The Confidential Report - March 2025
5 March 2025 By PDSNETAmerica
The chart shows how volatile the market has become since Trump won the election on the 5th of November last year. The S&P500 has been ranging between a low of 5827 on the 10th of January 2025 and a high of 6144, on the 19th of February this year. Consider the chart:
We have tried to keep you up to date with our thinking by publishing tweets, especially at critical turning points. Thus, we tweeted on the 2nd of January 2025 that we believed that the downward trend was over and that we were entering a period of risk-on which would take the market higher. Then on the 24th of February 2025 we tweeted just after the US markets opened that a fall below the critical support level of 6090 would trigger a new correction – which is exactly what happened. We also said in a subsequent tweet that we did not expect the correction to last very long – and Friday’s 1,59% gain may well indicate that it is over, for the time being at least.
Much of the increased volatility must be laid at Trump’s door. His on-again, off-again tariffs, the sweeping, and apparently ill-considered cuts which Elon Musk is making with the Department of Government Efficiency (DOGE) and Trump's controversial stance on the Ukraine war are making investors nervous. Nobody quite knows what he will do next.
In the background, the economy continues to perform relatively well and the driving force behind the continuing bull trend remains intact, but the uncertainty surrounding Trump’s next radical action or announcement is impeding its progress. In our view, once the correction is over the S&P will again be driven to new highs, boosted by the increased productivity flowing from technologies such as AI, humanoid robotics, and the falling cost of renewable energy.
The trade war which the Trump administration has been orchestrating is likely to be costly for Americans as well as the targets of their tariffs. Trump is already talking about the fact that Americans will face some “short-term pain” as the affected countries retaliate against them. It is Economics 101 that free trade between countries benefits everyone and that any interference in the free flow of goods between countries has a direct cost to everyone involved. It also seems unlikely that these actions will do anything to slow down the movement of fentanyl across US borders. Markets initially reacted negatively but have recovered much of what they lost. Trump’s assertion that America’s trading partners owe America “a lot of money” shows a lack of understanding of the basics of international trade and how it works. Notably, Europe has already promised a proportional response to any tariffs that Trump imposes. At the same time, the freeze on US aid to various parts of the world, including South Africa, opens the door for China to increase its support and influence with those countries.
The firing of about 10000 US government employees by Elon Musk’s Department of Government Efficiency (DOGE) has impacted many different areas of the US government from the Departments of Interior, Veteran Affairs, Agriculture, Health and Human Affairs. In addition, about 75 000 employees have taken early retirement packages or voluntary retrenchments. Altogether about 3% of the civilian government employees have left. The question is whether Musk is “cutting into muscle” rather than just eliminating the “fat.” For example, the firing of 3400 employees in the Forest Service comes at a time when California has just experienced the worst forest fires in living memory. Is this wise? There is a groundswell of opposition to Musk and Trump which is expressing itself in protests around the country.
The US jobs report for January 2025 showed that the economy created 143 000 new jobs in the month and that the unemployment rate fell further to 4%. Economists were predicting 175 000 new jobs, following December’s 256 000 jobs, so the figure shows a considerable slow-down. The 4% unemployment rate is a concern and may cause the Federal Reserve Bank’s monetary policy committee (MPC) to slow down the cutting of interest rates even further – but it shows that the economy is firing on all cylinders. It is quite clear that there is no danger of recession, and that the monetary policy committee (MPC) has plenty of latitude to keep rates high for longer.
The US consumer price index (CPI) came in higher than expected in January 2025 at 3% - up from December’s 2,9% and above economists’ expectations of 2,8%. Food, gas (petrol) and housing pushed inflation up to the highest level since May 2024. The increase obviously puts further decreases in interest rates into doubt as the Fed weighs up the “stickiness” of inflation at these levels. Traders are now only expecting a cut in rates in September this year. Core inflation (excluding food and gas) was up 3,3% from December’s 3,2% and rising prices because of Trump’s tariffs could mean that it gets worse before it gets better.
You will also note that since its peak at $479 on 17th December 2024, the price of Tesla shares has been falling steadily. It has so far fallen 38,8% and looks technically very weak. The problem is that Musk is no longer focused on growing his businesses – and some like Tesla are beginning to face very strong competition from Chinese companies like BYD, In our view, Musk has fallen victim to one of the greatest problem facing successful CEOs of listed companies – his own ego. He failed to realise that his success in Tesla and SpaceX and other engineering-based businesses did not automatically mean that he could succeed in a social media business like Twitter. Twitter is quite a different business from anything he has previously engaged in. He does not have the expertise to make it a success. And now that he is involved in government, he is losing both focus and popularity. We see Tesla falling all the way back to where it was before Trump won the election and probably far further. In our view, Musk may not be the world’s richest man for much longer.
Warren Buffett, now 94 years old, is arguably the greatest investor who has ever lived. In his annual letter to shareholders Buffett urged the government to maintain the integrity of the US dollar and to take care of those who “...draw short straws in life.” Notably, his company, Berkshire Hathaway, made a profit of $47,44bn in the year (up 27%) and is currently sitting on a cash pile of $334,2bn. For the past nine quarters the company has sold more stock than it has bought – including a large chunk of its Apple stock. Berkshire Hathaway’s operating profit rose by a massive 71% to $14,5bn in the fourth quarter of last year.
Ukraine
Obviously, now, all eyes are on the peace talks which Trump is organizing. The talks between Russia and America in Saudi Arabia did not include either Ukraine or the European Union – but they gave the Russians the opportunity to make further demands for any peace treaty. Clearly, there can be no peace agreement without the approval of both Europe and Ukraine so leaving them out of the talks in Riyadh seems extraordinary. At the same time Trump has publicly blamed Ukraine for “starting the war” and accused Zelensky of being a “dictator” – both of which are clearly absurd and have been rejected by most commentators and political leaders around the world, including many erstwhile Trump supporters.
What is clear in all this is that the Europeans can no longer rely on American help in supporting Ukraine. In our view, the time has now come for Europe to commit to putting troops on the ground in Ukraine. This may begin with the UK Prime Minister’s and more recently the Turkish president’s announcements that they would commit peace-keeping troops to Ukraine. In our view, one of the European NATO countries will soon go beyond this and decide to provide Ukraine with professional troops to assist in the war against Russia. This will clearly be an escalation, but well justified since Russia has already involved North Korean troops on its side. No doubt, Putin will again threaten NATO with nuclear war, but our information is that Russia’s nuclear capability has been severely degraded by a lack of maintenance and is now very out-of-date. Once Europe commits troops to the fight, Russia’s hopes of winning the war will drop to zero. They simply do not have the military or economic resources to seriously oppose the European countries.
During the war on Ukraine, it is estimated that the Russians have so far lost at least 36500 vehicles and fuel tankers – mainly to Ukraine’s first person-view (FPV) drones. Now there are reports that the Russian army is using donkeys to transport ammunition to the front lines. This shows the extent to which the Russian army has been degraded during the 3 years of this war.
Russian gains in the Donetsk area slowed down in December 2024 and January 2025, probably because of their inability to continue at the same pace. They are, however, still making incremental gains. At the same time, the Ukrainians have made gains in the Kursk area advancing about 5km towards the south and east of the city of Sudzha and are now threatening the Russian supply lines in the area. There can be no doubt that the Ukrainian incursion into the Kursk area and the fact that they are still holding it after 6 months is a major embarrassment for Russia and Putin.
The Russian economy is suffering from the sanctions which have been applied to their oil market. The cost of transporting Russian oil has increased by 50% since December because more than half (265 out of 4350) of their “shadow fleet” of oil tankers have been sanctioned by the US and are unable to operate. Ukrainian intelligence have published an intercepted Russian phone call in which the caller complains that as much as 46% of Russia’s oil refining capacity has been destroyed. Ukraine has made sixty-six successful strikes against Russian oil hubs, military bases, and arms factories in the last 4 months.
President Zelensky has said he is open to Trump’s idea of making a deal for the exploitation of Ukraine’s reserves of titanium, uranium, and other raw materials. However, the public spat between the two leaders where Trump ordered Zelensky to leave the White House does not bode well for such an agreement. The immediate outpouring of support for Zelensky and Ukraine following Trump’s public attack has come from almost every democratic country around the world. At the same time most Americans now reject Trump’s position on Ukraine and Trump’s support has been proportionately reduced. Behind all this, it remains significant that Trump has not yet lifted any of the US sanctions against Russia. His envoy to Ukraine, Keith Kellogg, has also said that Trump is ready to increase sanctions even further. In effect, Trump has removed America from the world stage – and that gap will probably now be filled by other democratic countries.
Through all this political turmoil, it seems probable to us that a deal will be struck sooner or later for a cease fire, if only because both sides are very stretched to the limit and neither really has the resources to continue. To achieve any kind of agreement, both sides will have to make compromises on their demands. Ukraine will obviously have to be given some security guarantees against future Russian aggression. Their strategy appears to be to make a deal now, but without acknowledging Russia’s right to the land it has so far conquered, and then to pursue their objective of getting all the occupied land back at some future date. There can be little doubt that Putin’s image inside Russia has been seriously damaged by this war, and it seems unlikely that he will survive for long after the war ends. Once he is no longer there the way may be open for Ukraine to achieve through pressure and negotiation what they have not been able to achieve on the battlefield.
Political
The last-minute postponing of the budget to 12th March 2025 represents the first really serious disagreement within the government of national unity (GNU) – and so far, it is being managed very well, in our opinion. The ANC has had to come to terms with the uncomfortable fact that it is no longer in exclusive control of the cabinet or the budget. The DA has always opposed tax increases to fund the steady increase in government social expenditure. The need for that increase has been created by the recently agreed 5,5% increase for civil servants and the decision to continue with the social relief of distress (SRD) grant. These costs together with lower tax receipts and the inability of the government to borrow more in the bond market forced Finance Minister Godongwana to propose a 2% increase in VAT to 17%. Obviously, increasing VAT is inflationary and would impact most on poor people making it unacceptable to the DA, despite the proposal that the range of VAT-exempt products be widened. In our view, the disagreement over the budget is healthy and will force the two dominant political parties to come to a compromise. One solution to the problem is to give SARS the resources it needs to go after the R800bn which the SARS commissioner, Edward Kieswetter, says is already owed to the state. If a workable compromise is reached it will signal that the GNU is working well. The governor of the Reserve Bank, Lesetja Kganyago, says that a 2% VAT hike would derail years of steady improvement in the inflation situation in the country.
The medium-term development plan (MTDP) agreed by all the parties in the government of national unity (GNU) excludes any mention of the national health insurance (NHI) in what must be seen as something of a victory for the DA. The plan imagines that growth in South Africa will ultimately reach 5,4% by the year 2029. This is extremely ambitious but could be achieved if Transnet’s logistics problems are solved and there is no significant return to loadshedding. The Minister of Finance, Enoch Godongwana is expected to deliver the postponed budget on 12th March 2024 and apparently will include no funding for the NHI. Clearly, the NHI remains, as it has always been, unaffordable.
The focus of President Ramaphosa’s state of the nation (SONA) speech was local government and South Africa’s 257 municipalities, many of which are bankrupt and very badly mismanaged. Their lack of skills, corruption and wastefulness has resulted in many cases in a lack of service delivery, especially with the provision of water and electricity. Ramaphosa drew attention to the fact that minor roads in many municipal areas are in a bad state of repair. His proposal is that the government of national unity (GNU) works with these municipalities to improve financial management and return them to viability. If this can be achieved, it will be a great boon for the entire country.
The cancellation of American grants for people with AIDS in South Africa will put about 15000 health workers out of work and eliminate treatment for the 5,6 million people with AIDS in this country who receive regular treatment. The draft budget, which was rejected by the DA because of the 2% increase in VAT which the budget proposed, did not include any funding to replace the US grants. Altogether, the grants amounted to about R6,25bn last year. Given the fact that the budget is already very stretched, it seems unlikely that the South African government will be able to fill the gap.
The cost to the country of the ANC’s anti-American stance on various international political issues may now be coming home to roost. These positions have taken many forms over the past few years from membership of BRICS, our position on Ukraine, to our friendship with Russia, and our pro-Palestinian attitude in the Middle East. Trump has singled South Africa out for some harsh treatment including various tariffs and the cancelling of aid programs. We are also waiting to see what will happen to our membership of the African Growth and Opportunity Act (AGOA) legislation which is due for renewal in September. The recent expropriation of land legislation and legislation on basic education is seen by the Trump administration as being anti-Afrikaans. Notably, two of Trump’s recently appointed officials, Treasury Secretary Scott Bessent and Secretary of State Marco Rubio, decided to boycott the G20 meetings held in South Africa due to broader political tensions and disagreements between the US and South Africa. This was seen as an overt political snub.
The decision by Trump to cut off all aid funding to South Africa pending an investigation may also be the price that this country must pay for opposing America in various international arenas under the ANC. The ostensible reason is our land expropriation without compensation policy, but over the years the ANC has opposed America on various foreign policy issues. President Ramaphosa points out that no land has actually yet been confiscated by the government, but the rand initially fell on the news. Trump has a reputation for back-pedalling on some of his pronouncements. For example, after imposing tariffs on Mexico, Canada and China he delayed the implementation of the tariffs by one month for both Mexico and Canada. The problem is that Trump’s investigation could expose South Africa’s dependence on the African Growth and Opportunity Act (AGOA) and its close relationship with BRICS countries like Russia and China. Business Unity South Africa (BUSA) is very worried that we will lose our membership of AGOA when it comes up for review in September this year. About a quarter of our exports to America worth about $3,6bn would be affected. Gwede Mantashe, the Minister of Minerals and Energy says that South Africa could retaliate by withholding minerals from America. In the meantime, President Ramaphosa has met with Elon Musk to discuss the misconception that there have been land grabs in South Africa and that white people are being discriminated against.
Economy
Average take home pay, as measured by BankServ increased by 16,3% to just over R18000 in January 2025. The BankServ index is based on an average of 4 million South African salary earners. The increase is especially important because of the falling inflation rate in recent months. The headline consumer price index (CPI) came in at 4,4% in 2024 so real take home pay increased substantially. So far, the monetary policy committee (MPC) has reduced interest rates by a total of 75 basis points in this cycle and there is speculation about when the next rate cut will come. The 2-pot retirement system has resulted in about R44bn being added to the economy. We are expecting GDP growth to come in at 2% or more this year.
The DebtBusters index of consumer debt for the final quarter of 2024 shows that between 2016 and 2024 inflation had eroded the purchasing power of its clients by 44% against a growth in incomes of 2% - leading to a 42% drop in their ability to cope financially. The index shows that of the people seeking debt counselling 82% had some sort of personal loan and half had a one-month loan to get them through the month. This shows how unsecured lending has become a feature of the SA economy. Unsecured debt was 29% higher than in 2016. As much as 68% of take-home pay is being spent on servicing debt.
The consumer price index (CPI) rose to 3,2% in January 2025 compared to December’s figure of 3%. The level of inflation is now lower than the average growth in salaries and wages making consumers better off in real terms. The rise in the CPI was mostly a result of base effects, because inflationary pressures remain very low. A year ago, inflation was 5,6% - more than 2% higher than it is now which shows that the Reserve Bank has been very successful in managing prices in the economy. Lesetja Kganyago, governor of the Reserve Bank has indicated concern about the inflationary impact of the Trump administrations tariff policies and the possibility of a trade war. Aside from this, there doesn’t appear to be any good reason why interest rates should not come down.
The producer price index (PPI) increased by 1,1% in the year to the end of January 2025 – up from the 0,7% increase in December last year. This was mainly because of a 4,4% increase in the cost of the food, beverages and tobacco category as a result of the rise in international food prices. Fruit and vegetables rose by 9,4% over the year while grains increased by 5,9% and dairy products by 3,8%. The cost of electricity and water increased by 10%. The rise in the PPI feeds through to the consumer price index (CPI) over time but at the moment both indexes are at historically low levels.
The official unemployment rate fell to 31,9% in the last quarter of 2024 with 132000 jobs created. Notably, the Western Cape has a significantly lower unemployment rate at 24,8% than any other province. The next nearest province is the Northern Cape with 39,7%. The statistics show that the informal sector employs almost 20% of all people with a job in South Africa, but this an estimate since the informal sector does not submit any returns. In our view the informal sector employs a far greater percentage of people in this country. Unemployment among people aged between 15 and 24 years old was almost 60% while those between 25 and 34 years had an unemployment rate of almost 40%. From a racial perspective, only 6,7% of white people were unemployed compared with 14% for Indians and Asians, 22,3% for coloureds and 35,8% for Africans. In our view, the informal sector employs far more African people than are reflected in these official statistics. Despite this, unemployment remains unacceptably high, resulting in a multitude of social problems such as increased crime rates.
The South African Chamber of Commerce and Industry’s (SACCI) business confidence index in January 2025 was 120 – substantially better than the reading in May last year - indicating that businesses were doing better in the absence of loadshedding and with lower fuel costs. Issues which might cause problems in the GNU are a negative, but most believe that these will be settled without the GNU falling apart. The mining industry has noticed an improvement in the business environment since the advent of the GNU and its relationship with government. This is encouraging foreign direct investment (FDI).
The Standard & Poors (S&P) purchasing managers index (PMI) fell sharply in January 2025 to 47,4 – down from December 2024’s figure of 49,9 – and indicating a contraction in the economy. S&P said the contraction was due to low client demand and a consequent drop in new business volumes. Export orders also fell for the fifth month in a row. There were cut-backs in staffing levels, especially in the construction and service sectors of the economy. All in all, it looks like a slow start to the year for the economy. At the same time, the ABSA purchasing managers index (PMI) came in at 45,3 in January 2025 – down 0,9 from December 2024 – indicating that manufacturing is contracting at least in the short term. New sales orders were up but this gain was negated by the prospect of ArcelorMittal’s closure of its long steel plant, difficulties in exporting through Moçambique and a further increase in fuel costs. In our view, despite the falling PMIs, the underlying trend in the economy is still improving due to the improved loadshedding situation and positivity around the government of national unity (GNU).
The World Bank is predicting that GDP growth in South Africa will be 1,8% in 2025. This compares with Bank of America which is predicting growth of 1,6% and Old Mutual which predicts that growth could be more than 2% given the structural reforms which have been introduced. PwC is predicting growth of between 0,5% and 1,3% due to the many uncertainties facing the economy. The ten months without loadshedding which Eskom has managed is a major factor in these predictions. Improvements in port and rail logistics are also a factor. The low level of inflation is a major positive while the high levels of government debt are a problem. The World Bank now cites climate change as a major threat to economic growth.
One of the key elements of the revised budget must be further support for Transnet. The rail and port operator received a R47bn guarantee in December 2023, but now needs additional funds either as a loan or as an equity injection. Like Eskom, Transnet is too vital to the South African economy to be allowed to fail. It fulfils a critical role in transporting raw materials to port for export. Obviously, Finance Minister, Enoch Godongwana does not want to increase the size of the government debt, but in this case it would be penny-wise and pound-foolish to deny Transnet further support. Transnet has said that it needs about R70bn more over the next five years to upgrade its rail and port services.
Transnet’s logistics problems are estimated to cost the country roughly R1bn per day in lost exports and trade opportunities. Delays at the ports and problems transporting goods by rail severely impede South Africa’s ability to export especially raw materials. Cargo has to be diverted resulting in raised costs for business which often makes exported products unprofitable. Total trade in 2023 was just over R4 trillion while 2024 only had R3,87 trillion in trade (the total of imports plus exports) – a fall of nearly 4%. Obviously, the effect of inflation on prices adds to this figure. The impact of supply chain problems cascades down through the economy negatively affecting almost every sector. Port congestion results in goods being held up in ports like Cape Town and Durban for an average of four days.
A 20,8% decline in motor manufacturing and a 6% decline in iron and steel production brought the manufacturing output figure down 1,2% in December 2024, compared with December 2023. Parts and accessories fell 25% in December and 48,8% over the whole year. The pressure came from the subdued local economy and lower activity levels internationally. Both export and domestic sales of new motor vehicles have been down and confidence among vehicle dealers is at a low point. Six out of the ten manufacturing sectors were in decline.
The news that Mahindra, the Indian car manufacturer, is investigating the feasibility of manufacturing vehicles in South Africa shows that the Indian company has reached a sales level where simply importing kits and assembling is insufficient to meet demand for its vehicles. It also shows Mahindra regards South Africa as a potentially solid investment despite its political uncertainty. The plan envisages the manufacture of electric vehicles (EV) as well. Obviously, if they actually do begin manufacturing they will employ thousands of people here and give the established local brands like Toyota even more competition.
The latest estimates coming out of the agricultural sector indicate that South Africa’s production of grains and oil seed declined by 23% to 15,4m tons in the 2023/24 year – mainly because of the mid-season drought which the country experienced. These figures obscure a greater problem because millions of destitute families in South Africa rely on growing a few acres of maize to eke out sufficient food to get through the year. These families will now be thrown into abject poverty and will have to rely on various aid organisations and government subsidies.
The decision by the National Energy Regulator (NERSA) to allow Eskom to increase its prices by 12,7% is patently absurd. About 80% of the energy that Eskom produces comes from coal-fired power stations and the price of coal has dropped 76% in the past 18 months from $439 in September 2022 to $103.50 in February 2025. The price increase appears completely inexplicable in the face of this fact. It would be interesting to hear how exactly the Eskom board managed to convince NERSA of the need for a price increase which is more than three times the current inflation rate.
Bitcoin
The Trump victory at the election in November 2024 resulted in a surge of enthusiasm for Bitcoin, accompanied by some wild predictions of the value doubling, tripling or more. However, in the intervening months, and especially since Trump took office it has become apparent that the run up in the Bitcoin price to above $100000 was excessive and the smart money has been steadily selling out.
This has manifested in one of the most bearish charting formations in technical analysis – the descending triple top – which came to a head on 25th February 2025 when the cryptocurrency crashed down through its previous cycle low at $91847 made on 13th January 2025. Consider the chart:
Because crypto currencies have no fundamental value, the only way to evaluate them is technically. Their value is entirely based on people’s perceptions. In other words, they have value only because people think they have value. As soon as those perceptions change their value evaporates immediately.
Our advice remains the same as always – if you have them, sell them, if you don’t have them, don’t buy them.
The Rand
The initial impact of the Trump presidency has been bad for the rand, but over the past month, the rand has held its ground against the US dollar indicating that the effect of his radical pronouncements may have passed its worst and stabilised. As one of the most heavily traded and liquid emerging market currencies the rand often reflects the general investor attitude towards emerging markets. The isolationist policies being pursued by the current US administration imply that South Africa and many other countries may have to look for alternative markets for some of their exports. There will, of course, be a cost – there always is with any policy that works against free trade between economies – but the cost will probably not be very great for us. Consider the chart:
Commodities
STEEL
The 250% increase in Eskom’s cost of electricity since 2010 combined with government mismanagement are likely to result in the closure of ArcelorMittal’s Newcastle long steel plant. About 25000 jobs have been lost in the steel industry since 2009. South Africa produces iron ore locally and so should have a significant advantage in the production of steel, but imports of cheap steel have been rising steadily by about 11% per annum since 2005. Steel is a high bulk relatively low value product and so the cost of transporting steel to South Africa should give the country a big advantage – and yet we are still unable to compete mainly because of the extraordinary cost of electricity. Knock-on effects of Eskom’s disastrous inefficiency and mismanagement are being felt throughout the economy.
OIL
Oil remains the world’s most important energy source and hence its price directly impacts the inflation rates and growth prospects of every country. Gradually, as internal combustion engines give way to electric vehicles and their source of power derives increasingly from renewables, and especially solar, the demand for oil will decrease. This trend will increase the profits of almost every business, large or small – with a commensurate impact on equity markets. The chart of North Sea Brent oil shows that the price is hovering just a dollar above its long-term support level at $72:
The chart shows that the downward trend in Brent has accelerated in recent weeks suggesting a further downward break. The upper trendline shows a series of declining tops. If the support at $72 is convincingly broken, and especially if the September 2024 low at $70 is broken, we can expect oil to drop precipitously. That would be good for world inflation and bad for the Russian economy.
Companies
In recent weeks, the JSE has been making a series of new record highs, in line with Wall Street, and like Wall Street it is currently experiencing a correction. Consider the chart of the JSE Overall Index:
Here you can see that the JSE has followed Wall Street down in the latest correction last week. It has not fallen as far as the S&P500, and we believe it will recover relatively quickly.
As you can see the JSE Overall index was in what is known as a broadening formation between an upper resistance line at 87644 and a descending lower trendline. It had broken up out of that broadening formation on 2nd February 2025 and made a series of new record highs before following the S&P down.
We expect it to recover as Wall Street recovers – probably more quickly.
DISCOVERY (DSY)
Discovery was developed by its CEO, Adrian Gore, to offer A/B income group people a range of financial services which began with medical aid and has now branched out into banking. The company’s Vitality concept has proved popular both inside South Africa and overseas. The platform tracks their customers' activities and 50 biometric measurements to reward customers for good behaviours. The concept has also taken off in the UK, China, Europe and America. On 20th August 2002, you could have bought Discovery shares for 590c. They closed on Friday at 20694c. We have always said that this share should be part of every private investor’s portfolio and should be accumulated on weakness. Consider the chart:
As you can see here we added Discovery to the Winning Shares List (WSL) on 1st August 2024 at a price of 14280c and it has since risen by 44,9% in seven and a half months.
BLUETEL (BLU)
Bluetel is a company which specialises in consumer expenses like prepaid electricity, ticketing, starter packs and universal vouchers. These are good debit order businesses which produce a considerable amount of passive income and do not require any significant investment in capital equipment. In September 2016, the company made a terrible mistake by buying 45% of Cell-C, pushing its debt levels too high. At one point the company’s debt was three times its market capitalisation. Eventually, in September 2022, Cell-C was recapitalised and the Bluetel share price began to rise. We originally advised waiting for the share to break up through its long-term downward trendline – which happened on 29th February 2024 at 360c. We subsequently added Bluetel to the Winning Shares List (WSL) on 23-1-25 at 610c and it has since risen to 757c. Consider the chart:
We believe that this share will continue to perform well in the future.
OUTSURANCE (OUT)
OUTsurance is what is left of Rand Merchant Insurance (RMI) after it unbundled Discovery and Mommet. In this form the company has been listed on the JSE since April 2023 and it has shown itself to be a solid blue chip share. The company has gained an edge in the insurance industry by marketing on the basis that customers “always get something out” – in the form of a no-claim bonuses. This strategy, although not new to the insurance industry, has proven to be very effective. Technically, the share has been in a strong upward trend. We added OUTsurance to the Winning Shares List (WSL) on 16th June 2024 at a price of 4457c. It has subsequently risen to last Friday’s close of 7138c – a gain of 60% in under 8 months. Consider the chart:
In our view, this share is a solid blue chip company which should be included in every portfolio and bought on any weakness.
NAMPAK (NPK)
Nampak is a packaging company with extensive overseas interests. It also operates in 10 other African countries aside from South Africa. Its packaging products are divided into plastics, metals, paper and glass with the emphasis on metals and the production of various types of beverage cans. In the year to 30th September 2024 the company recorded headline earnings per share (HEPS) of 3361.1c compared to a loss of 39004.6c in the previous year – so this share is benefiting from the company’s turnaround strategy which appears to be working well. This turnaround began with its sale of Bevcan in Nigeria for $68,5m in May last year. Consider the chart:
We added it to the Winning Shares List (WSL) on 20th June 2024 at R228 per share. It closed last Friday at 42249c - a gain of 85% in just over 8 months. In our view, this is a company which will benefit from further growth in the South African economy as a result of the end of loadshedding and the appointment of the government of national unity (GNU).
QUILTER (QLT)
Quilter is a UK-based financial services group spun out of Old Mutual and trading its shares on the London Stock Exchange (LSE). On 31st December 2024 the company had GBP119,4bn (R2,8 trillion) under management – which makes it truly enormous in the context of the JSE. In a trading statement for the 4th quarter of 2024 the company said, “Core fourth quarter net inflows of £1,960 million represented 7% of opening AuMA on an annualised basis (Q4 2023: 1%). Fourth quarter net inflows were 30% higher than the then record third quarter 2024 level and significantly ahead of the first half 2024 quarterly run-rate.” Consider the chart:
As you can see this is a massive blue chip rand hedge located in the UK and which is growing strongly. We added it to the Winning Shares List (WSL) on 21st November 2023 at 2154c. Over the past 15 months it has been climbing steadily, and it closed on Friday at 3500c – a gain of almost 50% per annum. This is a low-risk solid investment with a good future.
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All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.
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