28
March 2024
Rand strengthens after SARB kept rates unchanged
Adriaan Pask, Chief Investment Officer
PSG Wealth
Market commentary
The rand strengthened on Wednesday as the South African Reserve Bank (SARB) kept interest rates unchanged, as anticipated. The monetary policy committee kept the repo rate at 8.25%, the same level as in May 2023, after a total increase of 475 basis points since the commencement of the rate-hiking cycle in November 2021. The FTSE/JSE tracked firmer global markets as investors anticipated the release of the Personal Consumption Expenditures (PCE) price index data for February 2024, which could provide insight into the path of inflation.
With the expectation of looser monetary policy and robust risk appetite, European equities continued to rally on Wednesday, extending their strong momentum from the previous week and a half. Furthermore, economic sentiment in the Eurozone increased to a three-month high of 96.3 in March 2024, marking an uptick from February's revised figure of 95.5 and aligning with market expectations. The improvement has spurred optimism that the currency bloc's economy may favour its corporate environment. The STOXX 50 added 0.30% to reach a new 23-year high of 5 080 points, while the pan-European STOXX 600 edged above the flatline to extend its record high to 512.
Wall Street rebounded on Wednesday after suffering setbacks in the previous two sessions. Apple and Intel's impressive results drove the blue-chip Dow higher by 478 points. The S&P 500 added 0.80% to close at a record high, snapping a three-day losing streak. The Nasdaq added 0.40%, held back by losses from AI giant Nvidia.
Asian markets fell on Wednesday, with mainland stocks dropping to near one-month lows due to negative market sentiment and ongoing foreign outflows. Chinese equities fell alongside Wall Street overnight as investors took profits and reviewed market valuations after a spectacular rise to record levels.
Gold gained 0.51% to $2 189.49/oz, while platinum lost 0.90% to $894.4/oz. Brent crude was 0.16% firmer at $85.39 a barrel at the close of local business.
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Market indicators
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| Date | Index | Current Level | 1 Day Move | 1 Month Move | 6 Month Move | 1 Year Move |
|---|---|---|---|---|---|---|
| 2024-04-26 | ALSI | 74329.37 | -0.25 | 2.56 | 7.91 | -0.77 |
| 2024-04-26 | Basic minerals | 45037.83 | 3.20 | 9.24 | 11.78 | -5.02 |
| 2024-04-26 | Fin + Ind 30 | 9544.03 | -0.39 | 0.62 | 7.81 | 2.18 |
| 2024-04-26 | Financial | 38882.99 | -0.22 | -0.77 | 2.92 | 8.03 |
| 2024-04-26 | Industrial index | 109125.97 | -1.36 | 1.92 | 9.68 | -1.10 |
Some data may be delayed, the above table reflects the latest information available from Morningstar.
Please note 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.
Collective investment schemes
Local funds
| ASISA category | Fund name | NAV (Rands) at 26 Apr 2024 | Performance –As at 2024/03/31 | |||
|---|---|---|---|---|---|---|
| 1 year % | 3 year % | 5 year % | Inception % | |||
| South Africa - Equity - General | PSG Equity Fund Class A | 16.30 | 5.43 | 15.72 | 9.73 | 12.71 |
| PSG Equity Fund Class A | 16.30 | 5.43 | 15.72 | 9.73 | 12.71 | |
| PSG Equity Fund Class E | 16.29 | 4.33 | 15.16 | 9.79 | 8.58 | |
| PSG Equity Fund Class F | 16.35 | 5.91 | 16.25 | 10.23 | 9.55 | |
| PSG SA Equity Class F | 1.52 | 2.14 | 15.97 | 8.69 | 6.79 | |
| PSG Wealth Creator Fund of Funds Class D | 51.28 | 6.61 | 9.40 | 10.37 | 11.86 | |
| South Africa - Multi Asset - Flexible | PSG Flexible Fund Class A | 7.83 | 5.12 | 14.65 | 9.77 | 11.16 |
| PSG Flexible Fund Class A | 7.83 | 5.12 | 14.65 | 9.77 | 11.16 | |
| PSG Flexible Fund Class E | 7.84 | 5.40 | 14.96 | 10.06 | 9.88 | |
| South Africa - Multi Asset - High Equity | PSG Balanced Fund Class A | 94.92 | 4.85 | 13.93 | 10.11 | 12.69 |
| PSG Balanced Fund Class A | 94.92 | 4.85 | 13.93 | 10.11 | 12.69 | |
| PSG Balanced Fund Class E | 95.00 | 5.45 | 14.59 | 10.74 | 9.56 | |
| PSG Wealth Moderate Fund of Funds Class D | 40.36 | 9.93 | 10.12 | 9.17 | 10.72 | |
| South Africa - Multi Asset - Low Equity | PSG Stable Fund Class A | 1.62 | 5.23 | 9.90 | 7.44 | 8.23 |
| PSG Stable Fund Class A | 1.62 | 5.23 | 9.90 | 7.44 | 8.23 | |
| PSG Stable Fund Class E | 1.62 | 5.83 | 10.54 | 8.05 | 7.95 | |
| PSG Wealth Preserver Fund of Funds Class D | 24.44 | 8.61 | 8.68 | 7.73 | 9.01 | |
| South Africa - Multi Asset - Income | PSG Diversified Income Fund Class A | 1.31 | 7.40 | 8.23 | 7.82 | 7.83 |
| PSG Diversified Income Fund Class A | 1.31 | 7.40 | 8.23 | 7.82 | 7.83 | |
| PSG Diversified Income Fund Class E | 1.31 | 8.07 | 8.84 | 8.39 | 8.26 | |
| PSG Wealth Income Fund of Funds Class D | 12.38 | 7.81 | 7.50 | 7.01 | 7.79 | |
| South Africa - Interest Bearing - Short Term | PSG Income Fund Class A | 1.08 | 7.76 | 6.73 | 7.28 | 7.10 |
| PSG Income Fund Class A | 1.08 | 7.76 | 6.73 | 7.28 | 7.10 | |
| PSG Income Fund Class E | 1.08 | 8.07 | 7.04 | 7.59 | 7.76 | |
| PSG Wealth Enhanced Interest Fund of Funds Class D | 1.02 | 8.96 | 6.59 | 6.49 | 6.71 | |
| South Africa - Interest Bearing - Money Market | PSG Money Market Fund Class A | 1.00 | 8.28 | 5.98 | 5.83 | 7.94 |
| PSG Money Market Fund Class A | 1.00 | 8.28 | 5.98 | 5.83 | 7.94 | |
| PSG Money Market Fund Class F | 1.00 | 8.59 | 6.26 | 6.10 | 5.28 | |
| South African - Multi Asset - Low Equity | PSG Investment Management Cautious Fund of Funds Class D | 1.29 | 5.22 | 9.01 | — | 9.62 |
| PSG Investment Management Cautious Fund of Funds Class D | 1.29 | 5.22 | 9.01 | — | 9.62 | |
| South African - Multi Asset - High Equity | PSG Investment Management Growth Fund of Funds Class D | 1.47 | 2.95 | 11.00 | — | 11.35 |
| PSG Investment Management Growth Fund of Funds Class D | 1.47 | 2.95 | 11.00 | — | 11.35 | |
| South African - Multi Asset - Income | PSG Investment Management Multi-Asset Income Fund of Funds Class D | 1.13 | 6.96 | 7.34 | — | 7.57 |
| PSG Investment Management Multi-Asset Income Fund of Funds Class D | 1.13 | 6.96 | 7.34 | — | 7.57 | |
Performance data on local funds is shown up to the last market close minus 1 day.
Some data may be delayed, the above table reflects the latest information available from Morningstar.
Please note 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.
Global funds
Through our tried-and tested investment philosophy, we have built competitive global solutions to help clients achieve their investment goals.
The following funds are rand-denominated, but invest internationally:
| ASISA category | Fund name | NAV (Rands) at 26 Apr 2024 | Performance –As at 2024/03/31 | |||
|---|---|---|---|---|---|---|
| 1 year % | 3 year % | 5 year % | Inception % | |||
| Global - Equity - General | PSG Global Equity Feeder Fund Class A | 4.84 | 13.50 | 18.16 | 13.88 | 13.07 |
| PSG Global Equity Feeder Fund Class A | 4.84 | 13.50 | 18.16 | 13.88 | 13.07 | |
| PSG Global Equity Feeder Fund Class E | 5.01 | 14.16 | 18.84 | 14.44 | 12.79 | |
| PSG Wealth Global Creator Feeder Fund Class D | 4.57 | 31.95 | 14.40 | 16.71 | 15.72 | |
| Global - Multi Asset - Flexible | PSG Global Flexible Feeder Fund Class A | 3.75 | 11.50 | 15.71 | 13.27 | 12.83 |
| PSG Global Flexible Feeder Fund Class A | 3.75 | 11.50 | 15.71 | 13.27 | 12.83 | |
| PSG Global Flexible Feeder Fund Class B | 3.94 | 12.14 | 16.38 | 13.77 | 13.33 | |
| PSG Wealth Global Flexible Feeder Fund Class D | 4.77 | 16.82 | 8.82 | 11.36 | 11.51 | |
| PSG Wealth Global Moderate Feeder Fund Class D | 4.88 | 19.10 | 10.30 | 10.72 | 12.77 | |
| Global - Multi Asset - Low Equity | PSG Wealth Global Preserver Feeder Fund Class D | 1.54 | 15.10 | 9.24 | 8.30 | 7.48 |
| PSG Wealth Global Preserver Feeder Fund Class D | 1.54 | 15.10 | 9.24 | 8.30 | 7.48 | |
Performance data on offshore funds is shown up to the last market close minus 2 days.
Some data may be delayed, the above table reflects the latest information available from Morningstar.
Please note 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.
Invest in other currencies
The following funds invest internationally using foreign currency
| ASISA category | Fund name | NAV (Rands) at 25 Apr 2024 | Performance –As at 2024/03/31 | |||
|---|---|---|---|---|---|---|
| 1 year % | 3 year % | 5 year % | Inception % | |||
| EAA Fund GBP Cautious Allocation | PSG Wealth Global Preserver FoF (GBP) Class D | 2.04 | 6.23 | 2.28 | 2.49 | 5.01 |
| PSG Wealth Global Preserver FoF (GBP) Class D | 2.04 | 6.23 | 2.28 | 2.49 | 5.01 | |
| EAA Fund GBP Flexible Allocation | PSG Wealth Global Flexible FoF (GBP) Class D | 3.69 | 7.61 | 3.14 | 6.39 | 9.38 |
| PSG Wealth Global Flexible FoF (GBP) Class D | 3.69 | 7.61 | 3.14 | 6.39 | 9.38 | |
| EAA Fund Global Flex-Cap Equity | PSG Global Equity Sub-Fund Class A | 2.18 | 6.31 | 8.80 | 8.10 | 5.87 |
| PSG Global Equity Sub-Fund Class A | 2.18 | 6.31 | 8.80 | 8.10 | 5.87 | |
| PSG Global Equity Sub-Fund Class B | 2.25 | 6.92 | 9.42 | 8.72 | 7.09 | |
| EAA Fund Global Large-Cap Blend Equity | PSG Wealth Global Creator Fund of Funds Class D | 2.80 | 23.38 | 5.16 | 10.46 | 9.82 |
| PSG Wealth Global Creator Fund of Funds Class D | 2.80 | 23.38 | 5.16 | 10.46 | 9.82 | |
| EAA Fund USD Cautious Allocation | PSG Wealth Global Preserver FoF (USD) Class D | 1.65 | 7.71 | 0.33 | 2.30 | 3.54 |
| PSG Wealth Global Preserver FoF (USD) Class D | 1.65 | 7.71 | 0.33 | 2.30 | 3.54 | |
| EAA Fund USD Flexible Allocation | PSG Global Flexible Sub-Fund Class A | 18.91 | 4.80 | 6.92 | 7.47 | 5.79 |
| PSG Global Flexible Sub-Fund Class A | 18.91 | 4.80 | 6.92 | 7.47 | 5.79 | |
| PSG Global Flexible Sub-Fund Class B | 20.03 | 5.29 | 7.42 | 8.05 | 6.41 | |
| PSG Investment Management Global Flexible Fund of Funds (Dollar) | 1.55 | 7.92 | -1.45 | 3.38 | 2.65 | |
| PSG Wealth Global Flexible FoF (USD) Class D | 2.99 | 9.46 | 0.13 | 5.54 | 7.87 | |
| EAA Fund USD Moderate Allocation | PSG Wealth Global Moderate Fund of Funds Class D | 1.97 | 11.27 | 1.35 | 4.74 | 5.25 |
| PSG Wealth Global Moderate Fund of Funds Class D | 1.97 | 11.27 | 1.35 | 4.74 | 5.25 | |
Performance data on offshore funds is shown up to the last market close minus 2 days.
Some data may be delayed, the above table reflects the latest information available from Morningstar.
Please note 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.
Non-Collective investment schemes
House view equity portfolios
| Fund display name | Performance –As at 2024/04/26 | |||
|---|---|---|---|---|
| 1 year % | 3 year % | 5 year % | Inception % | |
| PSG Wealth Income Growth Equity Portfolio | 1.39 | 4.52 | -0.71 | 1.17 |
| PSG Wealth Offshore Equity Portfolio (USD) | 11.12 | 4.15 | 9.96 | 11.59 |
| PSG Wealth SA Equity Portfolio | -5.21 | 1.25 | 0.11 | 2.73 |
| PSG Wealth SA Property Equity Portfolio | 12.07 | 7.04 | -2.81 | -3.33 |
* PSG Wealth equity portfolio performance are shown gross of management fees, but net of brokerage and other trading costs.
The House view portfolios are bespoke solution portfolios and not part of the Collective Investment Schemes’ portfolios.
Recent investment ideas
Harmony Gold
In this report, we discuss Harmony’s latest results and attempt to show the asymmetry of Harmony's valuation by stress testing some of the critical assumptions.
Harmony Gold released a solid set of results for 1H24 on 28 February 2024. Higher earnings were achieved for the group driven by the following:
· Increased gold production
· Higher gold prices
· Higher grades
Harmony Gold shares have increased by roughly 55% since our last report in October 2023. It has outperformed both AngloGold and Goldfields which increased by 38% and 19% respectively.
The gold price has increased by 11% with the rand remaining largely stable against the US dollar. Our research supports a sell recommendation.
Please join us on Thursday at 11h30 for our Microsoft Teams Q&A sessions. Click here to join. <https://www.psg.co.za/wealthonline#investment-research>
Sasol
On 26 February, Sasol released its 1H24 results, which were characterised by the following:
1. Turnover decreased by 9%, driven mainly by a decrease of 24% in the chemicals average sales basket price.
2. Headline earnings per share (HEPS) decreased by 34% due R3 billion less net gains on derivatives combined with employee-related expenditure increasing 10%.
3. Volumes benefitted from the energy business improving production at Secunda Operations (SO) and the chemicals business increasing sales volumes by 4% due to higher US sales and improved operational performance in Africa.
Our research supports a buy recommendation.
Please join us on Thursday at 11h30 for our Microsoft Teams Q&A sessions. Click here to join. <https://www.psg.co.za/wealthonline#investment-research>
Resilient and Hyprop
In this report, we look at Resilient REIT Limited (RES) and Hyprop Investments Limited (HYP). We issue a buy recommendation on both RES and HYP.
We base our recommendations on improving rental reversions and vacancies across the retail sector and in both individual companies.
In combination with the property sector’s relationship with bond yields, placing it to potentially benefit from an easing of interest rates, we see both companies as undervalued with risk skewed to the upside. However, we prefer RES to HYP due to the following:
- RES has greater exposure to South Africa compared to HYP in revenue, number of properties and provinces.
- RES has more debt due in CY24 compared to HYP and is also less hedged, positioning them to benefit more from a potentially lower interest rate environment.
- RES is better positioned as a leading property company in load shedding protection amidst the current uncertainties related to backup power generation in the current operating environment.
- RES has a dividend yield of 8.7% trailing.
Please join us on Thursday at 11h30 for our Microsoft Teams Q&A sessions. Click here to join. <https://www.psg.co.za/wealthonline#investment-research>
Economic Calendar
View the Economic Calendar
Corporate Actions
| Date | Company | Share code | Expectation |
|---|---|---|---|
| 26 March 2024 | Anglo American Platinum Limited | AMS | Cash Dividend |
| 26 March 2024 | The Bidvest Group Limited | BVT | Cash Dividend |
| 26 March 2024 | FirstRand Limited | FSR | Cash Dividend |
| 26 March 2024 | Mix Telematics Limited | MIX | Scheme of Arrangement |
| 26 March 2024 | Motus Holdings Limited | MTH | Cash Dividend |
| 26 March 2024 | Putprop Limited | PPR | Cash Dividend |
| 26 March 2024 | Shoprite Holdings Limited | SHP | Cash Dividend |
The information above is to the best of our knowledge correct.
The Corporate Actions are updated weekly.
Fund performance
Collective Investment Schemes in Securities (CIS) are generally medium-term to long-term investments. The value of participatory interests (units) may go down as well as up and past performance is not a guide to future performance. Collective Investment Schemes are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from PSG Collective Investments (RF) Limited. Commission and incentives may be paid, and if so, are included in the overall costs. Forward pricing is used. The Portfolios may be capped at any time in order for them to be managed in accordance with their mandate.
Performance is calculated for the portfolio and individual investor performance may differ as a result thereof. Different classes of participatory interest can apply to these portfolios and are subject to different fees, charges and possibly dividend withholding tax and will thus have differing performances. Annualised performances show longer term performance rescaled over a 12-month period. Individual performance may differ as a result of initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. The portfolio is valued at 15h00 daily. Income distributions are net of any applicable taxes. Investment performance data is for illustrative purposes only. Actual performance figures are available on request. Always refer to the fund fact sheet (Minimum Disclosure Document) for full details, fees and risks of the fund.
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