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Market Scorecard
After the disappointing GDP figure last week, it was a surprise to see South African manufacturing and retail figures both better than economists were expecting. On Tuesday South African manufacturing data was released showing it grew by 2.8% in April, much higher than the 0.4% forecast growth. Then yesterday, South African retail sales released for April grew by 2.4%, also higher than the forecast of 1.2%. Not too shabby. Both numbers bode well for a stronger Q2 GDP figure. Sticking with economic data that beat expectations, a US inflation read came in lower than expected yesterday. Further reinforcing Wall Streets view that a rate cut is on the horizon.
Yesterday the JSE All-share closed down 0.10%, the S&P 500 closed down 0.20%, and the Nasdaq closed down 0.38%.
Our 10c Worth
Byron's Beats
We have had a lot corporate failures in SA over the last few years. Some of it has been poor management and some of it has been pure thievery. Since democracy in 1994 we witnessed a big boom period as the majority of the population entered the economy. Making money is never easy but it was certainly doable. And a lot of companies did incredibly well.
Even the finical crisis of 2008 was quickly forgotten. We got back on our feet fast and continued growing. But then, in 2015 our economy started hitting the skids. We cannot blame anyone else because the global economy continues to do well. When things get tough mismanagement and malpractice gets exposed.
I think it was a double-edged sword, the political environment was and still is corrupt. Morals were low and that filtered into the private sector. We have always had a bit of wild west culture here in SA. It makes us resilient, brash and resourceful, but the recent slump has exposed what is still an immature market. Poor management practices that succeeded in the past have failed and the regulatory environment has learnt many hard lessons.
But this is how a market matures and improves. Our regulators will learn from their mistakes and close the gaps they had left open. The private sector has no room for the weak. Those that have been behaving badly have been exposed and are paying the price. Most of them won't be around when the cycle turns. Those that have stuck it out, played fair and hard, will be stronger for it. Ready and waiting for a buoyant economy.
Michael's Musings
On Tuesday, Tesla held its AGM. There were no surprises, good news for shareholders. The general message is that Tesla will continue to grow at an incredible rate. Part of that growth includes opening a factory in Europe and maybe getting involved in mining to secure the materials needed for their batteries.
The main questions hanging over Tesla, can it stay cashflow positive and can their massive growth offset their debt burden? Some people have criticised Musk for missing some steep self-imposed targets. At the rate that Tesla is growing, there is always going to be some variability in their production, which means that they will miss some of their targets. I think the most crucial thing for Tesla is the overall trend of their production and sales. The trend has been exponential growth, missing a few targets along the way its an issue.
Here is a quick look at the main points - Highlights from Tesla's annual meeting and Tesla might get into the mining business to secure minerals for electric batteries.
Linkfest, Lap it Up
A flying Taxi! This looks amazing. All that Uber needs to do now is to make if self-flying - See inside Uber's first passenger drone, which could eventually fly passengers at 240 kph while burning no fossil fuels
This is good news for the likes of Nvidia and Tencent (Naspers)
You will find more infographics at Statista
Vestact Out and About
Byron gets a mention talking about the future of banking in South Africa - Digital newcomers spark price war among SA banks
Team Vestact chats about Woolies in this Business Day article - Woolworths share price recovers on renewed optimism.
Signing off
Last night after the market closed, Naspers released a trading statement saying that they expect their profits to more than double for the financial year that ended 31 March. Given that Naspers is effectively an investment holding company, its NAV value matters much more than some paper profits. Tencent is down around 2% in Hong Kong this morning, so expect Naspers to also be down. There are local mining production figures out today. The JSE All-share will probably open lower this morning. Good luck to Banyana Banyana, playing China tonight at 21:00 in a must win match.
Sent to you by Team Vestact.