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JSE dragged down by fall in Steinhoff

07 December 2017

JSE dragged down by fall in Steinhoff

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Market commentary

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South Africa

The JSE fell to a six-week low on Wednesday, in an action-packed session dominated by the speculator collapse in the share price of Steinhoff after long-serving CEO Markus Jooste quit amid fresh claims of accounting irregularities. The All Share closed 1.64% lower.

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United States

The Dow opened flat amid mixed European markets. The Dow was 0.03% off soon after the JSE’s close.

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Europe

European stocks dropped on Wednesday, with tech and mining shares fronting broad-based losses across the region, setting blue chips on course for a second consecutive decline. The FTSE 100 added 0.46%, but the DAX 30 dropped 0.6%.

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Hong Kong

Hong Kong stocks posted their biggest single-day loss in over a year on Wednesday, with sentiment hurt by a tumble in index heavyweight Tencent and simmering worries over North Korea. At close of trade, the Hang Seng index was down 2.14%.

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Japan

Japan’s Nikkei share average posted its biggest fall in 8 1/2 months on Wednesday as investors rushed to lock in gains after it broke below the key technical support from its 25-day moving average. The Nikkei share average fell 2%.

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Rand

The rand weakened further on Wednesday afternoon, leading the losses among other emerging-market currencies. At 15h05 the rand was at R13.52 to the dollar from R13.44‚ at R15.98 to the euro from R15.90 and at R18.08 to the pound from R18.07.

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Precious metals

Gold prices held near a two-month low on Wednesday, ahead of a vote over the US tax reform plan but a potential government shutdown lent support. Spot gold was steady at $1 266.20 an ounce by 13h10 GMT.

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Oil

Oil fell 2% on Wednesday after a sharp rise in US inventories of refined fuel suggested demand may be flagging, while US crude production hit another weekly record. Brent crude futures were down $1.23, or 2%, at $61.63 a barrel by 16h21 GMT.


Market indicators

Local markets (R)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
ALSI 58 010.18 -1.58 -3.12 5.37 12.81 22.10
Gold mining 1 267.70 -4.05 -10.50 -11.87 -9.77 -4.40
Basic minerals 24 949.33 -1.27 -9.57 -0.32 17.70 12.95
Industrial index 87 087.91 -2.23 -3.76 6.42 10.86 28.29
Financial 44 323.42 -0.35 4.62 8.18 13.30 18.08
Fin + Ind 30 8 547.36 -1.66 -1.30 6.95 11.58 24.92
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) 24 145.11 -0.16 2.92 11.34 15.58 28.45
S&P 500 PR (USD) 2 629.62 -0.01 1.71 7.17 9.32 21.28
NASDAQ (USD) 6 776.38 -0.19 0.13 6.35 7.99 28.78
FT-100 (GBP) 7 348.03 0.28 -2.42 0.65 -0.52 12.69
Hang Seng (HKD) 28 224.80 -2.14 -1.19 2.69 11.49 29.32
Nikkei 225 (JPY) 22 177.04 -1.97 -1.64 15.35 12.05 23.05
Paris CAC (EUR) 5 374.35 -0.02 -2.32 5.59 2.43 18.63
Frankfurt (EUR) 12 998.85 -0.38 -3.49 6.42 2.43 20.64
Other markets
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Gold ($) 1 275.90 -0.58 -0.24 -5.34 -1.50 8.32
Platinum ($) 922.00 -1.08 -0.98 -9.52 -5.00 -2.88
Brent Oil ($) 62.45 -2.61 -4.75 12.95 22.15 13.52
Rand/USD 13.53 -0.38 4.10 -5.86 -5.26 0.99
Rand/GBP 18.11 0.01 2.59 -7.86 -10.37 -4.66
Rand/EUR 15.97 -0.06 2.51 -3.55 -10.80 -9.00
ALBI (R) 565.68 0.58 1.76 -1.42 -0.08 7.19
  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. ZA: Foreign Exchange Reserves NOV
  2. ZA: SACCI Business Confidence NOV
  3. ZA: Manufacturing Production OCT
  1. EA: GDP Growth Rate QoQ 3rd Est Q3
  2. EA: ECB General Council Meeting

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 3.98 8.16 8.02 7.62 7.20 6.86
PSG Wealth Income FoF D 3.86 8.85 8.53 8.34 8.20 7.74
PSG Wealth Preserver FoF D 5.53 10.51 7.65 8.19 8.74 9.64
PSG Wealth Moderate FoF D 7.57 13.95 8.88 8.48 9.55 11.52
PSG Wealth Creator FoF D 10.01 16.45 11.07 7.46 9.39 12.25
PSG Wealth Global Moderate FF D 10.57 11.51 3.54 9.60 9.68 15.39
PSG Wealth Global Creator FF D 13.30 22.10 8.29 15.00 15.17 -
PSG Wealth Solutions ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Moderate FoF D 4.27 13.70 6.77 2.95 3.01 5.59
PSG Wealth Global Creator FoF D 6.71 24.32 12.00 7.97 8.08 -
PSG Wealth Global Preserver FoF (USD) D 1.97 7.84 7.31 4.08 4.44 4.55
PSG Wealth Global Flexible FoF (USD) D 6.64 21.19 12.71 7.61 7.34 10.02
PSG Wealth Solutions (£)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Preserver FoF (GBP) D -1.29 2.77 11.68 7.62 7.82 7.48
PSG Wealth Global Flexible FoF (GBP) D 2.50 12.58 17.51 12.18 12.00 12.75
PSG Asset Management
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Money Market A 3.09 6.97 7.13 6.92 6.62 6.29
PSG Income A 3.59 8.38 8.24 7.68 7.38 6.83
PSG Diversified Income 3.76 8.48 8.22 8.05 7.70 7.84
PSG Stable A 4.97 8.97 8.78 8.30 8.04 9.19
PSG Balanced A 7.14 10.37 10.90 9.35 9.96 12.68
PSG Flexible 7.45 9.74 13.16 10.80 11.43 14.71
PSG SA Equity D 6.55 6.11 14.66 5.63 - -
PSG Equity A 8.63 10.06 15.85 8.46 10.65 15.16
PSG Global Flexible FF A 12.58 13.75 10.65 12.21 11.79 -
PSG Global Equity FF A 14.19 17.47 12.78 12.05 11.95 17.48
PSG Asset Management ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Global Flexible USD A 6.14 15.82 14.52 5.68 5.45 -
PSG Global Equity USD 7.58 19.29 16.41 5.59 5.76 8.29
PSG Best Ideas Portfolios
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Best Ideas Flexible Income 3.36 7.77 7.62 7.24 6.93 6.66
PSG Best Ideas Low Equity 4.99 8.70 8.66 8.02 7.92 9.23
PSG Best Ideas Managed 6.97 9.71 10.96 9.21 9.83 12.68
PSG Best Ideas Aggressive 8.63 10.21 13.10 10.13 10.95 -
PSG Best Ideas Global Managed 12.33 13.23 10.15 11.70 11.28 -
PSG Best Ideas Global Aggressive 13.34 15.56 11.48 11.61 11.39 -
  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 Equity Portfolios
Portfolio 1 Month move 3 Month move 6 Month move 1 Year move Since inception
PSG Wealth SA Equity Portfolio -0.62 3.29 6.82 10.95 23.99
PSG Wealth SA Property Equity Portfolio -0.41 2.63 4.16 11.25 -0.87
PSG Wealth SA Dividend Income Equity Portfolio 4.80 7.15 10.88 16.37 11.57
PSG Wealth Offshore Equity Portfolio (USD) 1.26 7.38 9.20 29.52 38.50
PSG Wealth Managed Volatility Equity Portfolio -1.22 1.81 1.63 4.95 2.11
  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 trade ideas

company logo

Share name Share code Release date Recommended exposure of up to Share price Read the full report
Vukile Property Fund VKE SJ 7 December 2017 0.00% ZAR 2 035 cents Login to read the full report

Highlights

  • We feel the share is fairly valued trading at a 6% premium to its NAV of 1 917cps. Its dividend yield is also in line with its long-term average.
  • Management expects FY18 distribution growth to match the growth achieved in the interim period previously indicated as growth of between 7.0% and 8.0%.
  • The group reported a higher loan-to-value (LTV) ratio of 30.5% (2016:28.0%) which is below the group’s target of 35.0%. However, the group’s see-through LTV was higher at 35.1%, especially due Atlantic’s high LTV of 45.6%. See-through LTV takes into account the financial gearing of investments that are not necessarily reflected on the group’s balance sheet.
  • The group’s Spanish portfolio comprises of high quality retail parks that have solid long-term trading histories.
  • Vukile’s Spanish retail centres have low-average base rentals which provides the opportunity for income growth going forward.
  • Management will continue to look at opportunities to expand the portfolio in to offshore territories.
  • Vukile has a large exposure to the retail sector, which is currently under pressure. However, the majority of the group’s retail portfolio is exposed to small regional shopping centres and community shopping centres, which offer attractive densities.
  • The retail portfolio is experiencing a decrease in the average store size, which offers an opportunity for net rental growth.
  • The share price is underpinned by an attractive historic dividend yield of 7.9%.


company logo

Share name Share code Release date Recommended exposure of up to Share price Read the full report
Tiger Brands Ltd TBS SJ 5 December 2017 1.41% ZAR 41 437cps Login to read the full report

Highlights

  • We feel the share is fairly valued trading at a forward P/E of 17.2 times. This is slightly ahead of its long-term average and local peers, but is still below its global peers.
  • Tiger Brands is a high quality food producer with a high ROE, a strong balance sheet and good cash generation.
  • The group has an attractive portfolio of leading brands with a good spread across both markets segments and price points. It also continues to display its resilience as a defensive player.
  • Volume growth is expected to remain muted given subdued consumer spending in a constrained economic environment which results in increased competition for market share.
  • Competition remains fierce which increases the reliance on high levels of marketing and product innovation to maintain market share.
  • We expect lower volumes to be offset by a margin expansion, especially given the group’s conscious decision to protect margins in this environment.
  • Currency movements impacts the export results and improves its competitiveness against imported products, although the cost push from currency movements will likely outweigh this effect.


company logo

Share name Share code Release date Recommended exposure of up to Share price Read the full report
Mediclinic International Plc MEI SJ 4 December 2017 4.76% ZAR 9 500cents /GBP 504.2p Login to read the full report

Highlights

  • Trading at a forward P/E multiple of 17.8x, below its historic average and well below its international peers, we feel the share offers value.
  • Locally and in Switzerland, revenue growth is expected to remain muted given the increasing cost-conscious healthcare funders and a more complex regulatory environment which will necessitate greater attention to costs to sustain growth.
  • Mediclinic will continue to focus on building a high quality, multi-disciplinary clinical service offering in Abu Dhabi.
  • As the Middle East operation gains traction we expect improvement in revenue to translate into a gradual improvement in margins, which could be offset by additional development costs.
  • We believe a normalisation in margins from the middle East operations is the most likely driver of growth in the medium term.
  • Mediclinic is a high-quality company with high operating margins, an attractive assets base and consistently strong cash generation. However, given the muted short-term outlook we would only recommend the share to investors with a longer investment horizon.
  • Long-term demand for Mediclinic’s services, across its operating divisions are strong and underpinned by an ageing population, growing disease burden and technological innovation.
  • Investors are reminded that a significant amount of the group’s cash flow is generated in low interest rate environments, which skews the valuation on a P/E basis relative to its domestic competitors.


Corporate actions

Date Company Share code Expectation
13 December 2017 Atlantic Leaf Properties Limited ALP Cash Dividend
13 December 2017 Balwin Properties Limited BWN Cash Dividend
13 December 2017 Combined Motor Holdings Limited CMH Cash Dividend
13 December 2017 Hosken Consolidated Investments Limited HCI Cash Dividend
13 December 2017 GreenBay Properties Limited GRP DVOP
Option 1 - (Cash Dividend)
Gross - ZAR0.0383753
Less 20% - ZAR0.00767506
Net - ZAR0.03070024
Option 2 (Capitalisation Shares)
Ratio - 1.55365 new shares per 100 held
Default - Option 1 (Cash)
13 December 2017 Hospitality Property Fund Limited HPB Cash Dividend
13 December 2017 Investec Property Fund Limited (REIT) IPF Cash Dividend
13 December 2017 Invicta Holdings Limited IVT Cash Dividend
13 December 2017 Sirius Real Estate Limited SRE DVOP
Option 1 - (Cash Dividend)
Gross - ZAR0.25411
Less 20% - ZAR0.050822
Net - ZAR0.203288
Option 2 (Capitalisation Shares)
Ratio - 1 new share for every 46.13544 shares held
Default - Option 1 (Cash)
13 December 2017 Tsogo Sun Holdings Limited TSH Cash Dividend
13 December 2017 Vukile Property Fund Limited (REIT) VKE (DRIP)
Option 1 Cash (subject to 20% DT)
Gross - ZAR0.726535
Less 20% Withholding Tax - ZAR0.145307
Net - ZAR0.581228
Option 2 (Reinvestment)
Reinvestment Price - To be announced
(Default - Option 1)
  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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