EasyAssetManagement Insights: Which Shares Are on the Rise?

Join Thulisa Shandu, Junior Portfolio Manager, and Shaun Krom, our CIO at EasyAssetManagement, as they discuss this week's updates on economic events, the South African stock market, movements in the Enhanced Equity Portfolio, currency fluctuations, and upcoming economic events.

Weekly Report

Economic events

Gross foreign exchange reserves in South Africa increased to $62.323 billion in March 2024 from $61.653 billion in the previous month. The increase was mainly due to the sharp increase in gold reserves ($8.912 billion vs $8.18 billion in February). This was slightly countered by the SDR holdings falling off to $6.213 billion from $6.225 billion in February.

Manufacturing production YoY (Feb) was 4.1% highlighting some economic resilience and growth within certain sectors such as food and beverages, wood products and chemical products.

Business Confidence Index remained 114.7 in both February and March. This may be indicating a stabilisation of confidence at a higher level. Ten out of the 14 BCI (Business Confidence Index) subindices either positively contributed to the BCI or remained unchanged month-on-month in March, while four subindices had a negative impact.

Mining Production (Feb) improved from -3.3% the month prior to 9.9%. This growth is mainly due to the considerable output in the iron ore, coal, and chromium ore. Iron ore production contributed 5.1% to the overall increase with increased production of 42.9%. Mineral sales seem to be lukewarm with February seeing a 2.8% y-o-y decrease in mineral sales. However, there were positive movements in iron ore, gold and chromium ore sales.

Recent polls of the 2024 general election may see the ANC receiving less than 50% of the votes which increased the chances of the party to forge alliances with one or more parties thus heightening the risk of policy uncertainty. As a result of this, the South African 10-year bond yield as risen above 11% reflecting investor concerns on the upcoming election.

South Africa Stock Market

JSE All Share Index came at about 75,312 on Friday. The market experienced solid gains from resource linked stocks, especially gold miners. This offset the losses in the financial, industrial and tech sector. The JSE recorded a 0.7% gain this week as the traders await the release of March inflation and retail sales figures scheduled for this week.

Weekly movement in the EasyAssetManagement Enhanced Equity Portfolio

Resource linked stocks seem to be doing well mainly due to the ongoing recovery of commodity prices around the world. For example, the price of copper has risen by over 24% from its lowest point in 2023 which may be an indication that the global economy is bouncing back. Coal seems to also be making a steady recovery as the price of coal has elevated to $121 from the year to date low of $94.

Harmony Gold Mining share price rose over 10% on Friday. The company disclosed a semi dividend of R1.14 an increase from the R0.57 received in the previous semi-annual dividend representing a yield of over 1%.

Glencore share price increased by over 5% on Friday. The company is benefitting in both the increase price of copper and coal. Furthermore, the company is one of the biggest commodity traders with trading profits jumping to over $104 billion in 2023.

Currency
The South African rand reached its lowest in the past 2 weeks trading around R18.90 per USD. This was due to the strengthening of the dollar after the CPI (Consumer Price Index) came in higher than expected decreasing the hopes of the US Federal Reserve Government cutting rates soon. Domestically, due to inflationary pressures and political risks, there aren’t clear signs of monetary policy easing in South Africa and there could be a chance of a 25bps hike at the central bank’s May 30 meeting.

Upcoming Economic Events:

17 April 2024

• Core CPI (MoM) (Mar)
• CPI (YoY) (Mar)
• Core CPI (YoY) (Mar)
• CPI (MoM) (Mar)
• Retail Sales (YoY) (Feb)

Upcoming Earnings:

17 April 2024

• BHP Group Ltd
• Pick n Pay

18 April 2024

• Clicks Group Ltd

19 April 2024

• Harmony Gold Mining Co Ltd
  
  

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