TFG's Big Bash

Good morning Voornaam,

I am travelling abroad for the next two weeks. Although Ghost Mail will still be sent out throughout my trip, the times might be a bit off on some days depending on flights. I'll try hard to resist the temptation to spam you with motorsport pictures from Le Mans...but I'll be sure to share insights from meetings in London and observations on Dubai as part of the trip!
Fresh out the oven:

Ghost Bites: The Foschini Group still has some debt to deal with, but the underlying group is growing and looks particularly strong in online. ARC's investments are mostly performing well. Look out for Kibo Energy, Novus and Sibanye-Stillwater as well, all in Ghost Bites>>>

There is only one free lunch in investing, as this great new Ghost Stories episode with Kingsley Williams shows. Kingsley brought his wealth of experience in the markets to a great conversation about investing in general. Brought to you by Satrix, you can enjoy it here>>>

Fedgroup thinks differently about portfolio construction and how important elements like yield and inflation protection can be brought in. Michael Field joined me to discuss their approach, including being one of the largest beekeepers in the country. Podcast and transcript available here>>>

Elizabeth Magie invented Monopoly in 1903. It just took a long time and a decade-long court case for the world to remember that. This is the story of how Parker Brothers monopolised Monopoly - and how one man took them down. Told by Dominique Olivier, you can read it here>>>

In case you missed it:

This year, SA is set to become the tenth-largest solar market in the world. In episode 4 of The Current brought to you by Investec, Iman Rappetti spoke with Investec's Melanie Humphries, Bernard Geldenhuys and De Wet Taljaard from the South African Photovoltaic Industry Association (SAPVIA) to explore SA’s apparent solar boom. Enjoy it here>>>

In Magic Markets, we went back to our roots and covered local topics around the rand, South African bond yields and the state of play for South African consumers. Are we facing coalition politics, or collision politics? The podcast and full transcript are available at this link>>>

​Ghost Wrap: Enjoy a brand new episode covering Balwin, Quantum Foods, De Beers, Tiger Brands and Bidcorp, brought to you by Mazars. Listen to it here>>>​

The only free lunch in investing

Local company news:

The Foschini Group worked hard for its bankers in the past year, with net finance costs eating up almost all of the growth in operating profit. That's a short-term problem, as the group is generating cash and the debt is coming down. The market has focused on the operational performance rather than HEPS, which is why the share price had such a good day on the release of results. I've covered this in significant detail in Ghost Bites.
Over at African Rainbow Capital, the investments are generally performing in line with expectations. The Kropz Elandsfontein asset is still causing headaches, but the momentum in a business like Tyme is fantastic to see.
Novus released a trading statement reflecting a 1,000% increase in HEPS. You won't see that every day!
At Sibanye-Stillwater, they are trying to create headroom on the balance sheet to get through what looks to be a rough period in the cycle. Not good.
And finally, Kibo Energy is finally going through a major corporate overhaul that could also see the listing disappear from the JSE. I think it must have the worst SENS-to-liquidity ratio of any company I've seen, with plenty of announcements and almost no trade.
These stories are all covered in detail in Ghost Bites at this link>>>

Olympic fever and other ailments

Ghost Wrap: Balwin | Quantum | De Beers | Tiger Brands | Bidcorp

International business news:

Much has been written about the sheer number of Indian founders and CEOs in the US, literally living the American Dream and doing an incredible job along the way. Satya Nadella at Microsoft is just one of many, many examples.
You might have noticed that the T20 Cricket World Cup is being held in the US, which isn't exactly a cricketing nation. Well, that's what we all thought until they beat Pakistan in the tournament!
The money behind the tournament has come from the likes of Nadella, Adobe CEO Shantanu Narayen and others who want to see cricket make it in what would surely be the biggest market outside of India if it takes off.
Sport is big business, with Major League Cricket attracting no shortage of big-name investors and venture capitalists. They are always up for something new over in the US of A, as evidenced by Messi turning his balance sheet into the GDP of a small country by playing for Inter Miami.
There's really no reason why cricket can't work. If cricket becomes as big in the US as it is in India, then our local stars will literally be writing their own cheques and choosing which timezone to make a fortune in.
Lekker.
We just covered Foot Locker in Magic Markets Premium and next week we will be covering Lululemon. To get access to this research and the rest of the vast library, subscribe to the platform here.

Macroeconomic Update

After the US non-farm payrolls number was stronger than expected, markets took a hammering on Friday. This may seem counter-intuitive, as jobs are good for business, aren't they? The problem is inflation expectations and particularly the hope of rate cuts, which would be even better for business. The strong jobs data dampened hopes for an earlier cut, which doesn't do the rand any favours either.
There's a lot for markets to digest this week, like French President Emmanuel Macron calling a "snap election" after his party's defeat to the far-right National Rally Party in the European Parliament elections. The Fed's FOMC is meeeting on Wednesday, with key US CPI numbers also due for release, while the Bank of Japan is meeting on Friday.
And locally of course, the markets await clarity on the make-up of the GNU. With so much going on, the net result of a fairly stable rand is interesting.
Gold can't say the same as the rand, down 3.5% on Friday as part of the expectations of higher-for-longer rates. China ending its 18-month gold buying programme also hit the metal. The PGMs had a rough day of note and so did most metals. Brent Crude continues to be impacted by modest demand expectations.
Key indicators: USD/ZAR R18.88; US 10-year 4.45%; Gold $2,294; Platinum ZAR R18,294; Brent Crude $79.84
This macroeconomic update is based on TreasuryONE's morning update.