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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 inputs in at the end.
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Short summary of PSG's market commentary for 1 July 2019
South Africa
The local bourse ended the week slightly higher due to strong performances by miners and Naspers, all taking advantage of the US Federal Reserve’s dovish stance. As the closing bell struck, the All Share ended 0.24% higher.
United States
On Friday, US shares started the day low as investors kept an eye on the G20 summit and awaited the outcome of the negotiations between the US and China that seek to halt the protracted trade war. At 17h30, the Dow Jones was trading 0.10% higher.
Europe
European markets recorded the best first-half year results in almost 20 years on Friday, thanks to German shares lifting indexes while investors kept a close eye on the US-Sino trade discussions. At the end of trade, the pan-European STOXX 600 stood at 0.70%.
Hong Kong
Asian shares fell on Friday, ahead of the much-anticipated China-US trade discussions to be held on Saturday at the G20 summit. The Hang Seng closed 0.28% down.
Japan
On Friday, Japanese indices closed somewhat down as all eyes were focused on the trade meeting between the US and China, which took place alongside the G20 summit held in Osaka, Japan. At the end of trade, the Nikkei had lost 0.24%.
Rand
Although some experts believe the rand is undervalued by as much as R2/$, it was heading towards its strongest month since January this year as it awaited economic developments at the G20 summit on Friday. At 17h30, a dollar cost R14.11.
Precious metals
Bullion prices rose over 8% in June, its highest level in about three years, and silver touching its biggest monthly gain since January 2019 in light of the US-China trade dispute. At 17h30, an ounce of spot gold traded at $1 411.28.
Oil
Although oil prices dropped on Friday, they posted a weekly gain ahead of expected OPEC production cuts and the widely anticipated meeting between the US and China on Saturday. At 17h30, a barrel of Brent crude was trading at $66.52
The local bourse ended the week slightly higher due to strong performances by miners and Naspers, all taking advantage of the US Federal Reserve’s dovish stance. As the closing bell struck, the All Share ended 0.24% higher.
United States
On Friday, US shares started the day low as investors kept an eye on the G20 summit and awaited the outcome of the negotiations between the US and China that seek to halt the protracted trade war. At 17h30, the Dow Jones was trading 0.10% higher.
Europe
European markets recorded the best first-half year results in almost 20 years on Friday, thanks to German shares lifting indexes while investors kept a close eye on the US-Sino trade discussions. At the end of trade, the pan-European STOXX 600 stood at 0.70%.
Hong Kong
Asian shares fell on Friday, ahead of the much-anticipated China-US trade discussions to be held on Saturday at the G20 summit. The Hang Seng closed 0.28% down.
Japan
On Friday, Japanese indices closed somewhat down as all eyes were focused on the trade meeting between the US and China, which took place alongside the G20 summit held in Osaka, Japan. At the end of trade, the Nikkei had lost 0.24%.
Rand
Although some experts believe the rand is undervalued by as much as R2/$, it was heading towards its strongest month since January this year as it awaited economic developments at the G20 summit on Friday. At 17h30, a dollar cost R14.11.
Precious metals
Bullion prices rose over 8% in June, its highest level in about three years, and silver touching its biggest monthly gain since January 2019 in light of the US-China trade dispute. At 17h30, an ounce of spot gold traded at $1 411.28.
Oil
Although oil prices dropped on Friday, they posted a weekly gain ahead of expected OPEC production cuts and the widely anticipated meeting between the US and China on Saturday. At 17h30, a barrel of Brent crude was trading at $66.52
Our daily update
Over the weekend we did a valuation of MultiChoice (MCG) after their latest financial results. Below an extract from the valuation
Well you might be wondering why buy a share when they made a loss. In the group's defence if you strip out the exchange rate losses and the empowerment transaction fees the group would have made a profit of R2.78 billion (or earnings per share of R6.33 a share), which would place the group on PE ratio of 21 and a forward dividend yield of 4.2%. While the PE is well above the market average PE ratio the dividend yield is fairly strong. And as we mentioned in an earlier update on MultiChoice group three big asset management firms in South Africa owns over 20% of the group alone. They are:
So looking past the loss they made in this financial year and focusing on their future and prospects and the underlying results after removing the exchange rate losses and the empowerment transaction cost, what are MultiChoice shares actually worth? Looking at their strong balance sheet and expected dividends to be paid in future, we value the shares at R111.30 a share. We therefore feel the shares are overvalued and we don't share the sentiment and love that some of South Africa's biggest asset managers have for MultiChoice. We just believe that their future is riddled with difficulties from a more ever connected and streamed world. We took this opinion of ours into account when valuing their future cash flows as we believe it will not grow at a particularly fast rate in the next few years and this has affected our valuation. At our current valuation the group will trade at a forward PE of 17.6 (which is more inline with the overall All Share PE ratio and a forward dividend yield of 4.7%. We therefore feel R111.30 is a fair valuation for MultiChoice shares.
Read the full article here
Well you might be wondering why buy a share when they made a loss. In the group's defence if you strip out the exchange rate losses and the empowerment transaction fees the group would have made a profit of R2.78 billion (or earnings per share of R6.33 a share), which would place the group on PE ratio of 21 and a forward dividend yield of 4.2%. While the PE is well above the market average PE ratio the dividend yield is fairly strong. And as we mentioned in an earlier update on MultiChoice group three big asset management firms in South Africa owns over 20% of the group alone. They are:
- Allan Gray: 10%
- Prudential Asset Management: 5.37%
- Coronation: 5.1%
So looking past the loss they made in this financial year and focusing on their future and prospects and the underlying results after removing the exchange rate losses and the empowerment transaction cost, what are MultiChoice shares actually worth? Looking at their strong balance sheet and expected dividends to be paid in future, we value the shares at R111.30 a share. We therefore feel the shares are overvalued and we don't share the sentiment and love that some of South Africa's biggest asset managers have for MultiChoice. We just believe that their future is riddled with difficulties from a more ever connected and streamed world. We took this opinion of ours into account when valuing their future cash flows as we believe it will not grow at a particularly fast rate in the next few years and this has affected our valuation. At our current valuation the group will trade at a forward PE of 17.6 (which is more inline with the overall All Share PE ratio and a forward dividend yield of 4.7%. We therefore feel R111.30 is a fair valuation for MultiChoice shares.
Read the full article here
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.
So after four very positive months on the markets the month of May bucked the trend and saw half the gains made during the first four months of the year on the JSE wiped out in one month. But the JSE All share index rebounded strongly in June 2019 with it ending up a very strong 4.55% for the month. G20 summit taking place is bringing hope to the end of the trade war between the USA and China. And the South African Rand (ZAR) has made a strong come back in recent weeks as the appetite for risk on assets increased.
For more on daily market movements see our 2019 Calendar tracker.
But we as South African investors are losing out in Dollar terms. Largely due to continued Rand weakness not only over the short term but over the last couple of years. We continue to advise investors to take money out of South Africa and invest it offshore. Looking for ideas for investments to make? Go read this article
For more on daily market movements see our 2019 Calendar tracker.
But we as South African investors are losing out in Dollar terms. Largely due to continued Rand weakness not only over the short term but over the last couple of years. We continue to advise investors to take money out of South Africa and invest it offshore. Looking for ideas for investments to make? Go read this article