %5 year %Inception %
South Africa - Equity - General PSG Equity Fund Class A 16.34 5.43 15.72 9.73 12.71
PSG Equity Fund Class E 16.35 4.33 15.16 9.79 8.58
PSG Equity Fund Class F 16.39 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 51.55 6.61 9.40 10.37 11.86
South Africa - Multi Asset - Flexible PSG Flexible Fund Class A 7.85 5.12 14.65 9.77 11.16
PSG Flexible Fund Class E 7.85 5.40 14.96 10.06 9.88
South Africa - Multi Asset - High Equity PSG Balanced Fund Class A 94.89 4.85 13.93 10.11 12.69
PSG Balanced Fund Class E 94.96 5.45 14.59 10.74 9.56
PSG Wealth Moderate Fund of Funds Class D 40.51 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 E 1.62 5.83 10.54 8.05 7.95
PSG Wealth Preserver Fund of Funds Class D 24.50 8.61 8.68 7.73 9.01
South Africa - Multi Asset - Income PSG Diversified Income Fund Class A 1.30 7.40 8.23 7.82 7.83
PSG Diversified Income Fund Class E 1.30 8.07 8.84 8.39 8.26
PSG Wealth Income Fund of Funds Class D 12.37 7.81 7.50 7.01 7.79
South Africa - Interest Bearing - Short Term PSG Income Fund Class A 1.07 7.76 6.73 7.28 7.10
PSG Income Fund Class E 1.07 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 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
South African - Multi Asset - High Equity PSG Investment Management Growth Fund of Funds  Class D 1.48 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

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 categoryFund nameNAV (Rands)
at 12 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 4.89 13.50 18.16 13.88 13.07
PSG Global Equity Feeder Fund Class E 5.06 14.16 18.84 14.44 12.79
PSG Wealth Global Creator Feeder Fund Class D 4.68 31.95 14.40 16.71 15.72
Global - Multi Asset - Flexible PSG Global Flexible Feeder Fund Class A 3.77 11.50 15.71 13.27 12.83
PSG Global Flexible Feeder Fund Class B 3.96 12.14 16.38 13.77 13.33
PSG Wealth Global Flexible Feeder Fund Class D 4.84 16.82 8.82 11.36 11.51
PSG Wealth Global Moderate Feeder Fund Class D 4.97 19.10 10.30 10.72 12.77
Global - Multi Asset - Low Equity PSG Wealth Global Preserver Feeder Fund Class D 1.55 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 categoryFund nameNAV (Rands)
at 11 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 2.05 6.23 2.28 2.49 5.01
EAA Fund GBP Flexible Allocation PSG Wealth Global Flexible FoF (GBP) Class D 3.73 7.61 3.14 6.39 9.38
EAA Fund Global Flex-Cap Equity PSG Global Equity Sub-Fund Class A 2.20 6.31 8.80 8.10 5.87
PSG Global Equity Sub-Fund Class B 2.27 6.92 9.42 8.72 7.09
EAA Fund Global Large-Cap Blend Equity PSG Wealth Global Creator Fund of Funds Class D 2.86 23.38 5.16 10.46 9.82
EAA Fund USD Cautious Allocation PSG Wealth Global Preserver FoF (USD) Class D 1.66 7.71 0.33 2.30 3.54
EAA Fund USD Flexible Allocation PSG Global Flexible Sub-Fund Class A 19.00 4.80 6.92 7.47 5.79
PSG Global Flexible Sub-Fund Class B 20.13 5.29 7.42 8.05 6.41
PSG Investment Management Global Flexible Fund of Funds (Dollar) 1.56 7.92 -1.45 3.38 2.65
PSG Wealth Global Flexible FoF (USD) Class D 3.03 9.46 0.13 5.54 7.87
EAA Fund USD Moderate Allocation PSG Wealth Global Moderate Fund of Funds Class D 2.00 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 2024/04/14
1 year %3 year %5 year %Inception %
PSG Wealth Income Growth Equity Portfolio 1.08 4.80 -0.26 1.33
PSG Wealth Offshore Equity Portfolio (USD) 12.62 5.09 10.64 11.78
PSG Wealth SA Equity Portfolio -4.98 1.66 0.56 2.92
PSG Wealth SA Property Equity Portfolio 11.66 10.03 -2.22 -3.07

* 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

Renergen

On 31 October 2023, Renergen released its half-year 2024 financial results, which were characterised by the following:

  1. Revenue increased by more than 100% from R1.2 million to R23.8 million as phase 1 liquid natural gas (LNG) production ramped up, increasing by 88% from 1Q24 to 2Q24 to a total of 2 386 tonnes of LNG for the half-year.
  2. The loss for the period however increased by 77% to R43.5 million as operating expenses increased due to less being capitalised as assets became ready for use, combined with the increase associated with the ramp-up of operations.
  3. A leak in the helium cold box resulted in lower-than-expected production volumes. Management also brought forward annual maintenance which is expected to negatively impact the next quarter’s LNG production. 
  4. We lowered our intrinsic value to R7.8 (22% lower) due to the operational and funding delays, a larger-than-expected increase in expenses and the increased likelihood of ownership dilution.

Our research supports a sell 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>

Sibanye

On 25 October 2023, Sibanye announced that it had entered Section 189 consultations regarding four shafts and associated services at its SA Platinum Group Metals (PGM) operations.

  1. The four shafts affected are:
    • Simunye shaft, Kroondal
    • 4 Belt shaft, Marikana (4B)
    • Rowland shaft, Marikana
    • Siphumelele shaft, Rustenburg
  2. The Simunye shaft had already ceased operations in 4Q22, while the 4 Belt shaft faced closure due to reaching the end of its life.
  3. The proposed restructuring and shaft closures could potentially affect 3 500 employees and 595 contractors. However, these steps would be necessary to keep mines profitable.
  4. We have adjusted our valuation to the lower end guidance for the SA PGM operations and lowered the basket prices in line with the continued decline in PGM prices. As a result, our intrinsic value has changed to R32.

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>

US banks

This report looks at US banks and more specifically Bank of America, JP Morgan and Wells Fargo. Our review highlights the following across the sector:

  • Price-to-earnings (P:E) multiples deemed attractive with Bank of America at 80%, JP Morgan sitting at 91% and Wells Fargo at 55% probability of outperformance based on history (refer to tables 4,5 and 6) and have already priced in a decline in 2024 financial year earnings.
  • Share price performance is correlated to one year ahead of analyst consensus outlooks and is expected to improve based on FactSet consensus and our forecasts (refer to graphs 39 and 40). Earnings expected to reach a low-to-mid digit in 2024 as charge off rates increase and net interest income decreases (a decrease in net interest margins). FactSet consensus expects 2024 annual earnings per share (EPS) to decrease from 2023, 5% for Bank of America, 8% for JP Morgan and 3% for Wells Fargo.
  • We base our order preference on asset quality with Bank of America our favourite followed by JP Morgan and then Wells Fargo. With the exception of corporate real estate (CRE), asset quality still seems to be holding up due to low debt levels with consumers having a household debt service payments to disposable personal income ratio of 9.8% compared to a 20-year average of 10.8%. S&P represents businesses having an interest coverage ratio of 8.3 times compared to the 20-year average of 7.8 times.

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>

Economic Calendar

View the Economic Calendar

Corporate Actions

Date Company Share code Expectation
22 November 2023 Afrimat LimitedAFT

Cash Dividend

22 November 2023 Dischem Pharmachies LimitedDCP

Cash Dividend

22 November 2023 ENX Group LimitedENX

Capital Distribution

22 November 2023 Exemplar REITail LimitedEXP

Cash Dividend

22 November 2023 Investec Bank (Mauritius) LtdIMRP1

Cash Dividend

22 November 2023 Investec Bank (Mauritius) LtdIMRP2

Cash Dividend

22 November 2023 Investec Bank (Mauritius) LtdIMRP3

Cash Dividend

22 November 2023 Investec Bank (Mauritius) LtdIMRP4

Cash Dividend

22 November 2023 Investec Bank (Mauritius) LtdIMRP6

Cash Dividend

22 November 2023 Investec Bank (Mauritius) LtdIMRP7

Cash Dividend

22 November 2023 Octodec Investments Limited (REIT)OCT

Cash Dividend

22 November 2023 Redefine Properties Limited (REIT)RDF

Cash Dividend

22 November 2023 Sappi SA Limited Convertible BondSAPCB

Interest Payment

22 November 2023 SATRIX Capped All Share ETFSTXCAP

Distribution

22 November 2023 SATRIX GLOBAL AGGREGATE BOND PORTFOLIOSTXGBD

Interest Payment

22 November 2023 Satrix ILBI ETFSTXILB

Interest Payment

22 November 2023 Vunani LimitedVUN

Cash Dividend

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.

PSG Financial Services +27 (21) 918 7800

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