You're listening to Strictly Business Podcast with Lindsay Williams.
JSC has closed its doors for another day, so it's time for the 5 o'clock shadow,
and it's the first 5 o'clock shadow of 2025 with the excellent Skulk Lowe,
Portfolio Manager at PSG Wealth Old Oak in Cape Town.
Now, South Africans at this time of year take a very long holiday.
Skulk seems to have taken an extra long holiday, because it's been, I don't know,
maybe five weeks since we...
last spoke, but I don't begrudge him that.
And welcome back, Skulk.
I've missed you.
Are you energized or are you still feeling a little bit in holiday mode?
I decided.
So firstly, Lindsay, thank you very much for that glorious introduction.
Wonderful to be back.
Like you mentioned, we were sitting in the latter part of January already, looking
towards February.
I sort of told myself I'm going to be waiting for Monday.
Let's just get Monday done, the inauguration, let's just get Trump out of
the way,
and then I'll get back and see what we're dealing with.
And I must say, you know, you and I, we actually sat in the beginning of December
and we said,
oh, this is going to be hectic.
And it sort of started off nothing too spectacular.
In the mid-month, we thought, oh, boy, here we go.
And I think, you know, all in all, it didn't end too badly.
uh markets on the bond markets of course which we'll come to later are we what that
was the big one that we were looking
for yeah i mean the bond market um naturally dollar wise i mean the dollar
also crazy and and if you look both the bond market and the dollar i mean and
still looking where the gold is trading but
you know i'm going to be ending the year starting the year where i ended off you
know gold gold it's not making us too old lately so
um Yeah, I think it's been a fairly stable time.
I still think it's going to be a very, very interesting year.
I think it might not be as easy as 2024, but, well,
let's hope I'm wrong.
Yes, I mean, there's a good deal of optimism.
I keep on getting articles coming across my desk in the morning saying there's
optimism about
South Africa, which is great.
But on the other hand, is it justified, Skunk?
Are you optimistic about domestically focused stocks?
Yeah, I am.
I'm still optimistic.
I think naturally the main topic for South Africa in
2024 might be that three little acronym, G, N, and U.
I think that's been sort of the main topic.
And when you look at a few… things in the latter part of 2024.
Some of the stats that came through,
some of the smallish improvements that we've seen since the implementation of the
GNU,
it does give you reason for optimism.
Here we're sitting January and we're getting very, very close to a year without
load shedding.
So that's making us a little bit optimistic.
I think in general, yes, but make no mistake, I think
That's the one thing that we've seen over the first two weeks of 2025.
Well, we're sitting at three weeks, but I would say the first two weeks, it was sort
of dominated by, oh, here we go again.
Look at the rent.
I mean, that must have been Africa, 19.
It was floating with 19 to the US dollar, wasn't it?
It was over in one stage.
But, I mean, come on.
We sat here six months ago, and the dollar index, And I was flirting with that 100,
you know,
level.
And we were saying, well, it's going to break that 100 level because if it's break
those 100 level, let's talk about fundamentals, just pure technicals.
It seems like it could go, you know, to the 90 levels like a, you know, hot knife
through butter.
Here we're sitting, the Dixie, I mean, suddenly the year started off.
On one stage, the Dixie went well over 109.
The Dixie being the dollar index, yeah.
Dollar index went over 109.
I mean, so this was, I would say, really dominated by dollar strength and not
really rent weakness.
I still think looking towards 2025,
we can continue doing these little things right.
When I say we, I'm talking about South Africa.
I really think that we could still see some further improvement.
in the south african economy we could see some improvement in our unemployment rate
and and ultimately we'll see the
improvement in our currency so yeah am i am i somewhat optimistic yes just
remember that i think when you look at the whole trump trade and he's focused focuses
i mean it's not going to be um in a positive for for most of the emerging
markets it's
going to be very very u.s focused and That could be sort of a,
this is called when you do a SWOT analysis, you've always got the strengths,
the weaknesses, the opportunities and threats.
I would just maybe classify that as one of the threats for 2025.
So what you're saying is that Trump is a threat.
I mean, I remember when he was first elected.
When was that?
Back in 2016 or something?
Something like that.
Anyway, I remember the very moment that it became apparent that he was going to be
the president.
The Dow Jones futures fell a thousand points and it was around about two o'clock
in the morning.
I was morbidly fascinated watching what was going on.
And yes, we knew that this man, if I can call him that, was the new president.
And then afterwards, everyone said, well, wait a second, he touts himself as a
businessman,
so he's going to be business friendly.
And then the thing shot up.
It went from a thousand points down to 500 up.
This time.
People not so sure, Scott.
Yeah, you could see since Monday.
We really actually started seeing it on Friday.
Sort of the inverse.
Friday, we did see some strength in the U.S.
market.
And since Monday, I mean, today again,
S&P 500 again close to 1% up.
NASDAQ over 1% up.
And this is a U.S.
school of the Trump trade.
I mean, definitely markets are optimistic on the U.S.
I did an article in the beginning of the year where I usually just go through
all the major reports, the Goldman Sachs, Citigroups, Vanguard, all the major,
major investment houses, Deutsche Bank, HSBC, big, big investment houses.
And I usually try and go through all these reports and try and get where they sort of
agree,
the golden threads.
And it was very interesting that they say, well, firstly, U.S.
equity outlooks, they're not negative.
I mean, they feel that the biggest risk for U.S.
equities is definitely valuations.
I mean, we've heard about valuations for the past five to seven years on U.S.
stocks.
So this year is going to be no different.
They do see the stretched valuations and still the heightened geopolitical risks.
as some of the potential headwinds for the U.S.
But not necessarily, they're not seeing, none of them are really seeing
double-figure growth for the U.S.
this year.
I'm talking about the U.S., talking about the S&P 500.
They're really more seeing towards, they're going towards single-digit growth.
International equities, very similar.
Similar, they're still saying, well, they think some of these major developed
countries, non-U.S.,
might be a...
better destination than the US, just from a valuation point of view.
Still really optimistic on AI and all these sort of cleaner energies.
That was the major themes that came through.
But you could see it's sort of a,
you just say it's sort of carefully optimistic or carefully bullish.
But you can see that the worry is round about the round.
the emerging markets, they do feel that this new policies,
this Trump policies,
is most probably going to be one of the biggest headwinds for emerging markets.
Especially if tariffs start to come in, and also especially if the dollar,
which was at one stage 102 against the euro a week ago,
especially if the dollar gets strong and the emerging market currencies...
particularly in our case, the rent gets weaker, there is going to be a fallout
because, I mean,
it's got implications for debt obligations and all sorts of things.
But anyway, let's have a look at the markets now, because at the end of the
program,
I'm going to ask you about your asset allocation and whether it's changed since
we last spoke, which was about five weeks ago.
But let's talk about the markets now, because that's one thing of which I'm very
certain.
because it says so on my screen the dollar round is 1851 the british pound against
the round is 22 82 and the euro
round is 1929 with the euro dollar 104 20.
um british pound against the us dollar is 123
30. commodities now it says on my screen that the gold price is up 44 to 27.52 but
it's obviously different time zones and everything else but anyway it's up one and
two thirds percent which is great um
What else have we got?
Platinum 963, which is up $18 an ounce, and palladium 994,
both still in three figures rather than four figures, but palladium is $45 higher,
or 4.8%.
Other commodities, and notably the energy sector.
We've got the Brent crude oil price down half a percent to $79.17.
And West Texas crude is $75.69 per barrel.
And that's down about a quarter of a percent.
Anything else going on there?
No, still up two and a half percent.
But anyway, the CRB index has done very well since we last spoke, Scalp.
S&P 500 futures.
The highest on the futures in history has been $61.78.
That's, and now we are looking at
61.24. So we're 50-odd points away from all-time record highs.
Lots of bullishness out there.
The US 10-year Treasury bond yield, which we referenced earlier on, yeah, the bond
market in
September, end of September, the US 10-year was yielding 3.6%.
It's now yielding 4.6%, essentially.
So it's a really, really big move.
The South African 10-year.
It was 940 a couple of days ago.
Now it's 920.
So another really big move.
And what else have we got?
Bitcoin, which has been extraordinary.
Currently 104,400, which is up 1.2%.
No, 105,000 now.
1.8% higher and was 108.5%.
Sorry, 108,500 a little bit a few days ago.
So Bitcoin going extraordinarily well.
And that...
Definitely is the Trump factor, Skalk.
On the JSC today, I saw Mr.
Price and Life Healthcare with a couple of announcements, otherwise pretty quiet.
Yeah, I think, yeah, so we had Quilter as well.
I mean, this is crazy.
So let's start off with you, Mr.
Price.
Originally, I looked at this result this morning because it came out pre-market.
I was actually quite surprised.
We did see the retail figures came out today, also surprising sort of on the
upside.
But when you look at Mr.
Price, when they came out and said, well,
we actually increased our sales growth by close to 11%, 10.6%.
If you look at the comparable store sales, now that's usually where they didn't have
any acquisitions.
So where they had exactly the same amount of stores last year.
and still this year in the third quarter, those stores grew by 6.3%.
So really, really, really good.
I mean, and the outlook for Mr.
Price also looked good.
Share price sort of disappointed,
but we know it did sort of guide it well prior to the December holiday.
We saw a big, big movement in Mr.
Price lately.
So I think it was sort of that, how does the same go by and rumour sell on fact?
It was...
I think sort of the market just felt maybe it's done now.
I look at the outlook and I still feel that Mr.
Price, despite the fact of its valuations, might just not be a bad one.
And then Quilter.
Wow.
I mean, this is a company, and for the listeners out there, this is
Natchi, the asset management company I spent out of Mutual. And one that sort of
got away from me.
I mean, I follow the 91s.
I follow the coronations.
But quarters, slowly but surely, they're just every single quarter they come up and
they just grow that.
They just solidly get those net inflows.
Just to let people know, is it domestically focused or is it an
international business as well?
International.
Exactly.
But I mean, what, again, they're talking about 2024, total core net inflows,
5.2 billion pounds.
Not bad.
really, really good.
Q4, we saw a 2 billion net inflows.
This is not market movement.
And they even talk about when they look at December,
they ended 119 billion in total,
and that was 3% up just for the quarters.
I mean, in the market which didn't really perform predominantly, as they mentioned,
driven by net inflows.
Yeah, they mentioned the stable market, they mentioned the sterling weakness,
but...
Really, really solid inflows for Quilter. Share price again reacted
3.1%. Why do I say this is important?
If you turn the clock back a little bit more than one year ago, I mean, Quilter
were trading around about the 18-rand levels.
Today, after today's movement, it actually moved, what was it?
It's now 36.60.
So it doubled up in pretty much 12 months'time.
Really well done.
And to all the...
all the shareholders in this company, and man, I can just applaud you.
Well done, exactly.
Skulk missed, didn't join the ride with you, but well done anyway.
Talking about funds under management, Coronation Fund managers came out with
their total assets under management as of the
31st of December last year, coming in at a fairly chunky 676 billion,
Skulk.
What you could do with that?
Yeah, no, no, I can buy a few Coca-Colas.
It's a lot, isn't it?
It's a lot of money.
It is a lot of money.
It's a lot of money.
But, I mean, it's been, I mean, looking at Coronation, I don't know the graph in
front of me, but the AUM has been around about this,
let's call it, 6 to 700 billion, what's called AUM, been around those levels for
many, many,
many years.
So we need to...
need to see them start popping and then and growing like a like a quarter as well
well the share price was up around about two percent today anyway
talking about share prices on my board i've got alpha min up um nearly 10 percent
mtn up 6.6
percent harmony uh near six percent winner life healthcare we mentioned that before
five point one
percent higher and gold um goldfields also
five point one percent up sassel down six percent pick and pay down nearly six
percent
Clix down 5.2%.
Karoo down 4.5%.
And BHP down 4%.
You're going to tell me that one or two of those are XDIV or something.
Or maybe you're not, Scout.
Tell me, please.
No, I'm going to disappoint you.
So, Clix, I think, on your list.
Yeah, let's take the winners.
MTN, I saw two reports came out.
I saw a report coming out from JP Morgan.
I mean, that was an interesting one because just a week ago,
they still had a target price on MTN of R110.
Which it is now.
They improved it or increased it to R119. And also,
I think Standard Bank was somewhat a little bit more bullish.
They actually had a target price of R130 on MTN that came out, I think,
last night or this morning.
And now she...
Like I said, the rest is history to the massive, massive movement.
Cecil, we saw the, not news, let's call it the article, the Bloomberg article,
where they're talking about spinning off or have separate listings for their
chemical
business, predominantly Lake Charles business there in the US.
And I think the market on that stage, I think one stage was 15% up.
End of the day, just close to 10% high on Friday.
You can see this optimism.
This is the turn.
I mean, Cecil are now going to start unbundling and unlocking value.
And it's just, I think, just a cold ice bucket of water that's been thrown to
shareholders saying that no
real news coming out of the company.
So it might just be a rumor and no fact.
And I think that's why we've seen Cecil really just retracing.
And also, I mean, very nice.
I'm not going to go into the full presentation, Nice presentation coming
from one of the bigger
SA fund managers this morning, 361,
where they actually just mentioned they're not really bullish on SASL.
And one of the main reasons was just this whole
Trump trade or the new US direction is not going to be
positive for companies like SASL.
I think that might be one of the main reasons.
Okay.
I'm just looking at MTN, which is a company that we've spoken about many, many
times.
If you go back to August of last year, it was 75 rand a share.
It's now 111 rand a share.
It's had a stonking good start to 2025.
And in fact, its percentage move from its 52-week low, according to the screen I'm
looking at,
is 57.5% up from its 52-week low,
which is the low that I was just referring to.
which is around about 75 Rand a share.
MTM, what a performance.
Well, this might not be the best time to mention it,
but if you turn the clock back to the beginning of
2007, you're going to give me the put-down now.
It was like 300 or something.
What are you going to tell me?
18 years ago, this company was trading exactly at the same levels.
It's currently trading.
So, you know, besides the fact that you've earned quite a nice dividend,
if you bought this company 18 years ago and you excluded the dividends, you pretty
much have no growth.
How many times have you held a stock for 18 years, Scott?
Be honest with me.
Let me quickly think.
Never.
Exactly.
So it's a completely irrelevant comparison you've just made.
Yeah.
Anyway, so, yeah, it's… I'm really happy.
I mean, you know, MTN did improve,
but I think they need to do quite a bit to blow hot
air up my skirt.
Okay.
Well, I didn't know you were all skirts, but it's an interesting thought.
Skulk, could you give me, before you go to the indices,
an idea of when you sat back at your desk after your extended holiday?
Did you say right?
asset allocation has got to change my views have got to change or you is it
still business as usual at psg
wealth old oak no no it's it's it hasn't hasn't changed because remember we've
we've known
that that trump is is going to take take office um you know for quite some time so
so this has been been
sort of we've had two months so nothing has really changed since we last spoke we
still we still really
I mean, currently we're optimistic, I wouldn't say really optimistic, but we're
optimistic on local equities.
So still very much overweight in that regard.
We would say U.S.
equities, we're underweight.
We're worried about the valuations.
But international equities, we're still neutral.
Bonds at current levels, this might be an interesting one.
Because bonds, we're a little bit worried about inflation.
I mean, like most countries out there, but I'm really worried about inflation.
I think, you know, if these policies are going to be implemented,
I can't really see that it won't have a massive inflationary effect.
And I think this is why we've seen these bonds sort of looking through these,
because as I mentioned,
when you look at these investment companies, They're optimistic.
They still say, when you drill through this, they still say, well,
we're going to still see further declines in interest rates.
We're still going to see it lowering.
And they see the target neutral level run about the 3.75 to 4%.
They still feel that inflation is going to remain between the 2% and 3% levels for
the US.
I'm sorry.
I'm struggling to see that.
Because they also see that.
that the oil price is going to remain roughly between $60 and $70,
and it's not there currently.
So anyway… Okay, a note of caution, in other words.
Inflation is not going to be as benign as it was forecast to be around about a year
ago,
and we've already seen the evidence of that.
But further evidence, you're saying, is going to come to the fore in 2025.
and therefore the bond rates at around about these levels, 4.5% to 5% for the
U.S.
10-year, are entirely justified, Scott.
I do think that the bond market is telling us that they don't feel comfortable.
So now the question will be, but I think at these type of levels,
it's starting to get interesting.
But just remember that the actual effect of inflationary…
shocks could still have a further negative effect on on uh let's call it these bond
devils that said i do
think that at let's call it these these massive movement that we've seen over the
past three four weeks uh i'll
i'll nibble i'll nibble you're nibbling okay now scalp please give me the closing
jsc indices and the value traded
so the jsc today um like you mentioned was was a little bit softer 23 basis points
Soft closed today at 84,655 points.
Resources up 19 basis points while all the other indices were down.
Industrials, they were down 20 basis points.
Financials down 55 basis points.
And asset property index, that was down 29 basis points.
When you look at the value trade, not a bad day at all.
I mean, surpassing yesterday's, let's call it close to 22 billion.
Today, 22.5 billion value traded for the day.
Very good indeed.
Skulk, it's wonderful to have you back.
Thank you very much.
Even though you were completely exhausting, I'm going to have to go and
lie down now.
Skulk Loo is a portfolio manager at PSG Wealth Old Oak in Cape Town.
And that was the 5 o'clock shadow.
Same time next week.
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