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Rand weaker after IMF cuts GDP forecast

21 January 2020

Rand weaker after IMF cuts GDP forecast

Daily Investment Update

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Market commentary

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South Africa

The JSE closed 0.26% down on Monday, breaking a five-day winning streak, after the International Monetary Fund (IMF) cut SA’s growth forecasts from 1.10% to 0.80% for 2020. Earlier the month, the World Bank also cut 2020 estimates for SA from 1.50% to 0.90%.

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United States

US markets were closed due to a public holiday.

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Europe

European indices were flat on Monday, pausing earlier gains, as investors awaited the European Central Bank’s first policy meeting for 2020 as well as a week filled with economic data releases. The pan STOXX 600 Index fell 0.14% for the day.

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Hong Kong

Asian markets took a dip on Monday as investors prepared for the upcoming Chinese New Year and because of pessimism towards Hong Kong’s economy fuelled by the struggling tourism industry. The Hang Seng Index ended the day 0.90% weaker.

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Japan

The Nikkei reached a 15-month high on Monday, boosted by investor optimism about the US-China Phase 1 deal and strong US housing data released on Friday. The Japanese index closed 0.18% firmer.

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Rand

The rand reached a six-week low on Monday as investor concerns regarding SA’s economic health grew after the IMF cut forecasts. “The rand is reflecting the severe weakness of the deteriorated state capacity,” an economist stated. At 19h55, the rand traded R14.50 to the US dollar.

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Precious metals

Bullion prices rose on Monday due to anxiety in the markets around US President Donald Trump’s impeachment proceedings as well as the persistent tension in the Middle East. An ounce of gold cost $1 560.80 at 19h55.

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Oil

Oil prices reached a one-week high on Monday as Libya began shutting down production at two large oil bases “amid a military blockade, which reduced crude flows from the OPEC member to a trickle”. At 19h55, a barrel of Brent crude traded for $65.78.


Market indicators

Local markets (R)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
ALSI 58 850.41 - 0.26 2.59 5.96 2.87 13.32
Gold mining 2 888.83 3.22 10.33 15.88 37.30 118.24
Basic minerals 36 798.51 0.54 4.17 15.52 12.24 33.15
Industrial index 79 287.05 - 0.57 4.49 5.34 1.25 12.51
Financial 38 538.42 - 0.69 - 2.70 - 3.43 - 4.93 - 4.31
Fin + Ind 30 7 652.41 - 0.61 1.90 2.15 - 0.90 6.48
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) 29 348.10 0.20 3.90 9.25 9.16 23.38
S&P 500 PR (USD) 3 329.62 0.39 4.44 11.60 12.68 28.86
NASDAQ (USD) 9 388.94 0.34 6.47 15.41 15.32 33.97
FT-100 (GBP) 7 651.44 - 0.30 1.04 7.70 4.05 14.91
Hang Seng (HKD) 28 795.91 - 0.90 3.32 7.92 1.21 10.17
Nikkei 225 (JPY) 24 083.51 0.18 1.29 7.26 13.31 19.03
MSCI World (USD) 7 078.78 - 0.02 2.86 10.38 10.93 23.08
Frankfurt (EUR) 6 043.44 0.17 1.73 7.25 10.51 20.91
Other markets
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Gold ($) 1 559.25 0.18 5.58 4.82 8.50 21.34
Platinum ($) 1 025.00 0.89 10.10 16.08 19.60 26.54
Brent Oil ($) 65.20 0.54 - 1.42 9.73 4.37 3.99
Rand/USD 14.53 - 0.58 - 2.17 0.61 - 4.65 - 4.81
Rand/GBP 18.91 - 0.64 - 2.05 - 0.58 - 9.15 - 5.99
Rand/EUR 16.12 - 0.58 - 1.97 0.84 - 4.28 - 2.25
ALBI (R) 703.52 0.30 1.03 1.34 1.84 10.57

  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. UK: Claimant Count Change DEC
  2. DE: ZEW Economic Sentiment Index JAN

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 3.82 7.91 7.95 7.99 8.04 7.79
PSG Wealth Income FoF D 3.47 8.15 7.54 7.88 8.28 8.05
PSG Wealth Preserver FoF D 3.61 8.43 4.60 6.12 6.26 6.85
PSG Wealth Moderate FoF D 4.68 10.70 2.82 5.67 6.60 6.64
PSG Wealth Creator FoF D 6.77 12.04 0.87 4.90 8.01 5.75
PSG Wealth Global Moderate FF D 9.77 19.67 10.84 9.07 3.86 8.90
PSG Wealth Global Creator FF D 13.69 34.20 17.80 17.26 10.49 -
PSG Wealth Solutions ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Moderate FoF D 6.63 14.24 2.54 6.60 7.82 4.13
PSG Wealth Global Creator FoF D 10.73 28.20 9.03 14.64 14.64 10.57
PSG Wealth Global Preserver FoF (USD) D 3.63 9.23 3.33 4.71 6.69 4.37
PSG Wealth Global Flexible FoF (USD) D 7.81 18.83 6.64 12.05 12.95 9.15
PSG Wealth Solutions (£)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Preserver FoF (GBP) D 0.04 8.53 5.34 3.30 8.46 6.49
PSG Wealth Global Flexible FoF (GBP) D 3.07 18.10 8.96 9.12 14.76 11.40
PSG Asset Management
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Money Market A 3.52 7.23 7.27 7.36 7.37 7.19
PSG Income A 3.73 8.03 8.08 8.28 8.40 7.96
PSG Diversified Income 2.75 6.74 6.56 7.29 7.65 7.70
PSG Stable A 1.75 1.68 1.86 4.26 6.01 6.13
PSG Balanced A 1.32 - 2.37 - 2.71 1.38 5.47 5.03
PSG Flexible A 1.94 - 1.56 - 2.54 1.45 6.69 6.03
PSG SA Equity D - 5.06 - 15.34 - 12.29 - 5.86 - -
PSG Equity A - 0.01 - 7.23 - 7.58 - 1.90 6.89 3.33
PSG Global Flexible FF A 6.69 6.36 2.48 4.08 3.87 -
PSG Global Equity FF A 7.06 6.18 1.37 4.55 5.02 7.44
PSG Asset Management ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Global Flexible USD A 3.51 1.26 - 5.37 2.06 8.85 2.98
PSG Global Equity USD 3.74 0.97 - 6.32 2.60 9.98 3.00
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 3.11 6.97 6.94 7.32 7.52 7.29
PSG Direct Low Equity 1.62 1.22 1.22 3.70 5.72 5.70
PSG Direct Managed 1.24 - 2.61 - 3.11 0.94 5.29 4.81
PSG Direct Aggressive 2.16 - 1.96 - 3.29 0.69 5.83 -
PSG Direct Global Managed 6.45 5.87 2.02 3.61 3.39 -
PSG Direct Global Aggressive 6.68 5.77 1.33 3.91 4.12 -

  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 - 2.09 - 2.18 - 4.28 0.38 5.89 -
PSG Wealth SA Property Equity Portfolio - 4.52 - 6.99 - 9.67 - 4.86 - 2.44 -
PSG Wealth SA Dividend Income Equity Portfolio - 4.86 - 4.00 - 6.21 1.00 - -
PSG Wealth Offshore Equity Portfolio (USD) 13.01 23.78 10.07 17.63 16.64 -
PSG Wealth Managed Volatility Equity Portfolio - 2.53 - 5.50 - 8.38 - 3.40 - -

  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

  • Our recommendation for PFE US is overweight; click here to read the full report on our secure site.
  • The group has been able to protect its gross profit margins despite the challenging trading environment because of its scale and defensive nature.
  • We believe Pfizer is a high-quality company with a high ROE and an attractive and sustainable operating margin.


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Highlights

  • Our recommendation for MCG SJ is overweight; click here to read the full report on our secure site.
  • Having only listed on the JSE in February 2019, MultiChoice has already seen its shares grow by approximately 17% to R125.
  • At these levels, and trading at a forward P/E of 15 times, we believe that MultiChoice is still undervalued and is well-positioned to benefit from mass-market growth in both South and Southern Africa.


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Highlights

  • Our recommendation for SOL SJ is underweight; click here to read the full report on our secure site.
  • Sasol is currently facing an increased risk profile through the decline in chemical product prices, a severely constrained balance sheet and slowing global economic backdrop.
  • The group’s chemicals business is also facing growing competition from additional ethylene capacity/supply into the market.


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Author
author

Adriaan Pask PhD

Chief Investment Officer


At PSG Wealth
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