| Good morning Voornaam,
Truworths reported flat growth locally at the end of 2023, helping us understand the Mr Price and TFG numbers a lot better. ArcelorMittal's profitability has been smashed. Evergrande's liquidition is another blow for China. Dominique Olivier on the Stanley cups craze and how people just love hype. Magic Markets brings you the latest on Crocs and Birkenstock in this podcast>>>
Local company news:
In case you hadn't noticed, South Africa reminds me of my height when I was in grade 8 at KES: minimal upward growth. This means that when certain retailers are doing really well, others in the same sector probably aren't. The pie isn't bigger; it's just being cut differently.
Thus far in the clothing sector, we've seen Woolworths falter at a time when The Foschini Group and Mr Price did well. We've now seen poor numbers out of Truworths, where the local segment saw sales decrease by 0.3% for the 26 weeks to 31 December. The swings and roundabouts are shining through. Before you write Truworths off, I must remind you that their sales growth was a potent 13.4% in the comparable period when others were struggling, so the two year-stack tells a more balanced story across the sector. The other thing you should know is that the UK business is cooking at the moment, with sales up 15.6% in GBP!
Every dog has its day, even when that dog is an offshore clothing acquisition. I would just avoid tempting fate by naming my dog David. Or Jones, for that matter.
A dog having a very bad day is ArcelorMittal, with full details available in Ghost Bites. The company has been absolutely hammered by South African conditions and low growth in China. There are numerous knock-on effects of those issues that are making life miserable for the company.
It's well worth checking out the investor relations presentation that was released by MAS. It's a wonderful way to understand capital structure and the cost of debt vs. equity. If you want to enhance your understanding of balance sheets, this one is for you.
Also look out for an update from Gemfields and York Timber.
Get everything you need to know on these stories in Ghost Bites>>>
Also be sure to add the Ghost Wrap podcast to your weekly listening regime. This week, you need only five minutes to get the most important insights on Motus, Attacq, Clicks and Woolworths. This podcast is designed for busy people just like you, with thanks to Mazars. You'll find it here>>>
Although the Stanley cup craze doesn't seem to have found South Africa yet, it probably will. In Dominique Olivier's latest example of business storytelling, she explains how and why people are losing their minds over Stanley cups. This is the exact same behaviour that we see playing out in the stock market over and over again. Prepare yourself for the hype here>>>
International company news:
Thanks to data and automation specialists B2IT, Magic Markets brings you the latest from the world of ugly shoes! This might upset a few people, but Birkenstock and Crocs felt to us like they could be grouped together. Admittedly, we don't know much about fashion. We know a little bit about the numbers and investing though, so get up to speed on both companies in this podcast>>>
As you saw in the local news section, ArcelorMittal desperately needs things to improve in China. Realistically, our entire economy would benefit from that. The concerns around property development giant Evergrande have been around for a while now, with a reported $300 billion in debt. Liquidators have now been appointed to sort the thing out after the courts got properly gatvol about the lack of a restructuring plan.
When a company this large fails, it tends to have knock-on effects. People start throwing words like "contagion" around, which brings up PTSD for anyone who was around in 2008/2009 during the Global Financial Crisis that broke banking just a couple of years before I entered the industry. Thanks, Wall Street.
What will the impact of this be? Well, China's growth is already a problem, so this certainly won't help overall investor sentiment and a willingness to take risk. It also won't be good news for the existing lenders of course, or equity holders who are at risk of getting nothing at all. There are future homeowners who have paid for apartments that need to be finished.
Is this China's Lehman Brothers moment, trigging a widespread crisis? Probably not. Does it do emerging markets any favours at all? No, it doesn't. Bad news for China is bad news for us, I'm afraid. Here's just one clue why: briCS.
Have a great day! |
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| READ: Why are we losing our minds over Stanley cups?
(by Dominique Olivier) |
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| You’ve heard of an emotional support animal, sure. But why are people all around North America suddenly talking about an “emotional support water bottle”?
Is the Stanley cup really the last word in personal hydration – or is this just a sippy cup for adults?
Dominique Olivier investigates. |
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| Currencies, commodities and rates: TreasuryONE Market Update The rand managed to shrug off a stronger dollar yesterday, trading in the R18.70s for most of the day despite the dollar firming against other major currencies. The focus is on the FOMC rate announcement later this week and the related Fed outlook, which will give clues as to the likelihood and timing of rate cuts this year (especially in March).
The rand resilience could be a result of the cautious tone from the SARB last week regarding a roadmap to lower rates. Notably, strength below R18.70 is a tough nut to crack due to numerous technical resistance levels.
Keep an eye on the inflationary impact of higher shipping rates due to disruptions in the Red Sea. The price to ship a container has doubled in the past month and that has knock-on effects for inflation.
The rand is at R18.81 this morning, gold is at $2,031 and platinum in ZAR is at R17,401. Brent Crude has been ticking higher, trading at $82.65 per barrel.
As a Ghost Mail reader, you have a wonderful early bird opportunity to register for the 2024 post-budget panel discussion hosted by TreasuryONE, Econometrix and ETM Analytics. I absolutely cannot recommend this enough and I will also be attending to learn from the panel. Get it in your diaries now already by registering at this link>>> |
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| LISTEN: Magic Markets podcast |
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| In Episode 159 of Magic Markets, we dug in the back of our cupboards for the shoes we are too embarrassed to wear. Perhaps we just aren’t fashionable enough, as there are many celebrities wearing Birkenstocks. As for Crocs, there are few who would put those on a pedestal for beautiful design!
Of the two ugly shoe contenders, which one is a buy? And what can we learn about IPOs from this?
Find out about the opportunities and risks in this podcast, brought to you by international data and automation specialists B2IT. |
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| LISTEN: What to do with those festive savings
with Siyabulela Nomoyi of Satrix |
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| | | Saving and investing over December - January isn't easy. To keep you inspired, Siya joined me to cover a wide range of ETF topics - along with some tips of how to keep those goals going over this period of endless spending! |
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| READ: Letter from the Editor - from Cape to Clarens |
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| | | A roadtrip across South Africa is always a treat. Of course, it's also a way to see what is really going on out there.
I wrote about my experience from Cape Town to Clarens (and back again!) |
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| You should expect us in your inbox Monday – Friday. If you don’t receive an email, please check your spam, or junk folder and “move us” into your primary inbox to ensure you get it each morning.
Disclaimer
Our content is intended to be used and must be used for informational purposes only. You must do your own analysis before executing any investments or strategic decisions, based on your own circumstances. We do not provide personalised recommendations or views as to whether an investment approach or corporate strategy is suited to the needs of a specific individual or entity. You should take independent financial advice from a suitably qualified individual who gives due regard to your personal circumstances.
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