The Money Show | Views on Market Performance and Key Financial Results

This week on 702’s The Money Show, Arthur Karas talked about mining stocks, currency trends, the performance of specific companies, and provided insights into the current economic landscape. Markets have experienced a 1% decline for the month, while mining stocks saw some rebound due to several factors. Prosus and Naspers showed positive performance in the market, suggesting that improvements in China's economic activity could benefit these companies. Weakness in emerging market currencies is attributed to the expectation of higher US interest rates, making holding dollars more attractive to investors. 

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Chapters

• 0:21 Arthur Karas reflects on markets being down for the month, with a bounce in mining stocks
• 1:59 Why have we seen a better currency today?
• 3:03 Discussing results from Bell Equipment
• 3:48 Discussing results from Sun International

Transcript

The Money Show  00:00

The Money Show with Motheo Khoaripe standing in for Bruce Whitfield, is brought to you by Absa Business Banking. With green asset finance solutions to keep your business powered up and operational. Absa is an authorized FSP and a registered credit provider. T's and C's apply. The Money Show, the markets.

Motheo Khoaripe  00:21

At 24 minutes past 6, joining me now is the Portfolio Manager at MacroSolutions at Old Mutual Investment Group, that's Arthur Karas. Arthur, a very good evening, and welcome to the show. We'll start with reflecting on the fact that the markets are down, what 1% for the month? And we've seen a bounce on the stocks, particularly in mining.

Arthur Karas  00:42

Yes, we had quite a rough start to the month. As you mentioned, the market's off about 1% even after today's recovery. And I think particularly weak have been some of the mining stocks, especially the platinum stocks. Impala Platinum as an example, down about 12% for the month. Down 45% in the last three months. Sox, bit of a rebound from them on the back of some talk from Janet Yellen, hinting that she thinks that the US could see a soft landing, as well as a PPI number from China that suggests that things could be bottoming out there and they could be getting to the bottom of the trough economically, and that's made people a bit more positive about mining stocks on the day.

Motheo Khoaripe  01:26

It's not just mining, of course, that's doing well. Prosus and Naspers particularly doing quite well in the markets today as well.

Arthur Karas  01:33

Yes, and I think with a stronger currency, that's also a good sign. I think that, you know, the same factors that would make people positive about China in general would also have an impact on the valuation of Tencent, even though they've had a, I think it's quite a soft day today. But I think on the whole, that will also benefit from improvement in China, because you'd expect them to benefit from economic activity in general and advertising in particular.

Motheo Khoaripe  01:59

Why have we seen a better currency today?

Arthur Karas  02:04

Well, we had a very tough week for currencies last week. I think it's the emerging market currencies last week, I think especially on the back of a stronger US dollar, an expectation that US rates will hold up higher for longer, if you can earn more money in dollars, you'd prefer to do that rather than have to take the risk of moving your money to emerging market currencies to earn higher rates. So, while investors believe that US rates are going to be higher for longer, that weighs on emerging market currencies. We also had one of the largest global stockbrokers coming out with a report last week, saying that they thought that emerging market currencies would be weak for some time, and I think that weighed on that last week as well. So, we're seeing a little bit of a recovery there with the economic news that we heard, and also just simply, you know, markets are weak one week, they tend to strengthen a bit the next week, absolutely.

Motheo Khoaripe  02:54

18.86 is the amount of rounds you'll need to purchase $1 at the moment. We've had not one but two sets of financial results today.

Arthur Karas  03:03

Yes, we've had a few sets of results. I think both were very interesting in the background of the weak South African economy that we're talking about. So, we had a result from Bell Equipment which manufactures earthmoving equipment, which goes into agriculture and mining. Very strong results from them, profits up some 60%. So, that tells us that the miners active, they're busy moving things around, and they're needing to buy new equipment. They're quite upbeat about the future as well, they're investing in new capacity, and making sure that they can produce more metal. And that's led to them putting quite a bit of money, a couple of billion into working capital to ensure that they're in a position to do that going forward. 

Arthur Karas  03:48

The other results out of Sun International. So, when we think about Sun International, often we think about the hotels, but it's actually gaming that makes up some 78% of their profits. And that held up surprisingly well. So, about 4% up for the casino's business, which given how weak everyone believes the economy is, I think it's quite a credible result. Strong results from the hotels, those are recovering, both as leisure travel and business travel recovers. And the big, interesting number in those results, it's been a small contributor to their profits, but their online gaming business, that is up some 500% in terms of profits. So, it shows that that is a strong growth sector even in a country like South Africa with limited online penetration.

Motheo Khoaripe  04:36

We will be speaking to the Chief Executive of Sun International Group, that's Anthony Leeming, in about five/seven minute's times or so. 5.8 billion, let me repeat: 5.8 billion rand is the group's income for the first half of the financial year, an increase there of 11.7%. Arthur, thank you very, very much for your insights today. Arthur Karas is the Portfolio Manager at MacroSolutions, based of course at the Old Mutual Investment Group. Some of those figures, SunBet growing 138.4% for the period with the adjusted EBITDA  growing by 542% as Arthur alluded to there, from 14 million Rand to 90 million Rand. SunBet also seeing substantial growth in several key performance indicators compared to 2022. The group's urban casinos seeing an income increase of 4.2% with an adjusted EBITDA of 1.1 billion rand. 

The Money Show  05:36

The Money Show with Motheo Khoaripe standing in for Bruce Whitfield was brought to you by Absa Business Banking. With green asset finance to help you invest in solar installations with terms from five to seven years. Absa is an authorized FSP and a registered credit provider. T's and C's apply.