You're listening to Strictly Business Podcast with Lindsay Williams.
JSC has closed its doors for another day, so it's time for the five o'clock shadow.
And as always on a Wednesday, I speak to Scott Clow, Portfolio Manager at PSG
Wealth Old Oak in Cape Town.
I was thinking about it this morning, actually, and I thought, Lindsay, you
shouldn't be greedy.
You've had a war, and as a newshound, a war is a horrible thing to say.
But it provides a lot of news.
I'd rather not have the war and not have the news and be bored.
But I do enjoy some bad news and some market-stirring stuff.
I'm sitting here today and I'm thinking the gold price has done this over the last
few years.
The PGMs have done this.
Oil has done that and everything.
And I think to myself, where are we now?
Where are we with interest rates?
Are we going into stagflation?
Will there be a recession?
All those things have gone through my head pre- talking to you.
So you're going to get the brunt of it, unfortunately.
You're going to have to tell me all the answers to those questions.
Don't you feel like that?
Where to next?
So all in less than 20 minutes.
So there we go.
19 now.
Okay.
So the short answer is, I actually got a, it was part of an interview this
afternoon,
and the commentator asked me specifically, and the question was,
I can't He phrased it exactly, but he said,
so there's some people of the opinion that the rent is going to
skyrocket over the next few days or months.
When you say skyrocket, you mean skyrocket?
Exactly.
What does that mean?
Does it mean it goes to 20 or it goes to 13.50?
Yes.
Some people say if the rent skyrockets, it goes back to 19, whereas I would say it
goes to 12.50 because that means it's going up.
I'm in your camp I'm in your camp so I had to ask him exactly the question you know
what are we
because if we had this conversation two weeks ago we would have naturally accepted
the fact that
Skyrocket means it's going back to
14 Rand or 13 Rand to the dollar but now suddenly we're sitting in a war
environment where people say it's going to
Skyrocket you need to ask the question and funny enough it was in actual fact they
were they were Thank you.
But this specific commentator, we're referring to people talking about the rent
now going back to 1920,
20 rands of the dollar.
And how things could change in literally two weeks.
And the thing that made it change was this war.
So the thing is now to expect, we need to expect the unexpected.
It's like a stupid phrase.
But effectively, this could go left and right.
If we sit with a scenario.
that the straight stay is closed,
that the war is a prolonged war and it's going to continue for months or even
years,
then don't be surprised if a repeat of what we've seen in the World Prize two
days ago is sort of
that's the new norm.
Because now they're talking and say, well, this troubling scenario put us in an
environment where they need to open up
some new taps.
They need to.
now go into the oil reserves and make sure that they bring some stability by
pumping the most amount of reserves since, what was it, when the Ukraine, well,
it's even more than when the Ukraine and Russia war started.
If we see the oil price continue to weaken and weaken even further, then yes,
you will pay more for your petrol or your gas.
depending on where you stay in the world.
Strengthen, you mean?
You said weaken.
No, you will pay more if it strengthens.
If the world price, I see the world price going from
$70 to $120 as way weaker.
But I know what you mean.
Yes, yes, okay, I see what you mean.
But we are, you know, the new normal is not $120 a barrel yet.
That really depends.
But I'm looking at a graph now, Skok, of Brent crude oil.
And if we go back to...
If we go back to, let's say, May 2025, April 2025,
it's about a year ago.
About a year ago, it was, where was that, a goat lying along there, $70 a barrel.
And in March of this year, it was $70 a barrel.
So it's essentially gone sideways to slightly lower, actually, because it did
dip to $60.
But let's say it's gone sideways.
It went to $119.50 and it's now $91.50, let's say that.
I don't see it coming back below 80 while there's still a little bit of a scuffle
going on in the Middle East.
I'm not being disrespectful about the war here.
I'm just saying.
I think we've gone up to the next leg.
And how does the world cope with oil at these prices?
It's got to have an effect.
It's not going to have an effect on today's CPI in the United States.
We've seen that.
But it is having an effect in the future, don't you think?
And that changes everything to me.
Definitely.
No, no, definitely.
Because it's the ripple effect.
I mean, that same growth that you took, I mean, that...
period between, let's call it March last year and just before the war started,
it was one of the lowest levels that we've seen the oil price stabilize in years.
I mean, we've only really seen it lower in COVID.
But after the Ukraine-Russia war broke out,
the oil price also went to $120, $125 per barrel.
And then after people got used to the Funny how we should get used to wars,
but when people got used to the war and see all that stuff,
it actually sort of averaged out around about the $85 per barrel.
So what we've seen over the past year was sort of great.
So I agree with you that these newer normals is going to be higher oil price.
But what's that going to affect?
We've already seen today the likes of Astral's coming out to say, well,
it's been a great, great year because we came off.
fairly high maize prices and soybean prices in
2024-25.
That came off quite a bit.
So that was good.
Plus, we had a much stronger RAND.
So that was good.
So already one company is talking about the effect.
And now they say, well, if the oil price stays at these current levels,
the petrol price is going to be… getting a product from point A to point B is just
going to cost way more.
But also add to that, you know, most of these fertilizer things which these
farmers use,
you come out of that Middle East, Eastern region.
So that's going to kick up prices.
So you mentioned the stagflation.
You know, this is a conversation we've had many, many times.
I can't see that, firstly, this war or a prolonged war.
will not have an inflationary effect.
In actual fact, I think it could have quite a serious inflationary effect.
I think so too.
And the other thing that people keep on talking about, and it's a phrase I don't
like to use because it's overused, they keep on saying boots on the ground,
which is troops, in other words.
Yes.
And they haven't ruled it out.
If that happens, then it's all bets off about the war stopping.
As soon as you get troops on the ground in Iran, then it's like an Afghanistan
situation.
And it's horrible, Skulk.
truly horrible afghanistan doesn't produce oil it produces poppies yeah opium poppies
it's as simple as
that but it's iran is so important and one thing that hasn't happened yet is there's
an island called karg
island which
is close to the strait of hormuz it's where the iranian oil
refining facility is 90 percent of iranian oil goes through that island.
They haven't touched it yet.
Why haven't they touched it?
It's an easy target, the Israeli and the US bombers.
It's just too controversial to bomb that because then the oil prices go to 150
straight away.
And do you know who buys 98% of Iranian oil?
Of course you do.
It's China.
And then you've got a real problem.
There's so many different little arguments that can be made.
But whatever it is, it's not good, and it's not getting any better to me anyway.
There's only one.
That's only one leg.
Because we're talking about the inflationary leg.
Because remember, we went into this year, we really went into two years ago,
where we expected all these rate cuts coming from the Fed.
And we know that was a really contentious subject because last year it was,
how independent is the Fed still?
Are the Fed going to buckle under the pressure of Trump wanting to get rates
lower and way lower?
Because remember, he said the U.S.
interest rate should be the lowest in the world.
Well, now we're sitting in an environment where we're talking about inflation.
We're talking about oil at these current levels.
So you could now say if we stay at these current levels, a rate cut is gone.
ECB already came out this morning stating that, well,
they're sort of sitting in between a rock and a hard place now because they would
most probably next move would be to not cut anymore,
but now hike.
And that's...
That's a major problem because now what you've got is that is the quickest way of
putting the U.S.
and most probably the whole world into a recession.
Yes.
And so there you've got your no economic growth.
You've got the inflationary environment.
And also, you know, you could expect if you see a recessionary environment in the
U.S.
you would see unemployment pop up even higher.
So, yes, that's, I think, where we most probably go.
But if they can get this war done and dusted, the way Trump has, over the past
seven days,
the one moment this war is pretty much done.
It is done.
And the next thing, you suddenly hear the commentators come out, and Trump himself,
well,
we won't stop until we're done.
And it could take a bit longer.
There was an interesting chat.
There's been a bit of a leak from one of the congressmen who was in the debriefing,
a closed doors debriefing about the war.
He said it took two hours.
I can't tell you too much, but all I can tell you is that they don't know what
they're doing.
It was the most scary meeting he's ever been in.
They don't know why they went there and they don't know how long it's going to
take.
Literally, it was almost like one of those situations where Trump woke up in the
morning and said, I had a dream about Iran.
Let's go and let's go and attack it.
It was that.
I mean, that's frivolous what I've just said, but you know what he's like.
The weird and the worst thing of all, Lindsay, is the fact that I would believe
it.
I mean, just look, I mean, we're sitting on the 11th of March.
He came into office the 21st of January last year.
We're talking about Trump being back in office,
let's call it a little bit more than… one year and one month just go and count the
amount of things that's happened i
mean god he just he just loves the
attention anyway uh let's get back to other things now because my time is
limited today and i'm going to read out the
names of companies the
first one is harmony the other one the other ones are growth point rainbow
chicken metair
out assurance they all came out with results uh before between seven and eight
o'clock this morning
Which one or ones would you like to pick with a brief summary of what's going on?
We have to start with… Brief summary.
Okay, wait a second.
Harmony is a gold mining company, isn't it?
And Harmony, gold and brief and scuff don't go together.
Yeah, let's tackle that one first because this is going to be a quick one.
I mean, the share price is down over 11%.
So when you look at the results,
I think the major thing that stood out was the fact that production was really iffy.
You would want to see these gold miners really working pretty much 27
hours a day.
Yes.
But, I mean, you could see that there were some problems with the production side.
So production was down.
And also when you look at the they always had a little bit higher.
They're all in sustainable cost.
has run about the $2,100 per pound.
So a little bit more than your, it's got your $1,800 odd dollars that Anger Gold
and Goldfields has got.
So I think a bit of a disappointment for the market.
You know, just taking consideration, we had a bit of retracement in all gold
shares, gold miners today.
But I mean, Harmony being the one that's not really producing the way like the
other gold miners are doing,
that just, I think, saw them.
get hurt a little bit more today.
I think the star, out-surance today, for sure.
And I think we were spoiled this week because we had, I think it was on Monday,
Monday or Tuesday.
Yeah, it was Monday.
Monday we had Santam. Yes.
And today we had out-surance.
And it's really, really good to see that both these insurers did really well.
I mean, you can see they well-managed and they really did pretty solid.
But when I look at out-surance, They return on equity guarantee over 30%,
32 odd percent.
So that's really good.
They've got a dividend and a special dividend.
That's always a positive sign.
And yeah, the earnings, normalized earnings, all those, they did really well.
So solid growth, great company.
And when I look at the outlook, they did mention that they've got a strong capital
position.
And they think that organic growth-wise, they're really positive for the next year
or so.
So even from the outlook point of view, it's looking good.
One you didn't mention was RemGrow.
You know that's one of my companies that I really fancy.
And why I'm bringing him in the conversation, because naturally,
one of the largest holdings within the… the Bimgro portfolio, and it is
outshurants,
but we've heard now today that Bimgro are now fully on its way getting rid of their
total holdings of
first-round.
Now, this is a conversation you and I had last year when they talked about
Raynet, how they unbundled, and I said, watch this space,
because you can see they're selling off all the crown juice, starting to unlock
value in Raynet.
Do not Don't be surprised if you start seeing a similar reaction in RimGrowth.
And on that stage… Simply because it's an archaic structure and investors don't like
that anymore,
constantly trading at a discount to the sum of the parts.
Is that why it is?
Yes.
I mean, on that stage, the discounts are over 40%.
I think it's still just shy of 40%.
So I do think that this is becoming a really attractive play.
So for the listeners out there that sort of… got a bit of FOMO, felt that they miss
out on outshones,
a nice entry point could be looking at something like a RimGrow where you buy
most of these assets at quite a
serious discount.
What was the other?
Well, we talked about Astral.
Astral and Rainbow Chicken's got very similar storyline.
Very bad.
I mean, we know the maze prices were extremely high in 2024, and that came off.
And that naturally is the biggest inset cost for rainbow chickens and for astrol.
And that saw them in a better position, but they also warned.
They warned and they said, if we do see these oil prices stay at these current
levels,
if we do see a kick-up, I just quickly looked at the biggest inset cost,
which is basically soil beans and maize.
And if you look at those two… The maize price is now up 2% year to date,
and swerve beans up over 16%.
So clearly there's a bit of a kicker there,
and it could be just something to just put some cold water on any person that want to
get a speculative position
on rainbow chickens.
I think they've done really well in 2024,
but they came off sort of low base in 2024 to a higher base in 2025.
Yeah, I think that was the most important ones.
I can...
No, it's very good.
It's been a busy results time and the JSC is sort of holding its own.
But on the other hand, it's out of the company's hands right now when it comes to
the macro theme, isn't it?
Because the bonds have rallied essentially 100 basis points.
That's the 10-year.
The round has gone from the high 1570s or
60s to the at one point to the where is it now?
1640.
But anyway, let me give you some prices, Scott, so we can just sort of step.
back a bit from the corporate stuff and our war scenarios to what's actually
happening on the spot markets.
And dollar-rand is unchanged at 1639.
British pound against the round 2198.
And the euro-rand 1897.
Euro-dollar is about 11605.
So the euro has regained some of its luster against the dollar.
And there's talk, as you said earlier, Scott, that the ECB's next move maybe up.
I mean, it's just...
It's not going to be down, that's for sure.
British pound against the US dollar, 134.50.
Gold price, 51.70, which is down
$22. And I think maybe the investors are being a little bit hard on the gold shares
and the other miners
because of a perceived drawdown in metal prices coming up.
But anyway, platinum down 1.5% or $35 to 21.
I'll call it 2200 on the nose.
Palladium.
Not doing so well, down nearly 3% at $16.49, $48 per ounce.
Let's have a look at the other commodities, the big ones.
Oil price, such an interesting one.
$91.43 for Brent crude oil, up 4%.
West Texas crude, $86.84, up 4% as well.
And copper is $5.85 per pound, which is down around about 1%.
Bitcoin.
Above 70,000 again, 70,300.
That's down on the day, but it's had a good week or so.
South African 10-year bond yield, I spoke about that earlier.
It's 8.46%, which is up 2.5 basis points,
but much better than it was 36 hours ago after that oil price shock.
US 10-year, 420 again.
That's been all over the place for such a big market.
It's been quite big in the move department.
S&P 500 futures more or less unchanged, 6,782 after the US CPI figure came in.
Month-on-month 0.2% and year-on-year 2.4% up.
What else, Scott?
What moved on the market today?
I see that the metals and mining index down 4.7%.
Give us some individual stocks.
It must be the diggers on the downside.
Oh, no, for sure.
I think there's no doubt.
And you don't have to even look even further.
Like our first conversation point for today, how many down?
11.1%.
Goldfields down 5.7%.
Kumba Iron Ore 5.2%.
Sabania Stillwater down 5%.
Valterra down 4.4%.
And you can continue because then to follow is just the likes of the Anglo Gold
Sappies, Northern.
So those are pretty much A diggers downward day for today.
On the upside, Rainbow Chickens, not sure with a good set of results.
They were up 5.8%, 5% up today.
Outsurance, 4.9%.
Hey, look at this.
Sassl back in the top of the pops, 4.6%.
Look at that, 160.
It's more than tripled.
I can't believe this thing.
I would have sold the thing at 100.
I would have sold it.
Oh, hold my beer.
Hold my beer.
That's the reason why I do what I do and you do what you do.
And then number five.
And number five, I need to mention them.
Please do.
PSG Financial. I've heard of them.
Yeah, yeah, PSG Financial Services.
2.3% higher at 26,611.
Very well done.
There we go.
So also a solid day coming from our side.
Okay.
And the indices, if you would.
So as expected today, the JSE Resi,
that was down 3.8%.
The industrials, that was down 1.1%. The financials down 0.8%.
The SA Property Index was down 1.2%.
The JSC All Share closed today at 117 points, 399, just shy of 400.
So that was down 1.9% while the JSC, well, 40 closed today at 109,600 points.
That's also down 2% for the day.
Let me just quickly look at that value traded.
Yes, please.
I would be interested to see if you'd see this.
Yep, yeah, more than $30 billion traded through the JSC today.
Well done.
Skulk, thanks so much for your time.
Skulk Lowe is a portfolio manager at PSG Wealth Old Oak in Cape Town,
and that was the
five
o'clock
shadow.
other than the speaker or the author.
And since we are critically thinking human beings, these views are always subject to
change, revision,
and rethinking at any time.
Please do not hold us to them in perpetuity.