You're listening to Strictly Business Podcast with Lindsay Williams. The JSC has closed its doors for another day, so it's time for the five o'clock shadow. And as always on a Wednesday, I speak to Skulk Lowe, Portfolio Manager at PSG Wealth Old Oak in Cape Town. Last week, you weren't here, Skulk, because you had a PSG Wealth conference. Did that go well? Very well. Yeah, no, very, very well.
Very, very enlightening speaking to some of my fellow colleagues and solving some of the world's financial problems. And yeah, that was a very, very, very positive get-together. Yeah, thank you. Very good. Excellent. I won't ask you what conclusions you came to because conclusions are, in my opinion, probably redundant the next day. And this week's markets and the last even 24-hour markets have been... Testament to that statement I've just made.
Oil price, inflation in the United States, S&P 500 down 1.5%. But I want to start in South Africa if I can. Anglo-American platinum. Surely this provides some sort of opportunity somewhere. An extraordinary day for one of our key companies. Bad to worse. I mean, these platinum counts have been under pressure.
You know... you fall out of the you know one of the main index and you get a minus 11 day it's so yeah no it's a it's a toughie it's a toughie but yeah you know to your your original question do i think it's a it's a it's an opportunity yes i do think it's an opportunity i think uh you know these these platinum counters has been under i've been under massive massive pressure already and Yeah, I do think that there's some opportunity when you get a movement, sort of a natural movement.
I mean, this is a lot of fund managers just pre-empting, following an index now, no need to have this share, and sort of pre-empting the move. So, yeah, I think it's an opportunity. Looking at the graph, which I was earlier on with a previous interviewee, 2,250... or something was the closing high a number of years ago. It's currently around about 50, 51.50, let's call it, whatever it is. No, what am I talking about? 2,250 down to 515. Platinum is still needed, I think.
I think people are being too bearish. And it's also caught up in the general malaise when it comes to commodities, oil price in particular, which we'll talk about in a moment. Is it a perfect storm on the downside?
And are people... capitulating and therefore people like you patient people will say now's the opportunity to get in yeah this do attract my interest and i know i mean people say well then let's go out and buy we need to know that there's there's a few things happening in the eye we've had the the the whole ev ev space uh you know on pgms um we've got a global uh economic slowdown um not a real session yet. And it's just sort of bad news upon bad news upon bad news for the PGM counters.
But when I look at a share price, I mean, you just mentioned another 11% down today. That brings the year-to-date performance of this company over 50%. When something loses half of its value, I mean, you looked at the highs. I just looked at January. January. this company lost pretty much another half of its value. So then something do attract me. And I think you might need to be patient, might need to not go in, you know, all in. These encounters are what we call cyclicals.
Yeah, and for good reason. I mean, something that can lose 50% of its value in a few months'time. and then just gain it. That is extremely cyclical and extremely volatile. But yeah, I do think it is something that's always going to be needed. I don't think the EV space is going to be slap bang, there we go, every one of us are going to be driving electric vehicles.
And clearly, the hybrid model is something that's going to be tested for quite some time, which is good for platinum or palladium BGMs. Quite right too. So yeah, it's worth watching, but after a little bit of considered analysis, I would say. I think that's what you're saying here. Have a look at it, but don't get too carried away until the whole Anglo-American unbundling process has been done, don't you think? I mean, that's obviously a cloud in the background and, you know, corporate activity.
That's also a factor, Skark. Yeah, yeah, it's open. I mean, it is. It's an overnight of shares. You know, suddenly, you know, Anglo-American shareholders will have, you know, these Anglo-American platinum shares. And for those, let's call it large investors that might have Impala Platinum, Northern, you know, Sibania, one of those counters, they might look at this and say, well, let's consolidate, you know, sell their platinum, buy some more, some of the other companies. Be there as it may.
I mean, there's a few things. I mean, you just said it. You started off. It's the perfect storm. Do I think it's a bad company, Amplats? No, I think it's one of the best PGM counters in the world. It's one of the largest PGM counters or companies in the world, mines in the world. So, yeah, I think this do open up some opportunities, but it will be first of all for. How do they always say it's not for widows and orphans? Also, Sibanyu Stillwater is not for widows and orphans.
I was just looking at a share price at 2022, I think, under the stewardship of its still CEO, Neil Froneman. 75 rand a share. It's now down to today. What is that, Sibanyu Stillwater? Five and a half percent down to say 14 rand a share, from 75-odd to 14. horrendous destruction of wealth. Yeah, it's sad. It's sad. I think, yeah, what else to say? I mean, you mentioned the value destruction. It's definitely value destruction.
I think there's a few shareholders that would like to go back to early 2022 now and just take those profits where they could run about the 60, 65-rand levels. You talk a lot about property and you've made no secret of the fact that you are long of property stocks on the JSC. Growth Point, you must be interested in those results because they still warn about high interest rates, Gael. What did you make of these results and the commentary associated with those results?
Well, this is the fact that there's been extremely kind to us. I mean, this is something, I mean, you and I have had this conversation. You've done well, let's put it this way. Yeah, yeah, but it's something for good reason. And I don't.
think that the whole all all you know trade is is overall it's called the reason why i am overweight in in property i mean i yesterday i went and uh i updated that uh stats essay sheet now for those listeners let's let's listen to this for the first time this explanation stats as they produce on a monthly basis they will produce different stats on on residential and non-residential properties yeah The one that interests me is the non-residential one, the office space, the shopping centers,
industrial, all the non-residential properties. And what they say, they say there's a stat that they give that says non-residential potential properties completed by the period. Now, what does that mean? It means you drop your plans, you go and build that specific property. There's somebody comes.
comes along and they sign that property off they send it to the municipality and the municipality said that property is completed now when you look at the status this text is phenomenal it's really so interesting looking at the stats when you look at the stats you will see early 2000s you know there was a lot of uncertainty right south africa we had a 1994 the the whole um madiba magic and and then we had a change of god And people were also a little bit worried.
We also had extreme worries globally on recessions. We had worries on wars, geopolitical unrest. Remember, we had 9-11 and after that, it was Afghanistan war and then Iraq war. There was uncertainty. And people during that, I suppose, we had high interest rates and they just did not develop. They didn't develop new properties. And people were looking at this and said, well, yeah, for good reason. But sooner or later, this is going to pass as well.
And then what we're going to have, we're going to sit with a massive demand and not enough stock. There's not going to be enough supply. So you and I had this conversation, I think, a few months, a year ago. And I said, look at this. People are going back to offices. They're going back to shopping centers. This work in your pajamas is gone. Something all. past and yet were they not completing enough offices, they're not completing enough shopping centers, yet the demand is increasing.
Well, surprise, surprise, now we're starting to see it. Now we're seeing, I mean, last night... I was part of a conversation with the CEO of ATT&CK. They brought out their results yesterday, and they exactly had the same story. They bought some properties, and they now clearly can see the demand increasing at a speed of light. What are they doing, though, Scott? Sorry to interrupt. Are they taking old buildings that haven't been occupied?
I mean, for example, the old Cecil building in Rosebank springs to mind years and years ago when they relocated. to Santon, I think it was. Are they taking buildings that used to be offices and up until now have not been offices and saying, rather than build a new one, we're going to completely revamp this one? How do they go about adjusting to the new we're going back to work mode? That's the problem, Lindsay. I mean, they'll need to.
I mean, I'm not going to mention the company's name because I was sort of a... No, no, it's just a conversation we had with some of these, let's call it decision makers. Oh, I see. It's a big, big listed company. And they, during, let's call it two years ago, sort of post-COVID, they literally moved all their smaller branches, moved it into these larger clusters.
And they closed these offices because they said, well, people, they'll… You will work on a Wednesday and on a Friday and your mates next to you, you will work on a Monday. And this is how we're going to do it. Now, everybody's going back to the office and there's just not enough office space. They're frantically looking around and say, well, we need office space. But as you mentioned, the only thing that's currently available is older offices, older buildings.
You know, some of these companies that's held by GrowthPoint, High Props, their tax, these companies. Suddenly, the net asset value of these properties are increasing again, and the yields as well. So do I think the whole property investment play is over in terms of South Africa? No, not at all. I still think the yields are attractive, and our stock is very, very depleted. Quite right, too.
And after the inflation data from the United States, which peaked recently, As Donald Trump keeps on reminding us, he doesn't remind us of the number because he's not clever enough to remember the number, but it was 9.1% CPI in the United States of America. It's fallen today on the CPI announcement from the United States of America, the world's biggest economy, down to 2.5% coming close to target range. And that must be good for global capital markets worldwide, including South Africa.
So very good news there, Skulk.
Yeah. yeah no no that's not not getting close that is bang on target i mean we know that that that pal said he wants to see um inflation back to 2.5 percent weight and it was interesting i i out this morning at this conversation with my team and i said because there's a nice tool the cm cme fed tool where they look at the probabilities of rate cuts and they'll for instance look at the different meetings and this in terms of this one is now the 18th of september then they will look at different
probabilities on will we see a cut, will we see an unchange, and if we see a cut, what's the probability of a quarter percentage, what's the probability of half a percentage? But this morning, as we came in, it stood roundabout. There was a bit of an improvement towards the quarter of a percent, but it stayed more or less the 70% probability for a quarter of a percent and 30% probability. for a half a percent.
And for any non-mathematicians out there, that's pretty much 100% probability for a rate cut next week, Wednesday. This afternoon, I made the comment and said, well, it'll be interesting, although I can pretty much say with 100% probability from my personal opinion that we'll see a quarter of a percent. I think if the inflation rate comes out at...
2.5 percent because remember it was expected 2.6 percent if it comes out 2.5 percent watch how the probability on on a half a percentage suddenly just skyrockets and it just didn't it it it totally different scenario happened it went uh that the quarter percent increased again and now 83 probability for a quarter percent hike and um 17 on on a half percent but to me they're the most surprising that part was that the market's reaction of the inflation came out.
Man, oh man, they're taking an almighty club today. I know, we've got the S&P down, the S&P futures, down one and a half percent, well, down one and a third percent, actually, it's just adjusted itself. But I don't quite understand that. And looking at the US 10-year bond, which we'll come to in a moment, which is totally now, 3.62%. Yeah, but the stock market not taking it well. Maybe the stock market isn't taking it well because of the debate last night. And if Kamala Harris gets in.
Which I really hope, from a personal point of view, and this is not a PSG Wealth point of view, I have to tell you, if she gets in, I'll be very happy. But the stock market won't be. Maybe they're anticipating a victory in two months'time and are positioning themselves accordingly, Skark. I don't know. Did you watch the debate? I've watched it twice. I had clips. I must say, I just did not get myself. I was awake once or twice around about 3 o'clock.
Yeah, I just did not get myself to listen to Trump for the next few hours of that time in the morning. But I did look at a few of the highlights. Yes. I don't know, Lindsay. We can have a massive debate on which one will be best for South Africa, Kamala Harris or Trump. We know Trump won't necessarily be good for emerging markets. So I don't know. It's sort of the lesser of two evils. B, you've got a good point.
I think that could be the But I think the most likely scenario for today's movement, it's just, and yesterday on X, that's the old Twitter, I actually placed a graph, which I looked at the last few times where interest rates were cut, where the declining phase started. And I just mentioned, I didn't make a... I didn't make a prediction. I didn't say this is going to happen.
All I said, if you exclude COVID, which was a sort of a very, very unique situation, if you exclude COVID, you're sitting with 2001 and 2007.
When they actually stopped the hiking phase for that, let's call it a few months, we had one of the best... bull phase because everyone was expecting the next step to be interest rate being you know a a cut and that should be good for for you know equities so there was sort of this was it as the rumor go by and rumor sell on fact was the anticipation of the rate cuts were way better than the actual rate cuts because when you look at the rate cuts itself um and
you look at the after effect you would see that with 2001, where the rate cut actually started, market dropped 32%. With the world financial crisis, where the rate cut actually started, the S&P 500 dropped 41%. Yeah, but there was extraneous factors there. I mean, people were still digesting the global financial crisis, and it took a while for the cheaper money phase to kick in. And that is my analysis, very simple as it is.
But this time, Skunk, it could be a shallow recession, as indicated by the oil price. It could be a short, sharp recession, as indicated by Chinese and American data. But the fact is that interest rates, medium term, on the downside, is good for equity markets. Undoubtedly. So this is the Skunk point of view. I mean, I'm just, I put the graph out. So declining interest rates will be good.
And I do think that the way Powell handled this, I mean, I often said that they, you know, inflation, interest rate won't really make a massive effect. We can debate that. But I think the fact that they are really, really conservative in the way they're doing, they are waiting for this 2.5%. Well, we're there now. They are going to most probably do a quarter of a percentage, do another quarter of a percentage, and just get the market to settle.
And like you said, what you've actually told us is a soft landing. We will most probably then see a soft landing. I think so. I mean, the China news is baked in already. American jobs and growth sluggishness, not so much growth but jobs, it's part of the cycle. But it's not going to be. Dramatic. Maybe a quick one on Supergroup. I don't know if you've watched that one, but it's numbers. A quick minute on that one, if you've got it. If not, then we'll pass on to the markets.
Yeah, Supergroup, I'd add a quick glance on Supergroup. You know, when I look at this, you know, they've grown, they've revenue, that didn't look too bad. When we look at, you know, the earnings.
earnings decrease by 97 percent and there goes the share price share price down down seven percent um so yeah not not not a not a good i mean when we look at the the um you know the positives out there they actually said um that the the weakening rant um you know that helped them well we know that's not going to be the case now because we see the rant actually improving um Yeah, so I think in general, not the best set of results in terms of how they manage the company over the time.
But as I mentioned, not a company that I'm really following. Okay, good. Well said. Right, now let's have a look at the markets. Dollar Rand, 1793. British pound against the Rand is 2335. The Euro Rand is 1974. Euro dollar, 11010. And the British pound against the US dollar is 130, almost on the nose. Gold price, that's okay. Back above 2,500, which is gratifying because it wasn't so a couple of days ago. 2,512, which has barely changed on the day.
Platinum, 9.59, which is up 19. And Palladium up 39 to 9.99. Call the police in England. And that's a 4% move to the upside. When it comes to other commodities, and I've been fascinated by it all over the last 10 days, it's gone from 90 to below 70 this year. Which is a huge move. So I think at the current level for Brent crude of $69.45, we are technically in a bear crude oil market. It's up slightly today by 0.4%, but it's still $69.45 for Brent crude.
And West Texas crude $66.27, up 0.8% today, but a horrible weekly and monthly and yearly performance. Natural gas is up a little bit. Copper is up a little bit, but nothing else to speak of. So look at the South African 10-year. Don't forget we've got a Reserve Bank meeting next week, 9-17. The US 10-year, after that inflation data of 2.5%, the CPI 3.63%, which is a pretty good move to the downside for the yield. S&P 500 futures. We're recovering a bit actually.
They were down over 1.5%, down 1.2% at the moment at 5,438. And Bitcoin is 56,100 and a bit, which is down 1.3%. Market moves today, Scalp. You show me yours, I'll show you mine. Do I go first? I told you, you show me yours first and then I'll... Well, we had M-Plats, which we've already discussed. A few companies did stand out in terms of well, when I say a few companies, a massive, massive list in terms of ex-debt.
So, you know, ItalTal might probably stand out as a drop, but they had a dividend and a special dividend. Super Group, we've already discussed.
Coronation, they also had a ex-div so you know sabania still watered no ex-div so yeah and apps are again negative you know five percent ex-div story so today would most people be one of those days if you see a massive drop in the share price you would most probably need to go and look at the dividends yeah so the ones that have fallen on merit or rather demerit and sabania down 5.3 percent anglo-american platinum down 11.1 percent corporate activity of course involved there you
but people just don't like it and i love it when people don't like things because that means that i start to get interested and like it 507 rand per share quite extraordinary it was a buy i think it is this is not a recommendation from either skunk at psg wealth or lindsey williams from wherever he is no it's it's not i don't own it either but it really looks in my virtual portfolio as though i should be buying it on the upside Property, Hyprop up 3.5%, Kumbayanoor up 2.9%,
Premier up 2.6%, Mass, another property company, up 1.5%, and Vukile up 1.4% as well. Closing indices, please, Skull, and value traded, of course. So just for those wondering what the whole Hyprop story is, they came out with a trading statement today.
Yeah. Clearly had the market, you know, quite... quite excited um they they mentioned the dividend per share you know for approximately two rand 80 um and yeah like mentioned that that definitely had the market quite quite excited when we look at the jse today jse closed 80 828 points that is down one percent top 40 close 73 223 points also down 1.1 percent resources they um at a very very bad day 1.2 down but not the worst the worst came from the financial sector safe financial
sector were down 1.6 percent while the industrial sector were down 41 basis point and this is sort of a trend that we've been been getting used to because as mentioned in end of end of last month the the is a property index where we're up over one year, over 38% year-to-date, close to 24% up. And since then, we've seen that the equity market or locals, as well as the offshore equity market, has given back quite a bit of performance that they made in
August. Yet, the property sector, just going from strength to strength. And today was no different. Today, they closed up 30%. 39 basis points in the market that were really looking bad. When we look at the value traded, value traded, not too bad, 23 billion for today. Very good. Yeah, the highest trading day for the past week. You can interpret that in a couple of ways. But yeah, 23 billion, pretty good.
Next week, we'll look at the JSC Limited, what its share price is doing, which is also a fascinating subject in its own right. Skulk, thank you very much for your time this evening. Skulk Lowe is a portfolio manager at... PSG Wealth Old Oak in Cape Town and that was the five o'clock shadow.
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