The JSE was one of the few markets that ended last week lower. The Rand strengthened on the back of China being more passive in the “Trade War”. Commodity prices also pulled back last week causing the resources sector to impact the market performance. We’ve given up all the recent gains and back in buying territory.
SA equities are cheap when you compare the median P/E ratio of the All Share Index constituents to previous years. 40% of the JSE now trades at a dividend yield above 4%, almost the highest proportion since 2009.
We have a busy week ahead with several international risk events, namely the Trump – Putin meeting, Fed Chair Powell testifying and inflation figures out from various countries.
Investors should be using the current Rand strength to their advantage and invest offshore. We can assist you if you’d like personal share portfolio offshore. Investors who do not want to risk their investment capital but still want access to international markets and upside growth potential should consider a lower risk structured product or endowment. Below we mention two that look attractive.
The week ahead:
- Local Data: CPI, Retail Sales (18/07); Interest Rate Decision (19/07)
- Results Due: ARA (18/07); GLI (19/07), SBV (20/07)
- LDT (17/07): ACS, AEE, IBRP1, ILRP2, Lew, NEWFSA, NCS, PMV, SHFF, TLM, TFG and various ABSA ETFs.
Last week’s movers and shakers…
Best Performers: SNH 86.8%, TOR 28.8%, PAN 11.5%, HLM 10.6%, DTC 5.1%
Worst Performers: SGL -8.2%, ITU -8.1%, HAR -7.7%, TSX -6.9%, GLN -6.8%
Other Economic data releases of interest…
- Tuesday: CPI (NZL); Monetary Policy Meeting Minutes (AUS); BOE Gov Carney Speaks (UK); Fed Chair Powell Testifies, Building Starts (USA)
- Wednesday: CPI (UK); Fed Chair Powell Testifies, Crude Oil Inventories (USA)
- Thursday: Unemployment Rate (AUS); Retail Sales (UK); Unemployment Rate (USA)
- Friday: CPI, Core Retail Sales (CAN)
Two to BUY
Old Mutual Tandem Protect
Old Mutual have created a successful structured endowment that is unique, as it’s two-pronged approach comprises a cash component and an equity component.
The cash component (50%) provides a guaranteed return of 11.7% compounded annually net of fees for three years where after it pays out. This provides interim liquidity without any penalties applicable.
The other 50% is invested in an equally weighted fund of American and European shares (778 shares in total). You benefit from currency depreciation and are guaranteed to receive your capital back at the very least. Absolutely no risk of loss. You get the full uncapped return of the index at maturity. If the Rand weakens 10% and the fund goes up 20%, you will make 30% total return, but it could be significantly more than that.
Minimum investment R2 million
Momentum Growth Optimiser Plus
This product gives you 100% capital protection, a guaranteed return net fees of 15% while giving you exposure to globally diversified assets. Investors get the potential of enhanced returns but won’t benefit from currency devaluation. This can be invested in through an endowment or your existing retirement savings product. This product has a targeted return of CPI plus 5% and if achieved the guaranteed return of 15% is added to the performance.
Minimum investment is R50,000
Long Term Ideas
- Discovery: Buy below R150.
- Coronation: Bottoming out, buy below R60.00 for a move back to R80
- AB InBev: Place a stop loss at R1,350 to lock in 8% gain. Target remains R1,475.
- ARM: 10% open gain at R121. Hold
- Dischem: Add below R30.00
- Shoprite: Bulls back in control. Hold.
- Aspen: Accumulate on weakness below R260.
- Sygnia: Support building above R10.00. Add
- Santova: Maintain stop loss at R3.10. Hold.
- Merafe: Accumulate below R1.55.
- Jubilee: Speculative buy below R0.50.
- MTN: Accumulate for long term below R110.00.
- Glencore: Still bullish. Hold
- Wescoal: Long term buy. Add below R1.80
- Naspers: Trying to break above R3,500. Hold
Retirement Solutions
Do you have an RA policy? Are you nearing retirement? Do you know how your investments are performing? Are you still paying high fees on your long-term savings?
Prodigy is a leading provider of new generation investment solutions for pre and post retirement. Typically, we can reduce your fees by 60% or more!!
To ensure you have the best solution contact Gavin McCarter to set up a free review. Tel: 011 065 9316, Email: gavin@prodigyam.co.za
