It’s a big week for tech as Amazon, Apple, Meta and Microsoft are all releasing their quarterly results, and it could have a major impact on indexes – as everyone's eyes are on how AI plays are panning out.

Closer to home, we take a good look at the SA retail sector – here’s what you need to know…

Shining some light on 🔦 

• Investments and opportunities in SA’s retail sector

• Record gold performances, AI plays & ETH optimism

• Stock update: Higgo’s Top 10 stock picks for 2024

• Earnings calendar: Who’s reporting on revenue, when

• Income funds as an option for short-term savings

THE SPOTLIGHT

Movement in SA Retail Space

While Sanlam’s latest Financial Confidence Index shows South Africa’s general optimism is at a low, underscored perhaps by recent JSE delistings that include Sasfin Holdings Limited and Bell Equipment, there’s marked optimism in the retail sector.

Here’s what you need to know…

1. Boxer Lists on the JSE

Pick n Pay’s Boxer has made a significant move by listing on the JSE, setting the stage for increased competition with retail giant Shoprite. With its strategic positioning and appeal in the discount retail market, Boxer aims to leverage its JSE listing to expand its footprint and enhance market share.

Their listing marks a major milestone for Boxer and owner Pick n Pay. The only question is whether it will be able to hold its own against Shoprite.

2. Shoprite Seems to Go from Strength to Strength

Shoprite continues to be a standout performer in the South African retail space. The company’s strategic expansion into the Nigerian market, becoming a majority shareholder in Delta, Asaba, and Owerri malls, highlights its growth ambitions and effective management. 

From an investment perspective, Shoprite is priced higher than its peers. Yet its approach and robust management make it a strong long-term investment, expected to deliver sustained growth.

3. Pick n Pay Also Makes Strategic Shifts

Pick n Pay has also recently seen a positive response on the JSE, with shares ticking up following the award of 4 million shares to its CEO as part of a long-term incentive plan. This move signals the company’s commitment to strong leadership and future growth.

In fact, it might well have been the then-impending Boxer listing that drove the positive sentiment.

4. Woolworths Remains an Attractive Investment Option

Not making headlines, though still a favourite for other reasons, Woolworths remains a favourite among SA investors, trading at an attractive valuation with a PE ratio of around 13 and a dividend yield of over 5%. 

This positions Woolworths as a solid investment choice, particularly for those confident in a South African economic recovery. The company's consistent performance and attractive valuation make it a compelling option for building long-term wealth in the retail sector.

Note: This is not financial advice, merely observations. For personalised financial advice, you can book to speak to a financial advisor here (powered by a registered FSP: No. 51310).

STOCKS AND ALL

💰 Record Performance: PAN African Resources reports record gold prices and production levels, highlighting its strong performance amidst a volatile market. At the same time, Anglo American Platinum has also reported strong interim results, underscoring the company's resilient performance in the mining sector.

🛣️ Karooooo Delist: Karooooo Ltd has announced it will terminate its secondary Nasdaq listing, focusing its efforts on primary market operations. This strategic decision aims to streamline the company's financial operations and focus on core markets. Read more

☁️ Cloud Momentum: Despite a recent dip in stock price, Alphabet's Google Cloud division continues to show strong momentum, presenting a potential buying opportunity for investors looking at long-term growth in cloud services.

🔄 AMD's Strategic Positioning: With new strategic acquisitions, AMD is positioning itself as a key player in the AI chip space. The company's upcoming financial results and next-gen chip launch are highly anticipated by investors.

💎 Ether ETF Inflows: The launch of US spot Ether ETFs has seen net inflows of $106 million on the first day, reflecting strong investor interest and confidence in Ethereum-based investment products.

🔋 Investor Confidence: Arcadium Lithium plc sees increased investor confidence, with hedge funds showing a bullish stance on the company's growth potential in the lithium sector.

📉 Tesla's Stock Slide: All eyes are on Tesla as the company’s stock continues to decline as analysts reassess the company's valuation amidst heightened AI expectations.

UPCOMING EARNINGS REPORTS

These companies are expected to deliver earnings reports in the next few weeks:

Your Tax Filing, Sorted

It’s tax season and the FinMeUp team can help you get yours done.

To book our assistance, please reply to this email or connect with us on this WhatsApp link and we’ll be happy to assist.

(Powered by registered FSP: No. 51310).

WEALTH HACKER’S KIT

Short-Term Savings Options: Exploring Income Funds

In the current economic climate, finding the right investment for your short-term savings is crucial. And income funds can be a promising option, often offering better returns compared to traditional savings accounts and money market funds.

Here’s what you need to know…

What are income funds?

Income funds are a type of mutual fund that invests in multiple asset classes, including corporate bonds, government bonds, and sometimes high-yield bonds. The primary goal of these funds is to generate income through interest payments, which are then distributed to investors regularly.

How are they different from money market funds?

While both income funds and money market funds are considered relatively low-risk investments, there are key differences between the two:

• Investment Strategy: Money market funds invest in short-term, high-quality debt securities such as Treasury bills and commercial paper. Income funds, on the other hand, invest in a broader range of bonds, including longer-term and sometimes lower-rated bonds.

• Returns: Income funds generally offer higher returns compared to money market funds because they take on slightly more risk by investing in a wider variety of bonds.

• Risk Level: Money market funds are considered one of the safest investments, almost equivalent to cash. Income funds are riskier, due to the nature of the bonds they invest in, yet they still remain relatively low-risk compared to stocks.

What are the risks with income funds?

Interest Rate Risk: Income funds are sensitive to changes in interest rates. When rates rise, the value of existing bonds falls, which can negatively impact the fund’s performance.

Credit Risk: The risk that bond issuers might default on their payments. Income funds that invest in high-yield or lower-rated bonds are more susceptible to this risk.

And the potential returns?

Higher Potential Returns: Due to their investment in a variety of bonds, including higher-yield options, income funds generally offer better returns than money market funds.

Regular Income: Investors receive regular income distributions, which can be reinvested or used as needed.

Comparing Performance

When comparing the performance of two well-known income funds against two equally popular money market funds in 2023: 

• Income funds have generally outperformed money market funds, offering higher average annual returns.

That said, income funds tend to perform better in a low-interest-rate environment, as they can invest in longer-term and higher-yield bonds, which offer better returns than the short-term securities favoured by money market funds.

THE PEOPLE HAVE SPOKEN

We asked what your go-to industry is for growth, and it’s tech all the way…

🟩🟩🟩🟩🟩🟩 🦾 Definitely technology and blockchain (53%)

⬜️⬜️⬜️⬜️⬜️⬜️ 👠 Retail and fashion are the way (7%)

⬜️⬜️⬜️⬜️⬜️⬜️ 💳 Banking and finance always delivers (0)

🟨🟨⬜️⬜️⬜️⬜️ 🤖 AI and microchips right now (20%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🏗️ Infrastructure and real estate, of course (0)

⬜️⬜️⬜️⬜️⬜️⬜️ 🌾 I like agriculture and development (7%)

🟨⬜️⬜️⬜️⬜️⬜️ 📊 I don’t favour industries, it’s the asset that matters (13%)

What you said…

Indeed, Asethemane, especially now with the AGI narratives, chips and securing energy, hey?

Fantastic, Bob! Yes, it’s maybe a bit too broad to just call it blanket “tech”, but we know in general that’s where a lot of the new innovation lies.

THE UPDATE

Ready for Gold? Hold on, there’s a big update coming your way next week on Wednesday — don’t miss it!