Never let a good crisis go to waste

In this Issue:

 

As Winston Churchill once said “Never let a good crisis go to waste”, we believe investors should be ensuring they have enough exposure to offshore assets that will be a hedge against a “deeper crisis” and should be slowly buying depressed local assets if they have cash on hand. Most investors have been sitting on the sidelines not fully exposed to equities

 

You can’t blame local investors for being in cash, investors are concerned with having all their eggs in the South African basket. The slew of negative data points locally, could be an indication things can get worse before they get better.

And when you add the recent flare up of the trade war by President Trump, asset prices get distorted. South African share prices are going from cheap to cheaper and save haven assets are going from expensive to outrageous. Even Greek 10-year bonds are yielding negative.

 

After two large negative days on the market and it’s difficult to look through the noise. Most people know you can’t ‘perfectly’ time the market, but you can deploy capital at a time when people are panicking the most. This over the long term delivers outperformance.

 

We should see another day or two of big losses so you must fight the urge to buy too much too quickly.

 

Buy Old Mutual as CEO spat affects investor sentiment

 

Old Mutual has been on our radar for a while now and since it’s dropped through the R20 level we’ve been waiting patiently to buy.

 

Its been in the press for all the wrong reasons and investors are gun shy when it comes to companies that have any scandals or allegations. We like to look past the noise and politics to the data.

 

It’s currently trading on a PE below 8 (2019 expected earnings) and 2020 forward PE of 7.04, while its 2020 forward dividend yield is around 7%. Interim results are due on 2 September, which will give an indication on the operational performance of Old Mutual and the board will want to have its CEO issues sorted out by then.

 

Buy OMU below R18.25 for a move above R20.00.

 

New Round of Structured Products Launched

 

We have received the latest terms for a couple structured products launched last week and have compiled a summary. There will be more launching in the next two weeks but below are the top three currently available.

 

These products provide 100% capital guarantees with minimum returns up to 28.9% even if the market is negative over the investment period. Starting investment is R250,000.

Structured Product Summary 22 July 2019

You can access the above structured products through us, chat to Hempas, Roche, Guy or Gavin.

The week ahead:
  • Local: Manufacturing: Business confidence index (07/08); Manufacturing: Production and sales (08/08)
  • Local Results Due: ELI, MRF, SBV (05/08), HLM, NED, NBKP, RBP (06/08), GLN
  • MPT (07/08), ANG, MTN, SBK (08/08), BUC (09/08)
  • International Earnings Results: Walt Disney, Nedbank Group Ltd (06/08); Adidas (08/08)
  • LDT: HDC, TLM (05/08)
Other Economic data releases of interest…
  • Monday: Services PMI (UK); ISM Non-Manufacturing PMI (USA); Unemployment Rate, Inflation Expectations (NZL)
  • Tuesday: Cash Rate, RBA Rate Statement (AUS); German Prelim CPI (EU); FOMC Member Bullard Speaks (USA); Official Cash Rate, RBNZ Monetary Policy Statement, RBNZ Rate Statement (NZL)
  • Wednesday: RBA Assist Gov Bullock Speaks (AUS); Caixin Manufacturing PMI (CNY)
  • Thursday: RBA Gov Lowe Speaks, RBA Monetary Policy Statement (AUS); New Loans, CPI (CNY)
  • Friday: PPI (USA); Unemployment Rate (CAN); GDP, Manufacturing Production (UK)

 

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?

As a leading provider of new generation investment solutions for pre and post retirement, we can reduce your fees by 60% or more!!

To ensure you have the best solution contact Hempas, Roche, Guy or Gavin.

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