| Good morning Voornaam, The recent announcement of strong cash sales at Mr Price was a clue as to how the two-pot money was being spent by South Africans. But then we were shown pretty uninspiring sales at The Foschini Group, so that called into question whether Mr Price was a beneficiary of the two-pot liquidity in the market or simply its own strategy. Whilst we still can't opine on that with great certainty, we've at least received two more company data points that suggest that the two-pot money did indeed make a difference. Naturally, that's actually not great news for those still digesting the numbers from The Foschini Group!
Lewis had an immense end to 2024, with an acceleration in merchandise sales and another strong result in interest income and ancillary services. This has been seen as a value stock for a long time, using share buybacks to drive HEPS. It seems to be trying hard to become a growth stock in this post-GNU reality! Cash sales in the quarter were way ahead of the year-to-date performance, suggesting that the two-pot money went into furniture.
It also seemed to go into clothes and other household goods, if the results at Vukile are anything to go by. The shopping centres in lower income areas had a fantastic finish to the year, not least of all because eCommerce hasn't affected footfall at that end of the market. They are also continuing to show growth in Spain and Portugal, where the two pots are filled with delicious food rather than retirement savings.
In other news on the day, we saw Astoria announce the disposal of ISA Carstens. The private education trend is a fascinating one in South Africa and the new owners are already deeply invested in that space. The focus will now be on what Astoria does with the money, assuming the deal closes without any troubles.
Get all the important details with just one click in Ghost Bites>>>
You only have until the end of this week to apply for equity funding from MIC Khulisani Ventures if you are a qualifying Black-Owned business. After we released a podcast with full details at the end of 2024, the team has summarised the opportunity in a new article that includes a link to the podcast for those who missed it. Don't delay!
Dominique Olivier's latest column may restore some of your faith in corporate citizenship, with a selection of great examples of companies solving social problems through product innovations. From Savlon's soapy chalk in India through to Energizer's bitter batteries, this piece shows what happens when smart people apply their minds to the right stuff.
And finally, the latest Magic Markets episode that will give you helpful insights into the banking sector and how banks make money. We also talked about many of the tough decisions they need to make around capital allocation and balance sheet management. With our usual approach of combining a macro lens with bottom-up analysis, we explain why you can bank on banking - albeit with a preference for the US rather than the local market. Enjoy the podcast and transcript here>>>
Have a great day! |
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| SATRIX: Low-risk high-reward - the low-volatility anomaly |
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| | | Does taking higher risk always lead to higher returns? Or is there something to be said for seeking out lower volatility equity exposure, especially if it can generate similar overall returns?
Nico Katzke of Satrix digs into the numbers to bring you this insightful piece on portfolio and risk strategy.
Enjoy it here>>> |
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| Ghost Wrap - five insights from December |
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| | | Ghost Wrap: There were some great stories in December that are well worth keeping in mind in January. Italtile's share price needs a careful watch. Prosus is making major acquisitions again. Renergen is still dealing with teething issues - and a legal dispute as well. Metair is getting very little out of its Turkish business. Finally, will Bell Equipment shareholders kick themselves? I cover these topics in Ghost Wrap, brought to you by Forvis Mazars and available here>>> |
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| MIC KHULISANI VENTURES - A game-changer for Black-Owned businesses in South Africa |
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| MIC Khulisani Ventures is looking for Black-Owned business with high scalability and a commitment to growth. Equity funding is available and applications close at the end of January 2025. Get the details here>>> |
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| GHOST BITES - Making sense of SENS on the local market |
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| | | Lewis had an exceptional quarter of cash sales, giving us clues as to the use of two-pot funds. Vukile's recent trading performance is also a helpful data point. Astoria has announced the sale of ISA Carstens. Get the details in Ghost Bites>>> |
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| DOMINIQUE OLIVIER - Short Stories v.05: Ideas for good |
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| In a profit-motivated world, there are companies that find ways to solve genuine social problems through their products. Savlon, Honda, Energizer, Phillips and Renault all caught the attention of Dominique Olivier with their initiatives. Get the story here>>> |
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| Unlock the Stock - KAL Group |
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| | | Unlock the Stock: KAL Group joined the platform for the first time to talk about the performance and strategic focus areas in the broader agriculture industry. Enjoy the presentation and Q&A here>>> |
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| MAGAnomics: Trump and the global economy |
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| International Business Snippet: |
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| Well, you can't say I didn't warn you yesterday morning. NVIDIA was indeed the big loser in the panic around DeepSeek, dropping a spectacular 17% on the day. Based on the daily chart, there was a chance to get out in morning trade in the US at a decent price before things got really bad. Those who went short had a pretty incredible day!
CNBC reports that this was the largest one-day loss of value in history for a company listed in the US. NVIDIA's market cap shed $600 billion, a number that is hard to even fathom when you think about the size of JSE-listed companies. This tells you a lot about how much value around AI is already priced into the market. This is the theme that market bears focus on at the moment.
NVIDIA is still up 90% in the past year and a completely bonkers 1,900% over 5 years. Where to from here? That is quite literally the billion-dollar question.
Remember that Apple and Meta are also due to release results later this week, so it's a big week in tech!
From tech to luxury: this week in Magic Markets Premium we are covering Burberry, the iconic UK luxury brand that has lost its way. This is the third turnaround candidate that we've researched this year, adding to our work on Nike and Walgreens. If you're ready to give your global market knowledge a proper boost, then subscribe today at R99/month with no minimum monthly commitment. You get access to the entire research library plus a new report each week! |
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| Magic Markets: Retail turnarounds - high risk, high reward? |
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| | | Magic Markets: In this episode, we start off with some of the key macroeconomic indicators that investors and traders use to assess the health of the retail industry. We then go into the process of a typical turnaround, along with the milestones that are usually seen. Get the podcast and transcript here>>> |
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| US markets were still negative into the close but managed to end yesterday’s session well off the lows of the day. The markets continue to digest China’s more cost effective DeepSeek challenge to conventional AI. The news is sparking more angst around valuations in the US tech sector.
European index futures are trading in a mixed fashion this morning while Chinese bourses are firmer.
On balance, we are expecting a flat to marginally lower start to the day for the JSE All-Share Index.
The rand remains weakened, with uncertainty around the Expropriation Bill as a contributing factor.
Oil prices remain depressed on Trump’s call for lower prices of the commodity and support for increased US production of fossil fuels.
Gold continues to correct from near term highs and overbought territory.
Traders will want to keep an eye out for US CB Consumer Confidence data out later this afternoon.
Key Indicators: USD/ZAR R18.81/$ | US 10yr 4.55% | Gold $2,742/oz | Platinum $942/oz | Brent Crude $76.61
As often as practically possible, insights from the IG Markets morning macro update by Shaun Murison will be featured here. Where this isn't possible, only indicators will be provided. If you want to learn more about trading, refer back to The Trader's Handbook, a podcast series that takes you through many of the important principles in trading. |
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