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In our continued efforts to give our readers a broad number of views, opinions and information, we continue to provide PSG's daily market updates and add our own daily rant at the end.
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Short summary of PSG's market commentary for 28 February 2019
South Africa
The JSE fell on Wednesday, with Naspers posting a sharp drop following the separate listing of its pay-TV service. MultiChoice closed at R106.01, giving the group a market capitalisation of about R46bn. The All Share closed flat at 0.10%
United States
Markets started on a weaker footing after the second US-North Korean nuclear summit kicked off in Vietnam and on heightened tensions between India and Pakistan. At market close, the Dow Jones was down 1.15%.
Europe
The export-heavy FTSE 100 lagged the broader market on Wednesday as the pound lingered near five-month highs against the dollar amid fresh hopes that a no-deal Brexit could be avoided. The FTSE 100 closed down 0.10%.
Hong Kong
Shanghai shares closed up on Wednesday, after Federal Reserve Chairman Jerome Powell reinforced the Fed’s recent shift towards a more “patient” approach on policy in the face of a slowing economy. At close of trade, the Shanghai Composite traded 0.42% in the green.
Japan
The Nikkei rose on Wednesday as investors bought into defensive stocks such as pharmaceutical and real estate, and took some money off the table from machinery shares that rallied on progress in US-China trade talks. The Nikkei gained 1.07%.
Rand
The rand was range-bound on Wednesday as market mulled over Brexit’s progress and the US-North Korea summit. At 20h00 one dollar cost R13.93.
Precious metals
Gold held in a tight range ahead of US Fed chair Jerome Powell’s testimony on Wednesday. An ounce of gold traded at $1 320.27 at 20h30.
Oil
Oil rose on Wednesday, buoyed by an unexpected decline in US crude inventories. A barrel of Brent crude traded at $66.34 at 20h30.
The JSE fell on Wednesday, with Naspers posting a sharp drop following the separate listing of its pay-TV service. MultiChoice closed at R106.01, giving the group a market capitalisation of about R46bn. The All Share closed flat at 0.10%
United States
Markets started on a weaker footing after the second US-North Korean nuclear summit kicked off in Vietnam and on heightened tensions between India and Pakistan. At market close, the Dow Jones was down 1.15%.
Europe
The export-heavy FTSE 100 lagged the broader market on Wednesday as the pound lingered near five-month highs against the dollar amid fresh hopes that a no-deal Brexit could be avoided. The FTSE 100 closed down 0.10%.
Hong Kong
Shanghai shares closed up on Wednesday, after Federal Reserve Chairman Jerome Powell reinforced the Fed’s recent shift towards a more “patient” approach on policy in the face of a slowing economy. At close of trade, the Shanghai Composite traded 0.42% in the green.
Japan
The Nikkei rose on Wednesday as investors bought into defensive stocks such as pharmaceutical and real estate, and took some money off the table from machinery shares that rallied on progress in US-China trade talks. The Nikkei gained 1.07%.
Rand
The rand was range-bound on Wednesday as market mulled over Brexit’s progress and the US-North Korea summit. At 20h00 one dollar cost R13.93.
Precious metals
Gold held in a tight range ahead of US Fed chair Jerome Powell’s testimony on Wednesday. An ounce of gold traded at $1 320.27 at 20h30.
Oil
Oil rose on Wednesday, buoyed by an unexpected decline in US crude inventories. A barrel of Brent crude traded at $66.34 at 20h30.
Our daily rant..
So yesterday saw the listing of MultiChoice Group (MCG) after it was unbundled from Naspers (NPN). The stock traded very actively with total value traded surpassing R3billion yesterday. By midday it traded almost R1 billion more than Naspers. For more on MultiChoice's listing see our MultiChoice listing article here
A short summary regarding MultiChoice that we wrote at the end of January 2019. "So while MultiChoice has seen strong subscriber numbers growth over the last three years, infact 29.4%, while revenue over the same period only grew by 1.4%. Their trading profit margins are in decline too. But looking at the number of shares MultiChoice plans on issuing, their trading profits and placing a PE ratio of 15 on MultiChoice shares, it will give the company a valuation of R94.8 billion (which will make MultiChoice the 21st largest firm listed on the JSE) or around R211 a share
Note we do not think that MultiChoice will trade at a PE of 15. We merely used it as a benchmark PE ratio as it is close to the overall market average. We believe in the long run MultiChoice group will trade at a PE of around 8, due to the struggling segment they are operating in. Competition from online pay per view companies such as Netflix eating into their subscriber base. At a PE of 8 we see them trading at around R112 a share.
But dont be surprised if on listing the price surges as large funds tracking the Top 40 (and dont have a lot of exposure in NPN) needs to buy the share to have it in their funds. A gradual decline after the feeding frenzy mayhem of listing will then probably set in and MCG we predict will be trading at a PE of around 7/8 a few months after listing.
The JSE All Share ended they day up 0.1% and the Rand/Dollar was sitting at R13.84
A short summary regarding MultiChoice that we wrote at the end of January 2019. "So while MultiChoice has seen strong subscriber numbers growth over the last three years, infact 29.4%, while revenue over the same period only grew by 1.4%. Their trading profit margins are in decline too. But looking at the number of shares MultiChoice plans on issuing, their trading profits and placing a PE ratio of 15 on MultiChoice shares, it will give the company a valuation of R94.8 billion (which will make MultiChoice the 21st largest firm listed on the JSE) or around R211 a share
Note we do not think that MultiChoice will trade at a PE of 15. We merely used it as a benchmark PE ratio as it is close to the overall market average. We believe in the long run MultiChoice group will trade at a PE of around 8, due to the struggling segment they are operating in. Competition from online pay per view companies such as Netflix eating into their subscriber base. At a PE of 8 we see them trading at around R112 a share.
But dont be surprised if on listing the price surges as large funds tracking the Top 40 (and dont have a lot of exposure in NPN) needs to buy the share to have it in their funds. A gradual decline after the feeding frenzy mayhem of listing will then probably set in and MCG we predict will be trading at a PE of around 7/8 a few months after listing.
The JSE All Share ended they day up 0.1% and the Rand/Dollar was sitting at R13.84
Our JSE All Share index daily performance calendar
Visit our JSE Calendar tracker page for a expanded version of the calendar below
The graphic below provides the daily returns of the JSE All Share Index (J203) on a calendar chart. Provides a great overview of the All share index over the course of the month. It will be updated daily with our daily investment update as received from PSG.
The first trading day of February ended in the red. In contrast to January in which every Friday ended the day in the green, so far for February 2019 every Friday has ended in the red. So far the market has increased by 3.95% during the 27 days of February 2019. So unless something extremely drastic happens during the last trading day of February, the month will end on a pretty positive note.