WorldWide Markets with Simon Brown

Offshore / US existing home sales fell 9.7% the lowest level since October 2010. US jobless claims dropped to 1.48m / Wirecard into bankruptcy. EY never checked the bank account of the missing cash for 3 years. / HS Markit's Eurozone PMI Composite Output Index rose to 47.5 in June, / Microsoft permanently shutting retail stores / Nike reports unexpected loss as sales tumble 38% / Boeing 737 MAX certification flight tests to begin today Local / Supplementary budget & GDP tomorrow / Capital raises; City Lodge, Sun International, Pepkor, Harmony / Stor-Age* results / Telkom results, dividend cancelled to fund spectrum / Intu is not able to make a deal with lenders. Stock suspended on the JSE / Solid JSE trading update as volumes soared during the period

Simon Shares Tencent hit a new all-time high on Tuesday and again on Wednesday pushing Naspers (JSE code: NPN) and Prosus (JSE code: PRX) higher and helping the JSE overall. Gold seems to be breaking up out of the consolidation zone it has spent the last few months trading in. Good German PMI data, still under 50, but only just again suggests that April was likely the worst month. Albeit the route back to normal is going to be long and rocky. Mboweni budget; No changes to taxes, but a rough budget. Some key points; The South African economy is now expected to contract by 7.2% in 2020. This is the largest contraction in nearly 90 years. Global GDP -5.2%, broadest collapse in per capita income since 1870 "A post‐lockdown future will require that we build high‐quality physical bridges, roads, railways, ports and other infrastructures.". Some changes in the R200bn Covid loan scheme. Removed the R300m turnover limit. South Africa will "shortly" fall into a sovereign debt crisis if it does not act urgently. The ASHGEQ* ETF is changing and needs your vote. Kristia writes about it here, but, in short, we'll have a cheaper TER after the process. The delayed April CPI came in at 3%, lowest for 15 years and right at the bottom of the SARB inflation target range. How likely are you to win the lotto? Video: Investing globally, locally. Upcoming events; 01 July ~ The world after Covid-19 08 July ~ Know your derivatives: Long, short or hedge? 15 July ~ Trading 101: Managing risk Subscribe to our feed here Subscribe or review us in iTunes Send money The JSE is currently awash with capital raising. Some just because it makes sense to make their balance sheet stronger, others because they're in real trouble if they don't. The problem is that issuing new shares gives a permanent right to profits, loans are better, but right now bankers are not lending with abandon. Some have been via a quick bookbuild Stor-Age* (JSE code: SSS) ~ R250million Transaction Capital JSE code: TCP) ~ R559.7million Pepkor (JSE code: PPH) ~ R1.9billion Many others will be via a traditional rights issue; Curro (JSE code: COH) R1.5billon (non-renounceable) City Lodge (JSE code: CLH) ~ R1.2billion Sun International (JSE code: SUI) ~ R1.2billion Sasol (JSE code: SOL) ~ not confirmed Mr Price (JSE code: MRP) ~ R3.6billion (idea floated but not confirmed) The Foschini Group (JSE code: TFG) ~ up to R3.95billion This raises a real issue for many shareholders, do you send cash and follow your rights? If you don't you'll be severely diluted, especially with the bigger issues. So you need to decide which you'll follow, but also keep in mind that some of these raising capital may well be back again in the months ahead for more money, and then maybe even again. If you're worried about repeated capital raises, then exiting early may be better than not. I would also add that we will most certainly see a lot more capital raises coming, heck the property stocks haven't even started aside from Stor-Age. So the requests for money will keep on coming and at the end of the day, it's going to be a lot of money requested. * I hold ungeared positions. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

/ Wirecard and the missing $2.1bn / Hertz decides NOT to issue shares while under chapter 11 / Reports on Sunday that British Finance Minister Sunak plans emergency cut in value-added tax / Index rebalancing in the Russell indices sees nearly half of the stocks being promoted to the Russell 1000 from the Russell 2000 will be healthcare names. / Apple will close 11 stores across Florida (2), North Carolina (2), South Carolina (2) and Arizona (6). This after re-opening 100 in May. / Fed Chair Jerome Powell warned millions of people will likely still be unemployed even as the economy is on the path of recovery. / The Federal Reserve started buying corporate bonds Tuesday as part of a $250 billion program funded by the CARES Act Local / New level 3.something opens leisure and beauty (to a degree) / Marriott Group closing three hotels (Mount Grace, Protea Hotel by Marriott Hazyview and Protea Hotel by Marriott Durban Edward). The hotels are owned by Hospitality Property Fund. / Sasol update, lots of news but not on LCCP partial sale or rights issue. / Capital raising galore (COH, TCP, TFG, SUI, SOL, MRP) / Zero based national budget on Wednesday / New kinda wonder drug / Aspen Ascendis (latter Tanzania only) / Discovery putting aside R3.3billion for Covid-19 claims. ===

Simon Shares Here's a gem from the Herenya Capital Advisors Twitter account, albeit Remedica is up for sale and we've had lots of early hype on drugs that quickly fizzled out. Ascendis Healths subsidiary Remedica manufactures Dexamethasone which apparently helps combat severe cases and is being approved by the NHS. pic.twitter.com/XUw9VPHwdg — Herenya Capital Advisors (@HerenyaCapital) June 17, 2020 That said, Aspen (JSE code: APN) issued a SENS stating "It is confirmed that Aspen owns rights to this product and distributes both injectables and/or tablets containing dexamethasone in a number of countries." But most importantly, is it really a new wonder drug to treat Covid-19 (dexamethasone). Because ouch, you need to already be in ICU and then if you're on a ventilator it saves 1:8 (12.5%) and of those needing oxygen, it saves 1:25 (4%). Aren't those very modest numbers? On MoneywebNOW yesterday I chatted with Easy Equities CEO, Charles Savage and he dropped some amazing stats. They're opening 1,500-2,000 new accounts a day against 12,000 in all of February. R1billion client money into Sasol at an average of 5500c and if half of those investors still hold Sasol they're sitting on almost R1billion profit! Subscribe to our feed here Subscribe or review us in iTunes Massmart (JSE code: MSM) trading update is as bleak as expected. They secured an R4billion inter-company loan from Walmart to keep them going and expect HEPS to be at least 50% lower. Missed liquor sales for the months of April and May are estimated to be approximately R2.3 billion lower compared to the previous year. Discovery* (JSE code: DSY) puts aside R3.3billion for Covid-19 hoping that it is enough money. Hits HEPS hard but they'll still make some R5.5billion of normalised HEPS. Chinese Ping An Health is, however, having a good Covid-19 as sales increase and the bank is doing well enough as it continues to grow clients and accounts. MultiChoice (JSE code: MCG) came out as I was recording last week and they were solid. They paid their first dividend and announced a tie-up with Netflix and Amazon streaming. But long-term challenges persist and they still buy content in hard currency and sell in soft. Very good results from Value Group that place the stock on a PE of around 5x and a dividend yield of just over 9% while they hold cash of almost 150c a share or over 35% of the share price. Zeder (JSE code: ZED) sold its shares in Quantum Foods (JSE code: QFH) for over R300million. So now what for Zeder? They have just over 80c cash per share, some 30% of the share price? A PSG delisting? A buying spree, dividends or a share-buy-back? Next Wednesday, 24 June, we get a revised budget from Minister Mboweni. The US is considering doing a US$1trillion infrastructure package. * I hold ungeared positions. Cash Club: Is TymeBank still right for me? Upcoming events; 18 June ~ What it means to Invest Globally, Locally 01 July ~ The world after Covid-19 08 July ~ Know your derivatives: Long, short or hedge? 15 July ~ Trading 101: Managing risk JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Offshore / China's PPI down 3.7% in May and factory output rises less than expected, retail sales continued to contract in May. / Fed kept interest rates flat and cautioned they expect conditions to remain tough into 2022. GDP 5% in 2021 and unemployment 5.5% in 2022 o S&P500 dropped -4.8% last week but remains +8.1% this month, o Nasdaq dropped -2.3% last week but remains +6.4% this month, o FTSE 100 dropped -5.9% last week but remains +5.3% this month, o JSE Top 40 Index dropped -1.9% last week but remains +5.8% this month, / We're starting to see the second Covid-19 wave in both the USA and China and this spooked markets. Detroit, Michigan is seeing new all-time case highs / Mnuchin says 'we can't shut down the economy again' / UK economy contracted by 20.4% in April, the largest monthly fall on record / Justeat-takeaway buys GrubHub Local / The Rand hit 16.33 overnight on Wednesday but then came under serious pressure at 17.20 on Friday. / Solid Multichoice results and first dividend payment as sports starts to resume. / Tsogo Sun Gaming results show debt of over R11billion. Casino industry wants to re-open ASAP / Solid Sygnia results / Sasol Draws Multiple Bids for Stake in U.S. Chemical Site / Hyprop update shows good recovery after the hard lockdown of April. Still opens below 100%, but looking better Hyde Park Corner 67% Rosebank Mall 76% Canal Walk 85% The Glen 85% Woodlands Mall 85% Clearwater Mall 88% Capegate 89% Somerset Mall 92% Atterbury Value Mart 97% Foot count at Hyprop's malls: March 2020 Down 24% April 2020 Down 71% May 2020 Down 39% June 2020 (seven days) Down 24% / JSE Index balancing this Friday, Redefine is exiting both the Top40 and Fini15 to be replaced by Exxaro and Quilter respectively. ====== British Airways is auctioning off art worth millions as pandemic weighs on earnings

Simon Shares Bankruptcy stocks are the new excitement in the US. Hertz in chapter 11 saw its stock price back at the levels from when it announced Chapter 11. Tsogo Sun Gaming (JSE code: TSG) results to end-March show debt at R11.2billion, more than double the market cap. EOH (JSE code: EOH) update says debt is being paid off quicker than planned. But it remains a long road for the company. British American Tobacco (JSE code: BTI) update sows solid DM demand but reduced EM demand. Hyprop JSE code: HYP) update details foot traffic and open rates with their malls between 67% (Hyde Park Corner) and 97% (Atterbury Value Mart). In large part, the number depends on the number of sit down restaurants. Foot traffic was down 71% in April and in the first seven days of June is now only down 24%. Again this shows that April was very likely the worst point and that things are improving, but the last stretch of improvement is going to be the hardest. China's PPI down 3.7% in May. China is opening but exports are struggling as much of the rest of the world remains in lockdown with reduced demand. Upcoming events; 17 June ~ Trading 101: A traders plan 18 June ~ What it means to Invest Globally, Locally 01 July ~ The world after Covid-19 Subscribe to our feed here Subscribe or review us in iTunes The US goes back to work with 13.3% unemployment US unemployment came in at 13.3% (from 14.7% in April) as the US added jobs in pretty much all sectors. The expectation had been for further job losses and an unemployment rate closer to 19%. Perhaps the biggest miss ever. Now sure some funnies in the number, but they existed n the April numbers as well so net-net the miss would have happened. But what is important is that it shows the US economy opening up and bouncing back strongly, but perspective is still needed. Current US unemployment remains the worst numbers since the great depression with the 2008/9 financial crisis peaked at 10%. It is a long way back to single-digit unemployment and even longer to the sub 4% from the beginning of the year. The driver here will remain the pandemic and what we need to watch remains the rate of infections in the US with 14 states still reporting growing numbers. This could slow or even reverse the positive jobs data we saw. My thinking is that we will likely see the US unemployment rate improve further over the next few months with 10% possible by the end of their summer (August / September). My logic here is that lockdown saw millions at home and the lifting of lockdown saw many return to work. But what we don't know is how many businesses are still in business because a bankrupt business doesn't employ anybody. So while 10% is very possible getting below that number may be a lot harder and could take years. That all said the key point is that while nobody truly expected an improving US job situation this quickly it did happen and there is no point denying it. Instead, we adjust our expectations as expected data reveals itself. As important is to remember that while this was a massive positive number, it stills remains a massive number that shows an economy under severe pressure. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Global / US May unemployment rate seriously strong at 13.3% / PMI bounces from April lows but still below 50 / China May exports slip back into contraction, imports worst in four years / Opec extend cuts by another month / AstraZeneca Approaches Gilead About Potential Merger local / Apple mobility and Yoco transaction data shows about 65% economic activity in week 1 of level 3 / JSE allows share issues without shareholder approval / Rand below 17 as foreigners buy our bonds and equity / Reserve Bank takes up R10.2bn in government bonds in May / More banking updates / Bidvest update gives insight to Comair and Adcock Ingram / Capital Appreciation solid results and increased dividend as they operate in payment terminals and cloud services (there are always some winner) ==== Levi opening stores and they say "everybody has a new size, a larger size"

Upcoming events; 09 June ~ South China Seas structured product Q&A 10 June ~ Margin, gearing & exposure explained 17 June ~ Trading 101: A traders plan 18 June ~ What it means to Invest Globally, Locally Simon Shares Day 70 of lockdown, week 1 of level 3 and I got drink (still no smokes) but court locks down lockdown? Markets are surging, taken off flying and chasing the stars. Overall value is decent but not spectacular. Coupled with the ZAR at 17 we likely have a risk on trade and some epic sort squeezes. The general view for the currency is at least 16 in the short-term maybe stronger but as always, be careful because this can turn on a dime. Of course, my crash puts are getting slaughtered in this run, but that's the plan. if my cash puts are losing then my portfolio is winning. WTI and Brent both having a good week with the latter back above US$40. Sasol (JSE code: SOL) the easy winner here, likely based on higher oil and short squeezes. Will it close the gap at R160? Certainly, the possible rights issue is much less likely with Brent oil back above US$40. Subscribe to our feed here Subscribe or review us in iTunes The Bidvest (JSE code: BVT) saw them write down their Comiar (JSE code: COM) stake to zero as the business is in business rescue. But they had good things to say about Adcock Ingram (JSE code: AIP) and that boost Adcock, but caution as they sell a lot of over the counter drugs that may struggle under a stressed consumer. Last week I was dissing MTI on Twitter, they've reached out to me asking why. I sent them a list of questions on Tuesday and will publish the answers when I receive them. Key point apart from paying referral fees is an absolute lack of compliance process and no FSCA registration. Locally and globally PMI data bounced back in May compared to the horror April numbers. This is in part statistical, but also that April was hard lockdown in much of the world and importantly aside from China all PMI numbers were still below 50 and hence contracting. Speaking of China, they're cracking down on Hong Kong coupled with Trump blaming them for their COVID-19 response and let us not forget we still have the trade wars on-going. Make no mistake they are using the cover of a pandemic and Trumps increasing isolation as a world leader to flex their muscle and increase their influence. This is not surprising but will lead to even greater tensions between the US and China and this must leave Tencent in somewhat of a bind and at risk of sanctions aimed either directly at them or China more generally? That, of course, could then play out to Naspers (JSE code: NPN) and Prosus (JSE code; PRX). But for now, they both doing alright, remember they are still some 20% of the Top40. Remgro (JSE code: REM) has spun out their holding in RMH and PSG have announced the terms of their Capitec* (JSE code: CPI) unbundling, 14 Capitec shares per 100 PSG shares leaving PSG with some 4%. My view is unbundling already listed shares makes absolute sense. There is no point in me essentially buying a holding company if all they own is listed. Now if the held unlisted shares then t's a different story, so maybe we'll see more in the months and years ahead? * I hold ungeared positions. Video: Pandemic investment scenarios (with risk matrix) Video: South China Seas structured product Video: Managing risk as a trader with Garth McKenzie JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Global / US past 40million initial claims and Q1 GDP updated to -5.0% from -4.8% / Personal saving rate 33% in April / Germany's Business Climate Index rose to 79.5 in May as the country reopens / Reuters ~ China's May factory activity returns to growth but demand remains weak / China US tensions increasing / Bill Ackman's Pershing Square Capital Management announced it had sold off its entire stake in Berkshire Hathaway. BH has $133.3 billion hoards of cash vs S450 market cap (third of assets are lazy and not been deployed). Local / PSG announced CPI unbundling details (14 CPI for every 100 PSG) / Woolies update, spending AU$100million on Australia / TigerBrands results as branded goods come under further pressure. / Famous Brands very pessimistic on casual dining recovery / Stats SA delayed April CPI by a month due to difficulty collecting data / PIC talking about converting Eskom debt to equity

Simon Shares Day 63 of lockdown, level 3 on Monday. As I record we're still waiting for details as to what is allowed under level 3, but it seems that rather than saying what we can do, the regulations will tell us what we can't do and that list will be short. We will be able to exercise, retail is open but restaurants and bars not. Alcohol will be sold, but not tobacco products. Personally I will pretty much stay in lockdown (aside from my daily radio show), but now with a drink. NYSE trading pit opened again on Tuesday. A throwback to the days before technology but always fun to watch, not that I have been to the NYSE. I did see the JSE in the mid 80's on a trip to Johannesburg. It was wild and made no sense to me but it was energetic and I wanted to be a part of it all. Famous Brands* (JSE code: FBR) results presentation made two comments "restaurant landscape will be irrevocably transformed" because of Covid-19. The market recovery in the casual dining segment will be "slow and unforgiving". Woolies (JSE code: WHL) trading date shows food doing well but clothing and Australia doing very poorly. They're talking to bankers in Australia about debt covenants and Australia may need a AU$100million cash injection. Solid Coronation* (JSE code: CML) results with HEPS and dividend both up 8%. But risks remain, will private investors pull money or slow/stop deposits? Also as companies reduce head retirement money flows into their funds ever month. Tuesday in parliament Minister Dlamini-Zuma said unemployment may hit 50% and the Absa (JSE code: ABG) said they expect local 2020 GDP to be -10%. Pepkor (JSE code: PPH) saw R5.5billion in lost revenue due to COVID-19 already so far. R476million to end March and another R5billion in April. May has seen a spike in shopping so they'll get some back, but likely not all. FAANG annualised returns since the lows of March is averaging 970%. Wowzer, but as I said last week; don't fight the Fed. * I hold ungeared positions. Video: Solvency and liquidity in the time of COVID-19 Wealthy Maths: Drop a tax bracket Upcoming events; 28 May ~ Managing risk as a trader with Garth McKenzie 03 June ~ Pandemic investment scenarios 10 June ~ Margin, gearing & exposure explained 17 June ~ Trading 101: A traders plan 18 June ~ What it means to Invest Globally, Locally Subscribe to our feed here Subscribe or review us in iTunes Understanding warrants TOPSBZ is a put warrant that trades on the #JSE and can be bought in any normal stock broker account .. @SBGTraderZA clients buying in a warrant account pay flat R50 brokerage taxes etc. https://t.co/LX0mZmplYo — Simon Brown (@SimonPB) May 23, 2020 Warrants were the first derivative I traded, starting in October 1997 as they were launched in South Africa. SAWarrants was also my first successful website that launched me into the financial services industry. Recently I've been trading some warrants again as have a few traders I know and a tweetstorm I did over the weekend got a lot of question about trading warrants. The short answer is don't. They're derivatives and hence risky If you're an ETF buyer or even just a straight equity buy and holder, stay away. If you're successfully trading other derivatives then they're worth a look. Certainly, they have some benefits over traditional derivatives, but also lots of complexity. A warrant is really an option that gives the holder the right to buy or sell an underlying asset. Call goes up as does the underlying asset. Last letter of the warrant code will be A-0. Put goes up as the underlying asset falls. Last letter of the warrant code will be P-Z. The fact that it is a right, not an obligation, means your loss is capped at what you paid. Warrants trade on the JSE just like any other share or ETF with six-letter codes. First 3 letters denote the underlying asset. 4th letter is the issuer, 5th letter the style (B for normal, I for instalment and K for knockout - be very careful of knockout warrants). The last letter is as above denoting call or put. But a lot of greeks that can trip you up that are outputted by the Black-Scholes formula (this formula won the writers a Nobel prize). Gearing ~ amplification of the move. For example, 4x gearing means for every 1% move of the underlying your warrant will move 4%. You don't want to gear much more than 5x, 8x on indices. Theta ~ time decay. A warrant decays every day, every week, even if the asset moves in your direction it will lose some value. This reduces the warrant price and is very aggressive in the last third of the warrants life. Be very careful of tie decay. Expiry ~ unlike CFDs, warrants expire and if you hold at expiry you'll be paid out. If it has value. Make sure you have lots of time, at least 3 months, ideally 6 months. Time decay becomes very aggressive in the last few months. Value is price above strike prce at expiry (for calls). For puts price below strike. Strike is the price at which you can buy / sell the asset. You want the current price

Offshore / Hertz bankruptcy / US initial jobless claims now over 38million (160m labour force), UK ver 10million (35million labour force) / This on the back of German Q1 GDP released this morning coming in at -2.2% / Moderna vaccine excitement, and then they raise capital on share price spike / Commodities having another good week. / Apple mobility data shows Europeana and US economy opening. Local / 0.5% rate cut / Stor-age raises R250m in bookbuild. / Grand Parade Burger King sale being repriced? / Liberty 2 Degrees update, nice insights. / Nedbank update also offering solid insights. / Richemont raises Euro2billion debt as they strengthen their balance sheet / Online sales surging

Upcoming events; 21 May ~ Solvency and liquidity in the time of COVID-19 28 May ~ Managing risk as a trader with Garth McKenzie 03 June ~ Pandemic investment scenarios 10 June ~ Margin, gearing & exposure explained 18 June ~ What it means to Invest Globally, Locally Day 56 of lockdown Simon Shares Don't fight the Fed (The Federal Reserve). Markets are in full rally mode and the forward PE of the S&P5- makes it the most expensive in the last decade. During a pandemic and worst US unemployment since the great recession? Bu the point is simple, if the Fed is buying with guns blazing, don't stand in the way, markets will rally higher even if everybody I speak to is bearish. With that in mind, I have bought some TOPSBZ as insurance against another market collapse. It is a put warrant over the Top40, expiry is December and strike is 41,000. So a decent amount of time and about 18% out-the-money. Richemont (JSE code: CFR) raises Euro2billion of cheap debt to go with their almost Euro2.4billion of cash on hand. Now they've always been a conservative company, but they are storing up that balance sheet like crazy. Dischem (JSE code: DCP) results disappoint and buys Baby City for R430million. Solid Santova (JSE code: SNV) results, but to end February. Oil is moving higher as production cus finally start taking effect. Commodities remain strong. Makes no sense unless one assumes a massive post-COVID-19 infrastructure spending boom, and that does make sense. I've been watching countries lifting their lockdowns, gentle but certainly lifting. Germany started lifting in late April (some stores open again) and then more broadly in early May. So far new cases continue to trend down, albeit the early May stats would only start coming in now. But early evidence is that an initial hard lockdown works and then slowly lifting restrictions seems to do the trick. Very early days, but the data is hopefully. Importantly, this is not about removing restrictions, just reducing them. Liberty 2 degrees (JSE code: L2D) update gives great insights into the property sector. April & May saw rental collections around 40%, most malls are now operating at 60% - 70% GLA and foot traffic at 60% pre lockdown levels. All stats are improving during level 4. ZAR at 18 as I record. Video: Getting started in trading Subscribe to our feed here Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

**Global** / UK two-year government bonds traded negative last week as UK GDP -2% for Q1, -5.8% for March & retail sales fall 19% year on year. Biggest in 25 years / Tencent's Q1:20 results showed a +19% jump in gaming subscriptions, overall Group revenue grew +26% and, on almost all metrics, the Group beat analyst estimates. / US, jobless claims came out as another nasty number today, now totally around 36m (the worst number since the Great Depression) while April retail sales collapsed -16.4% m/m. **Local** / Barloworld is attempting to back out of its deal to buy Tongaat Hulett's Starch business due to COVID-19 likely negatively impacting the business's EBITDA and triggering a "Material Adverse Clause". / Dis-Chem announced the acquisition of 100% of Baby City / Richemont released FY 20 results showing revenue flat but profits collapsing by two-thirds. and are proposing a possible warrant instead of a dividend / Strong Aspen update while Life healthcare says EPS for full year likely 20% lower after mid year was +12%. / Knockout Sibanye Stillwater results that saw debt down 40%. / Impala Platinum Mine has temporarily suspended operations at its Marula Platinum mine in Limpopo. This follows the detection of six more COVID-19 cases among workers at the plant. =====

Simon Shares Day 49 of lockdown Pick 'n Pay (JSE code: PIK) results were slightly down, but no dividend as they conserve cash. Sibanye Stillwater* (JSE code: SSW) first quarter results knock it out of the park, strong cash flow and debt down 40%. Tongaat (JSE code: TON) sale of their starch business to Barloworld (JSE code: BAW) has collapsed with the buyer claiming "material adverse change" due to COVID-19. UK two-year government bonds traded negative this week. UK GDP was -2.0% for the first quarter (QonQ) with March saw a 5.8% contraction. Retail sales fall 19% year on year. Biggest drop in 25 years as 'excess deaths' top 50,000 but look to maybe have peaked, for now. Norway oil fund exits Anglo American (JSE code: AGL), Glencore (JSE code: GLN) & Sasol (JSE code: SOL) as they "derive at least 30% of their income from thermal coal, base at least 30% of their operations on thermal coal, extract more than 20 million tons of thermal coal per year, or have a coal power capacity of more than 10,000 megawatts from thermal coal.". Naspers (JSE code: NPN) and Prosus (JSE code: PRX) have both hit new all-time highs over the last week ahead of Tencent earnings that came out ahead of expectations. Upcoming events; 13 May ~ Know your derivatives: CFDs, indices and FX 20 May ~ Trading 101: Getting started in trading 21 May ~ Solvency and liquidity in the time of COVID-19 28 May – Managing risk as a trader with Garth McKenzie 03 June ~ Pandemic investment scenarios * I hold ungeared positions. ffff Download the audio file here Subscribe to our feed here Sign up for email alerts as a new show goes live Subscribe or review us in iTunes The post COVID-19 reality is starting to emerge It's very early days but an announcement from Twitter shows how things may look as the company says it will "allow its employees to work from home forever". Hello new world. This is surely going to be a large part of our post COVID-19 reality and has serious implications across many sectors. A recent IBM survey during April of 25,000 US adults found; 54% of Americans say they want to work from home primarily 75% say occasionally Commercial property in this example will simple need less office space. This will hit not just office rentals, but for example also car an Uber usage as we travel less to work reducing fuel and car needs hurting the respective industries. Then of course lower insurance rates as less driving means less risk, and so the all rolls. The flip side of course is that less travel time means more money and free time for an individual and how will we spend that? Reading? Eating out? Family? Taking the Twitter example a step further, working from home means more virtual meetings (such as Zoom) and then it is a small step to less corporate travel as meetings or events that may required travel are now done virtually. It'll be a long time before we get to the new post COVID-19 reality, but it's not going to be a new normal, it'l be way more. A new reality and importantly we get to define what this new reality will look like. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Global / Worst US unemployment since the depression, but lagging indicator. Likely 25% by end May / Last weeks PMI, local and global mostly setting records for worst ever / Nasdaq is up year-to-date / IMF warning that their 2020 GDP forecasts may be too low? Local / Comair business rescue / Phumelela Gaming business rescue / Our bonds are strong, 10 year at 9.3%, shorter dated below 8% / Anheuser-Busch InBev QoQ volumes down 9.3% / Property stocks and risk of losing REIT status

This week's episode of JSE Direct is courtesy of OUTvest, our preferred supplier in retirement products. Simon Shares April was the best month for equity markets since 1987! Local ten year bonds are on a tear, just a week after we exited the World Government Bond Index the yields are back at pre-junk levels and even better as they trade below 8%. This is the search for yield playing out. If their mandate allows investors want yield, the rest they don't care about. This has also seen the Government Retail Bonds locally drop their April rate of 11.5% to 10% for May and likely will fall further in June. PMI shocker. The headline number was fine but that was due to some oddities. The real kicker was the business activity index that collapsed to an all-time low of 5.1 index points in April. During the 2008/9 crisis the lowest levels were low 30s. Oil bouncing higher, albeit at US$30 Brent is still over 50% off the January levels. Comair (JSE code: COM) went into business rescue less than a week after an update detailed no flying until October / November. They hope to be able to restructure and come back by then, but the airline industry globally is in melt down and locally we have three airlines in some form of bankruptcy (SAA and SA Express the other two). Metrofile* (JSE code: MFL) updated the market on their proposed 330c delisting and the short answer is that it is still on but is delayed indefinitely. Pratically trying to raise capital and get all the Is doted and Ts crossed is largely not practical under lockdown. But the buyer also wants to get a better understanding of the business post lockdown. I hold the stock and am happy to continue holding as I'd rather it not be delisted. But price had dropped to 220c on the news, currently 250c. Lockdown does hurt the company a little, most work in contractual. But the issue is how many clients don't survive and of those who do will they require less boxes? In very tough times for REITs Equites (JSE code: EQU) results really shone. Debt is low, distributions solid and they have very few clients not able to pay rentals as they state "since 29 February 2020, we have collected 92.8% and 100% of the contractual rental due in terms of our lease agreements in SA and the UK, respectively". This is largely as they are in the business of fancy logistics. No retail, no offices and many online customers, especially in the UK which os some 25% of their business. Upcoming events; 13 May ~ Know your derivatives: CFDs, indices and FX 20 May ~ Trading 101: Getting started in trading 21 May ~ Solvency and liquidity in the time of COVID-19 28 May – Managing risk as a trader with Garth McKenzie Subscribe to our feed here Subscribe or review us in iTunes Property losing REIT Status A REIT ~ Real Estate Investment Trust is essentially a special purpose vehicle for listed property stocks. In South Africa the most notable requirement is that 75% of 'distributable income' is paid to shareholders as a taxable dividend. This absolves the REIT of tax liability but that dividend received by shareholders is taxed as income, not the 20% dividend withholding tax (DWT). So depending on your marginal tax rate, it cold be higher or lower than DWT. With this in mind I asked Redefine CEO Andrew Konig about this on my show on Tuesday. The company had some 33c per unit of distributable income due to investors but did not declare it rather saying they'd decide at yearend in August 2020. This is perfectly legal as this was an interim distribution and they only need to be paid annually. Now that 75% rule is a SARS issue as it regards taxation, it is not a IFRS concept and as such it is a murky issue. So the REIT industry is engaging SARS in case some REITs can't pay the distribution. There could be lots of options such as delaying the payment and maybe spreading it our over a number of years. But if they lose REIT status frankly the property companies would unravel as the tax advantage from that status is huge and how they operate. As such I expect industry and SARS to come to some sort of agreement. But what Andrew Konig said was that liquidity issues were of more a concern for REITs. Frankly their ability to actually pay anything and liquidity is a part of the companies act so is more immovable than the SARS REIT definition and allowances. This is the bind property stocks find themselves in. Debt that needs to be paid, income (rentals under pressure) and legal requirements to pay distributable income. There is going to have to be lots of clever thinking to get through this crisis. * I hold ungeared positions. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Moneyweb NOW, starting Monday. Live stream at 6.30am and podcast from 7am - both on Moneyweb.co.za or their app. Day 35 of lockdown, and last day of level 5, for now. S&P500 trading back at August 2019 levels and Top40 at January 2019 levels. So basically saying COVID-19 is no worry? Everything is going to be alright? Sure the US has thrown over US$2trillion at the problem, but some 13% of the US workforce has lost a job in the last month and it easy to fire, but will surely be a lot slower to rehire? This is why I am at best a W recovery person not a V shaped. We have another leg lower, no idea how much lower, but lower. Locally a Stats SA survey of 707 VAT-registered companies shows that 20% have already laid off staff and 30% have decreased working hours. We also see IMF forecasting a local GDP of -5.8% and an unemployment rate of 35.3% for 2020. Then 34.1% unemployment in 2021. These are horror numbers and if they're wrong, they be wrong on the light side with reality potentially worse. Certainly that -5.8% for GDP is the lowest I am currently seeing with even the SARB and national treasury expecting -6.4% for 2020, a number I still think will ultimately be on the low side. On lockdown level 4. It not very different with tobacco products allowed to be sold (maybe) and restaurants allowed to do food deliveries (maybe) and some industry allowed to get back to work. Restaurants will be a biggie, people do not normally cook their own dinner every night, heck I know some of even ordering in for breakfast and lunch. So demand should be wild and it will get cash back into this sector, but managing demand is going to be tricky. My thought is that we should be able to book cooking times. For example, I book the 7pm slot at my fav and they have limited number of slots available at each time slot as per their capacity. This is much like a lot of the food stores were doing and it manages expectations and delays. At the end of the day level 4 lockdown is expected to see about 1.5million returning back to work. But the flip side is Edcon reportedly filing for voluntary business rescue as it burns through its cash. We're going to see a lot more large and small businesses not surviving, hence my feeling that the projected GDP and unemployment numbers are likely to be on the light side. Subscribe to our feed here Subscribe or review us in iTunes WTI still trading weak and frankly why not negative again just ahead of close out for the June delivery contract? Storage is now even tighter as demand remains collapsed and the supply taps remain turned on. Eventually supply has to decrease because demand is a long way from booming again, but nobody wants to be the first to blink and exit so instead each is hoping somebody else blinks and markedly cuts production first. Biggest loser locally in this oil war (aside from Sasol (JSE code: SOL) which is now over 8000c and which I am still not buying) is MTN (JSE code: MTN). Their biggest market is Nigeria and Nigeria is an oil economy that is being nailed by both COVID-19 and collapsing oil price. The latter means less government and oil industry money and that'll lead to lay offs and less income generally. All this means poorer people who have less to spend on data and voice. PSG (JSE code: PSG) are giving "serious consideration" to unbundling their Capitec* (JSE code: CPI) holding. This makes sense, the Capitec stake is worth more than the PSG market cap essentially valuing their other assets at a negative value. This defeats the point of being listed which is largely capital raising which one would never do at such a discount. In fact PSG are fairly smart at issuing new shares when they trade at a premium to their holdings. Further, the Capitec dividend flow has been very useful for PSG over the years, but with that dividend now cancelled for at least two or more years, now's a good time to do the transaction. PSG also states that "new legislation may potentially deem PSG (as a material shareholder in Capitec) to be a financial conglomerate" and that would increase compliance costs for PSG. Lastly depending ow much they unbundle it may well leave Capitec without a reference shareholder which is very useful in times of stress, but most of our big four are in the same boat so no train smash. Staying with Capitec, Michiel le Roux, one of the founding directors, has donated R99million to three efforts to fight COVID-19 in South Africa. Well done gent. Then a fascinating report on how Morgan Stanley is tracking the industrial recovery in China. They're measuring air quality and if it is returning to normal seasonal levels. Lastly, we fall out of world government bond index today (delayed from end March) as we're now full junk. This means we'll see selling pressure on our bonds and likely also our Rand. How much pressure? No idea and as I record on Wednesday afternoon, the Rand is stronger at 18.53 and about US$10-15billion needs to be sold, remember SARB is also a buyer

Simon Shares Day 28 of lockdown. Oil, negative pricing? I thought I'd seen it all when interest rates went negative, but no ~ oil says "hold my beer". I Tweeted about it. Short version, don't now suddenly decide you are an oil trader. Overnight WTI Oil (West Texas Intermediate) traded at a negative $40. Yip -$40, traders were paying you to take their oil off their hands. Totally wild and now everybody wants to be an oil trader. But some caution before you jump in. 1/ — Simon Brown (@SimonPB) April 21, 2020 Bye-bye SAA. Staff have essentially been given termination letters for end April by the business rescue practitioner, payment subject to the sale of assets and this is the worst time ever to be selling airline assets. But public enterprises minister, Pravin Gordhan, has other ideas, a new "financially viable airline". This in the middle of a pandemic when US airlines got US$25billion, and they want more? But here's the fun part, while the minister and government is insisting no new money, the business rescue practitioner actually has less power than usual. This is because the Public Finance Management Act applies and this gives the minister a final say on major decisions and the sale of assets or a liquidation would certainly be considered a major decision? Standard Bank (JSE code: SBK) gives gives us a first quarter 2020 update. "In 1Q20 earnings attributable to ordinary shareholders were 27% lower". While providing for bad debts on a forward looking basis, they specifically said " virus related stress had to a large extent not emerged yet and bad debt provision raised were based on best estimates.". ETF: Same index, different price? Upcoming events; 6 May ~ The economic data so far, what's it telling us? 13 May ~ Know your derivatives: CFDs, indices and FX 20 May ~ Trading 101: Getting started in trading 21 May ~ Solvency and liquidity in the time of COVID-19 28 May - Garth McKenzie Subscribe to our feed here Subscribe or review us in iTunes Going BIG R500billion announced by the president on Tuesday evening. We await details from the finance minister, but some highlights. 10% of GDP and some 25% of the February budget total spend. But it not all real money, some of it is soft loans, others tax relief in delayed payments. R130billion ~ budget reprioritisation R40billion ~ UIF, they have R42billion excess reserves. R70billion ~ tax breaks, relief and deferrals. The monies will still need to be repaid, but it helps cash flow over the next few months. R200billion ~ loan guarantees Banks issue the loans with state under writing them. This is an easy and quick win directly into mid size and smaller businesses and banks have the processes already in place with just a few tweaks needed. R60billon left over and actual new spending is some R100billion. The R60billon we can cover that from the IMF easy enough. BUT for example tax breaks hurt SARS cash flow, so more fluid then just R60billion needed. The biggie is the increase of social grants, child grants ultimately an extra R500 a month and all others +R250 while a new unemployed grant at R350. This is to run till end October, in theory - but we'll still be in the midst of a COVID-19 pandemic then, so it will have to be extended. Basically we have implemented a basic income grant (BIG) and it will be impossible to take that away any time. How do you say to poor hungry people, no more? Even when the pandemic has passed? Simple you can't and you don't. For those who think a BIG is communist or evil, go check the research. There is lots starting from the 1970s in the USA and Canada, they work and they are cost effective. How do you help a poor person? Give them money. How do you help a homeless person? Give them a home. Surely there is nothing anti-capitalist about caring about the deeply less fortunate and having a little less of our luxurious lifestyles to help them? And the concerns that they will 'waste or drink' the money is simple not true. Every research shows the incidence of waste is actually lower in groups receiving state aid. As for the theory that women get pregnant in order to receive the child grant, again research has disproved that every single time. There is zero evidence to support that theory. Lastly on social grants, we have a world class system that is also one of the largest in the world and it works. Further theft is pretty much impossible as the recipient knows what they due and if it not there, hell to pay. Now sure as we saw with Cash Paymaster Services, charges and 'extras' can get messy. But not the actual hard process. It won't be enough, we'll have to do many more. Likely this will take us into the third quarter at best (note the extra grants end in October and COVID-19 is expected to peak around September for South Africa). But eventually we'll need well in excess of R1trillion, I think maybe some R2trillion to take us into the end of 2021. For reference the US did US$2trillion and have now passing another bill. Now sure, we're not

Lockdown day 25 22million unemployment claims in US in 4 weeks (entire 2008 saw only 8.8million) opening economy China GDP fell by 6.8% YoY in Q1 (first fall since 1992) Wall Street gained 15% in the past two weeks, its strongest fortnight in 80 years. Oil price .. crude oil getting smashed as global storage fills up Earnigs season kicks off in US this week, includes March so some sense of impact but not entirely Goldman Sachs cuts Apple to sell & cut its price target to $233 from $250 as it sees revenue dropping a third Amazon trading at all time highs Big cabinet meeting today (Monday) End of the road for SAA (US airlines getting $25bn, and that not enough) Another 1% repo rate cut, but still SARB expects SA to contract by 6.1% this year Treasury looking to borrow $60bn, potentially from IMF

Lockdowns being extend everywhere (Spain +15 days, Italy +2 weeks, US wait and see, but likely end April) ZAR blowing out US jobless claims 6.6m this week Unemployment at 4.4%, non-farm payroll down 701k jobs (first down in a decade), -100k expected Numbers don't add up, latter is only to mid March Lots of lagging data, two issues here, one is data coming out at record worst, and even just a 1 month delay makes data largely useless Woolies update Famous Brands bails on GBK Spur suspends franchise fees amid Covid-19 closures Nampak gets their R1.5billion for selling glass biz Anchor reports record demand for fixed-income assets British American Tobacco working on COVID-19 vaccine

Simon Shares New weekly podcast in the RSS feed every Monday late morning. BUT only in the RSS feed, not on the website. So subscribe to the feed, it is here. Upcoming events; 09 April ~ JSE Power Hour: Trader's game plan Lockdown, day six as I record (seven as you listen). COVID-19 numbers globally continue to rise, but I'm watching Italy. They're now at three weeks of lockdown and are seeing daily new cases decline, but still at 4,000 a day. I am also seeing reports that they'll extend lockdown to after Easter, which is bad news for us. Our new cases are minimal, but still likely to spike higher and come the end of three weeks surely we'll be winning but not wanting to let the virus back in the front door, so lockdown extended? My thinking is extended to first weekend in May. It's after the two public holidays and means we'd have been in lockdown for 5 weeks. Longer term we're waiting for a vaccine, and that's 2021 at best, so even if lockdown gets lifted, heavy restrictions will be the norm and new lockdown periods very likely if the virus starts to spread with speed. Remember all data is two weeks old due to a 14 day incubation period. Overall I agree with our governments response and think the president and health minister are doing a great job under unimaginable conditions. Hardest hit is without doubt small business. Closing for even just 21 days with zero revenue can kill a business, even a strong one. SaySiyaBonga.co.za We also have extreme inequality in South Africa that makes lockdown frankly just not impossible for most South Africans. It's easy in Bryanston, but impossible in Alex and add in poverty we have an entire extra layer of impossible. First quarter moves; Top40 - 19.8% Indi25 -6.7% Fini15 -40.2% Resi10 -25.9% SA Property - 48.9% ZAR/USD -28.2% S&P500 - 20.0% FTSE 100 -24.8% Nikkei225 - 20.0% Gold +4.2% Brent oil - 61.4% Questions is if the worst is behind us and the honest answer is that nobody knows. We've seen a massive rally in the last ten days, but that is more about liquidity as governments (especially the US) pump cash into the system. Certainly rallies of around 15% in a bear market are totally normal, we saw about half a dozen during the 2008/9 crisis. I also don't think the market is going to be able to ignore the horror data that will be coming out over the next many months. The other issue is that markets try and price in the future, but our forward view is limited to days, maybe weeks. Markets want to price in the next 12-18 months and we have zero visibility that far out. The data for the rest of 2020 will be bad, very bad. But we have no real idea or reference as to just how bad. We're going to see a number of bankruptcies, large and small, local and global. Some are easy to spot; airlines, high debt companies, cruise companies. But a lot will surprise us. I continue to only buy ETFs (ASHGEQ my preferred). Subscribe to our feed here Subscribe or review us in iTunes Hello junk And now we're junk. Full junk status, or in the lingo ~ non investment grade. The outlook was negative and this is significant, means we can go further into junk status at the next review in October. Ideally we don't want to slip too far down that status because it makes coming back that very much harder. The immediate response was the local market green, Rand weaker at R17.95/USD and bonds about 1.5% higher yields. The yields are what matters. We issue new bonds every week to cover costs, so far his weeks auction was over subscribed and that's what I expect. We're not actually at risk of default so the +11% yield is very attractive. Also with SARB buying in the secondary market we've got lots of liquidity. But overall, it was pretty much priced in, now government needs to get us out. Practically we're now also out of the Citi World Government Bond Index (WGBI) at the end of April. This will see selling in our bonds, also a lot of mandates don't allow junk bonds, so more selling. The flip side is a lot of mandates only want junk bonds (for yield albeit at higher risk). So in a way we've gone from a tiny fish in a giant pond to a large one in a large pond. Nice, but still not want any country wants. We'll also see the local banks downgraded to junk, when the sovereign is junk so go the banks. But it will potentially increase their borrowing costs and that will be passed onto consumers. Question from Njabulo Nsibande What happens if all REITs or the top ten REITs (as they make up about 50% in the case of CoreShares income property fund) in an ETF all go bankrupt. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Moodys junk (negative outlook) SARB bond buying Moboweni, world bank & IMF Motsepe R1bn US worst US jobless claims - EVER US $2.2trillion bail out Edcon CEO, they can't pay suppliers TFG wants delay on rent Dividends being delayed

Upcoming events; 09 April ~ JSE Power Hour: Trader's game plan New weekly podcast in the RSS feed every Monday late morning. BUT only in the RSS feed, not on the website. So subscribe to the feed, it is here. Subscribe to our feed here Sign up for email alerts as a new show goes live Lockdown T-1 day Will lockdown hurt the economy? Yes it absolutely will. Exactly how much we have no idea, but our economy is largely shutting down for three weeks (at a minimum). The impact too GDP, business (small and large but especially small) will be huge and right now is not quantifiable. How do we pay for it? We print money and take on state debt. Is this bad? Sure, under normal conditions. This is not normal conditions. This is a global emergency and it requires drastic measure. The extra and more expensive debt and more cash printed is all bad, but right now saving people and the country and its people takes priority over the economy. I know a broken economy is going to hurt, but no country or no people would make an economy moot. One point is that if we print money and run our debt higher, we're not doing it alone as a country, so the impact may be muted as all countries end up with way worse debt to GDP levels and weaker currencies making it all moot. Will Moodys downgrade us on Friday? Probably, maybe? But at this point nobody cares. Really, nobody does. The entire global economy is at risk of junk status. Also the local market and government bonds are way worse off than what a downgrade would have caused. Will lockdown be only three weeks? Initially sure. But most health experts say that after the initial lockdown the economy opens again, the virus returns and we go into another lockdown and this process continues for months if not the rest of 2020. Losers? Pretty much everybody. Especially those with debt and high fixed costs. Tourism and entertainment industries extra especially. Winners? No real winners but food retailers and to a degree food producers will remain operational but likely with higher costs from their implementing COVID-19 restrictions and protective measures. And we'll be shopping less and spending less. Example; Shoprite to pay shop floor and distribution staff R102 million 'appreciation' bonus. Commodity prices are flying as mines move onto care and maintenance. As such miners are also have a great few days. But if they don't get back to mining soon, they're only selling stock piles and that eventually runs out. Have we hit bottom yet? I do not think so. Price action is moderately suggesting we have. But I suspect the markets will get solidly spooked when we start seeing the economic data. We'll get data that will be the worst every recorded, it'll take a strong market to not freak about that. Further the market seems to be thinking COVID-19 will be over in the next month or so. I think COVID-19 will potentially remain a problem well into 2021, we'll just be better at managing it. What's happening to dividends? We've seen a number of companies delay their dividends by up to six months. They're protecting cash in very uncertain times. At this point it has only been delays in payment, but at some point we may start seeing already declared dividends being cancelled. I have no idea how that process works, I assume the board has the right to reverse a decision they took early about dividend payment? Further we're seeing results coming out and dividends being passed as boards protect their cash. I am happy with this, but I don't need the dividend income, many do. What am I buying? ETFs, ASHGEQ. Sure lots is cheap, price wise. But is it offering value? We can not know as we simple do not know how this plays out. I have made two purchases so far in March, doubling my usual monthly spend (excluding tax-free). But I am not going in boots and all. There will be lots of time for buying stocks. We won't wake up one morning and suddenly everything is back to pre-crash levels. It'll be slow and volatile with a recovery to the peaks maybe as long as 4 years, potentially as short as two. We've got lots of time to buy, don't panic buy. Is US$2trillion a lot? Nope, US Federal national deb in 2019 was some US$22trillion. Staggering numbers, but the proposed US 'package', while large is not that seriously big in total terms. Any good news? Our government is doing this right. Not all countries are, some are doing a horror job. We're not. Load shedding is gone for now. With the economy shut down demand for electricity has collapsed and as such Eskom can cope with the reduced demand. Will local interest rates drop further? Yes. Further SARB has announced "As a further measure to add liquidity to the market, the SARB will commence a programme of purchasing government securities in the secondary market.". The R186 is already 1.5% lower on this news. The SARB is essentially creating liquidity for those who want to exit their government bonds and receive the cash. How do they pay for this? They print money, that weakens th

Simon Shares Sasol (JSE code: SOL) is now talking a rights issue of some US$2billion, more than the current market cap. They hope to be able to avoid this by selling assets, finding a partner for Lake Charles and cutting costs. But the first two will be near impossible in the current climate, so expect the rights issue with a +50% dilution. In other words, a horror rights issue. Price will be weaker until those details and issuing of the rights. I am NOT buying, that may change when the rights issue hits. But not before. Brent oil is under US$27.00 a barrel. Big ouch for Sasol. Good news for petrol prices. I am seeing a flood of people wanting to get into the market, because it has fallen. On the one side, this is commendable. Yes cheap is best tine to get in. But this volatility is the worst time to try and start trading. If you want to start trading we have two series for traders, Boot Camp and Master Class. But frankly as always, ETFs the best place to start, especially in troubled times. Everybody asking about gold, yes it is going down. When crisis hits everything goes down. Gold is great when one is worried about the future, but when that worrisome future arrives people want cash so gold gets sold like everything else. MPC rate cut announcement this afternoon. No more 0.25%, surely? I think 2% - 2.5% is possible and the best response. Certainly nothing less than 1%. Upcoming events; 09 April ~ JSE Power Hour: Trader's game plan Subscriber to our feed here Subscribe or review us in iTunes COVID-19, my presentation of just two weeks ago warning on the virus and resulting market melt down, is already totally over taken by the reality on the ground. Read this take from the Imperial College COVID-19 Response Team. It has flaws, but also has golden nuggets. If we manage this crisis well I still think the worst will be behind us by Q1 2021. But the worst is going to be worse than I had thought, and if we do this well, well then it is a horror show of epic scale. It has solidly landed in South Arica and while still early days the confirmed case numbers are growing at the expected 33%, every day. So far government is doing a decent job lead by the NICD, President Ramaphosa the cabinet and especially the health department. But what matters more than anything is to #flattenthecurve. No large events, social distancing, washing hands, working from home if possible and limiting trips outside. All of this will eventually slow the growth, but we'll still end up with hundreds of thousands sick and many thousands dead ~ as a best case scenario. Yip it sounds wild, but that is the only way to slow the spread and stop it completely overwhelming our health services. This of course means a massive hit to our economy and individual peoples financial well being, find our series on managing debt here. If you have debt and are worried about repaying, or if you're in default already - this is a must read. Our market, and in fact all global markets, remain under severe pressure and extreme volatility not seen since 1929. I's not getting better any time soon. The global economy is grinding to a halt and there is no quick fix. Best estimates suggest twelve months of COBID-19 before as a planet we're truly on top of it. So Q1 2021, at best. For investors, we continue to tread cautiously and I continue to buy my monthly ETF allocation and will double the monthly purchase amount. But I am not whole sale buying stocks, because cheaper is very likely. Traders, as I have said before. Reduce position size, widen stops and be disciplined. And of course, obey your stops 100%. From a personal perspective, start planing for the long haul, I don't expect this to all be resolved in a month when schools are due to go back. As example, I've downloaded online monopoly to play with my niece and nephew in Durban and have proposed every few days or so one of us will present (via zoom.us) on a topic that interests us. It's going to be a very long school break house bound. Lastly, let me know if we can help. I have no idea what or how, not money or food or handshakes. But if you got ideas how Just One Lap or I can help you or the broader community, let me know. Maybe it just something as simple as helping to set up Zoom.us or a weekly bookclub session on Zoom. Send ideas. And very lastly, stay safe. Social distance and wash your hands. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares The Sasol (JSE code: SOL) share price has collapsed this week for three key reasons. Saudi Arabia has declared oil price war on Russia and sent Brent down to the low $30's as they try and get Russia to agree to production cuts. Sasol has not hedge the oil price. They usually hedge about a third pf production, but currently they only have ethane and ZAR hedges in place. Massive debt burden of some R150billion, now some 3x more than their market cap. This is spooking the market worried about a potential rights issue at current levels. I'd add that a right down on Lake Charles is surely a given and in time Sasolburg as well. All in this is a total mess and coupled with poor management the market is not happy. I fully expect Sasol to survive, but in what form or price have no idea and I would NOT be buying. Subscriber to our feed here Subscribe or review us in iTunes COVID-19 continues to create havoc with Italy shutting down the entire country of 60million people as deaths exceed 600 and confirmed cases over 10k. But that still means some 20k cases they do not as yet know about. (Watch: COVID-9, markets in trouble) Recession is fast becoming a certainty as regions (and entire countries) shut down, people stop going to work or out at all so no spending and no production. A huge concern is the USA who are not testing very well as South Korea did and may have tens of thousands of cases they don't know about. South Africa has 13 confirmed cases and so far it is being handled very well. Identify the confirmed case and works backwards with who they contacted putting people into isolation. Testing is key as South Korea shows. But while we're very good at this sort of thing (remember listeriosis) it can very quickly overwhelm a struggling medical establishment. Global there are simple not enough ICU beds and we're likely far behind the global average. Bottom line is that this is getting worse and will continue to do so for a while (no idea how long that while is). No surprise markets are panicking and extremely volatile and my view is they'll go still lower. Some quick good news; yellow and white maize levels in South Africa are looking very good which is good news for food inflation and producers, especially Astral Foods (JSE code: ARL). Offer for Assore (JSE code: ASR) at R320 which may provide some opportunity. There are no dates yet and lots of T&Cs. But if I see some weakness to say around R255-R270 (15%-20% below offer price) I'll pick some up for the R320 take out. Upcoming events; 26 March ~ Small money changes that make a big difference 09 April ~ JSE Power Hour: Trader's game plan JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Recession, surely nobody surprised? Growth lower for longer. The budget is certainly designed to help, but the R160billion cut from pubic sector wage bill is not going to be easy. Likely we'll also now get at least 2 rate cuts this year, each 0.25% minimum. Last week of February was the worst week for global markets since 2008. It was violent and it's not going away. COVID-19 marches on. Of note, 94k sick but 3.4k dead. With mortality of 1% it should be 300k sick and at 2% mortality it should be 160k sick. Are markets ready for the spike in sick? We'll find out but the Fed is not waiting. Negative US rates in my life time as the Fed panics and cuts by 0.5%. Thing is COVID-19 is a supply issue, not a demand side. Fed can influence demand with rates, but that does nothing to the supply side. This after a G7 meeting, but only the Fed has responded so far and US markets sold off some 3% after the rate cut. At the post rate cut press conference; "the risks to the U.S. outlook have changed materially" -- Powell "The virus and measures taken to contain it will surely weigh on the economy ... for some time." -- Powell Shoprite* (JSE code: SHP) very solid results with rest of Africa back into profit (albeit small), great cash flow and local margins holding as they gain market share. Upcoming events; 5 March ~ JSE Power Hour: COVID-19, markets in trouble 26 March ~ Small money changes that make a big difference 09 April ~ JSE Power Hour: Trader's game plan * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

I chaired a panel discussion on the 2020 budget by Minister Mboweni and have included the audio from that panel. The biggie, which is not mentioned is that the annual tax-free allocation has been increased to R36k a year effective 2 March 2020. On the panel with me was; Elizabeth Fick ~ Tax and Fiduciary at Investec Jacques Conradie ~ Managing Director at Peregrine Capital Theunis (TJ) Strydom ~ Financial journalist and author Albertus Marais ~ Director at AJM Tax Subscriber to our feed here Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares I bought Sibanye Stillwater* (new JSE code: SSW) last week, average price 3950c. You want to own single commodity miners when price has already boomed and underlying commodities are flying. We have both here and if prices hold they'll print money for the rest of this financial year ending June. I'll add on the fifteen day EMA and hold for as long as it runs. Metrofile* (JSE code: MFL) got nailed on Monday down at 230c while there's still a delisting on the table at 330c plus mid year dividend (likely to be at least 5c judging from last trading update). So is the deal off? Officially it is not and it seemed to me to be a fairly low risk deal. So a panicked seller who needed cash? No idea. But current offer is 280c and assuming the deal happens that's a potential 55c profit by mid year when I would expect the deal to conclude. Coronavirus (COVID-19) continues to spread with over 75,000 confirmed cases and over 2,000 dead. But it still remains very much contained to China with 750million people on some sort of travel restriction. Apple has also announced production issues out of China albeit the rumoured low cost iPhone is apparently still on track for March. More reports coming about a good maize crop locally this year, even after late rains and hence planting. But prices not as low as one would expect, seemingly Zimbabwe shortage is seeing them buying our maize and keeping it higher. That said, Astral (JSE code: ARL) still looks very cheap to me with better maize prices compared to previous years. Upcoming events; 20 February ~ A new Tax-free year starts 05 March ~ Investing in a low growth economy * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Does COVID-19 just delay spending? One of the issues surrounding the Coronavirus is lost revenue and hence lower profits. Apple is reporting supply constraints, Starbucks has closed the majority of their Chinese stores and so the list goes on. But here's the question. Which purchases are simple deferred and which never happen? Supposedly large ticket items such as an iPhone or white appliance will simple be bought later. So lost sales now come up later. But this is 100% true. Say your phone was lost. You need a new one now, not in a month so maybe instead of Apple you get a Samsung, or a cheaper Apple that is in stock. With consumables the story is very different. If I don't have that coffee or lunch today, it doesn't get held over till tomorrow. That sale is lost. So Starbucks suffers more than Apple. Another point is for example the Mobile World Conference in Barcelona has been cancelled and this is not deferred. The event supposedly brings in some Euro500million in spending over the three days. That money is gone, it'll be spent at home, so the city loses out. But if you don't buy your consumable today and have left over lunch at home, where does the 'saved' money go? Do we still see a surge later, but maybe in big ticket items if we've saved enough from deferred lunch dates an coffees? Or does it get properly saved into a bank account? What about hourly paid workers? No work = no pay. They will be hurt, albeit company will benefit as lower expenses while closed. Point is, the money to be spent will surely be spent. Maybe different timing and maybe different product or location. But that money doesn't disappear. So absent of the Coronavirus becoming a lot lot worse, any hit is merely short term and could be followed by an equally short burst of spending? Sure some spending will be lost, but not much? JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Ecsponent (JSE code: ECS) have announced they will default on their March preference share dividends. This is a mess and preference shareholders are in a real bind. If you hold any, contact your lawyer. AngloGold Ashanti (JSE code: ANG) confirms the sale of their Mponeng to Harmony (JSE code: HAR) for US$300million meaning it'll no longer operate in SA from June. Coronavirus (COVID-19) continues to spread with almost 45,000 confirmed cases and over 1,100 dead. But it remains very much contained to China. Reports are it will already take 0.2% - 1% off global 2020 GDP. Upcoming events; 20 February ~ A new Tax-free year starts Subscriber to our feed here Subscribe or review us in iTunes Don't shoot the messenger Gina Schoeman, South Africa economist for the Citibank Global Economics team. I attended a S&P Dow Jones Global event on Tuesday where Gina delivered the keynote and here are my notes on what she said. Any errors are mine, not hers. Gauteng is 35% of SA GDP. Service delivery protests show strength of democracy. People are leaving small towns due to lack of services and this erodes tax base, making service delivery even harder. SONA watch list; Cosatu Eskom bailout plan. SAA business rescue. Public sector wage bill. Reforms. Cabinet reshuffle. Watch the World Bank Ease of doing Business survey as good metric for Ramaphosa. We're 84th but where under 50 when Zuma took over. SA union rate is 24% and dropping and will drop further. Members are aging and youth are unemployed. Secret strike ballot. Manufacturing is very productive, second only to financial services and this offers an opportunity. Household debt is 75%, down from 84% in 2010. But the nuance is in the data. SA population growth is 1.5%. GDP growth has to exceed this for people to be getting richer. Lack of rental inflation is a big driver of low inflation overall. No VAT increase in the 2020 budget. Moody downgrade is very likely, but don't worry about that. Worry about Fitch and Standard & Poor dropping us lower because it is now about the recovery. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Tesla (Nasdaq code: TSLA), epic short squeeze. Steinhoff (JSE code: SNH), epic short squeeze. Coronavirus continues to spread, fast, with almost 25,000 confirmed cases. People are recovering and we now have two deaths outside China. Tongaat (JSE code: TON) results are out and the suspension has been lifted. The results were a horror show with debt of some R13billion and negative equity of almost R4billion. They need a rights issue of at least R4billion and the share lost over 50% when it resumed trading, currently at 488c after being suspended at 1321c. No Sasol* (JSE code: SOL) that was not "a satisfactory set of operational results for the six months". Both financially and operationally the last six months (six years?) has been a horror show. I hold Sasol since 1994 and haven't added since the 2009 lows, but will be exiting. Upcoming events; 20 February ~ A new Tax-free year starts * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Law of large numbers In a financial context, the law of large numbers indicates that a large entity which is growing rapidly cannot maintain that growth pace forever. Simple that the bigger you get the harder it is to grow and ultimately the growth slows to modest inflation or GDP adjustments. We see many companies fearing this rush out and make bad acquisitions - but that's another story. I want to focus on how this law can at times be broken when the underlying market fundamentally changes and the example is Microsoft (Nasdaq code: MSFT). On a PE of 30x it is expensive, but this US$1.37trillion company grew EPS by 40% making it cheap using a simple PEG ratio. It is up six fold in the last decade and in the decade before is was red. How is a trillion dollar company able to grow earnings 40%? Broadly software as a service and cloud computing but the story is bigger, edge computing. Certainly the story is no longer Windows. Edge computing is the vast number of small devices that are invading our homes, offices and lives. Examples are; streaming music and movies, smart bulbs, security systems and virtual assistants. This is just a few examples, but they're fundamentally changing our lives and the demands on processes and data storage and importantly the data is close to the device to ensure speed, requiring data centers everywhere. Add to this the amount of data we create and need to store. For the first time in my life I have data that only exists in the cloud, simple because I have so much data. Now I am paranoid, so I keep it on two clouds, and wildy encrypted. Data storage or cloud computing was hardly even an idea a decade ago. All the talk was of slim clients with all processing and data in the cloud. Back then Google (Nasdaq code: GOOGL) was the leader, but it has exploded and Google now trails in third position and we never really got to slim clients (Chromebooks the exception and services like Stadio newly trying). This has changed companies such as Amazon (Nasdaq code: AMZN) and Microsoft (Google oddly lags in cloud) who are the leaders in cloud computing. The thing is one could have made a solid argument that even under new management Microsoft was largely ex-growth and a mature company. But then business models came along, they grabbed them with both hands and now they're growing faster then they have in over two decades. This growth changes the game for Microsoft, Amazon and others. I have no idea where it ends but this trend can go on for a lot longer and they can grow revenue by a bunch more and then, hello two trillion dollar company. What is noticeable that this is a tech issue and that traditional brick and mortar companies, miners and the like do not have this potential. They do hit the law of large numbers, but computing and the internet has changed the rules for tech stocks. Of course eventually the law of large numbers will come into play again and growth will slow. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Correction, last week I said Naspers got some R100billion from selling Prosus shares. It was more like R22billion. Apple (NYSE code: AAPL) results knocked it out the park, again. Profits up 11% to US$22.2billion, EPS up 19% to US$4.99 and revenues up 9% to US$91.8billion (US$1billion revenue for each trading day in the quarter.). All above expectations and even iPhone sales grew 8%. Coronavirus. Is this the end of the world, half an end or nothing much? Likely not much but at this point we truthfully don't know. It is spreading and it is lethal, but part of the increase in numbers is due to health officials being on the alert. Also most deaths are aged people and those already susceptible to an infection, how bad is it for healthy people? Do we convincingly know of somebody who got the virus and has been clear for 14 days? Reports are of over 100 being 'cured'. Lots of questions and thus far very few answers. Certainly global markets have been jittery, but no real panic as yet. That said, there will be pain, Starbucks has closed 1,000 stores in China. Even if just for a week, that'll hurt a little. Longer could hurt a lot. Short answer, we know little and this will play out over a few weeks at least. PGM demand, will vehicle manufacturers switch from palladium to platinum? Nasen Nair from Sasfin Securities commented to me that maybe the savings aren't enough to justify the switch? About $100 PGM goes into a catalytic converter so switching saves maybe $50 (albeit switching pushes up demand and hence prices). And on a car costing +$10k that's small change? CellC has defaulted on a loan and that sent Blue Label (JSE code: BLU) down some 12%. The reason is simple, while they have written CellC to zero, the market hopes they get something, but this default makes it look less likely. After destroying the company and its value, Brait (JSE code: BAT) executives will get a R200million golden handshake after the rights issue in place to save the company and move control to Ethos. You can't make this stuff up. Upcoming events; 20 February ~ A new Tax-free year starts Subscriber to our feed here Subscribe or review us in iTunes Restructuring my portfolio Over the last few years I have been slowly increasing my ETF portion of my portfolio from 50% with the ultimately goal of getting it to around 65%. This is going to take some 5 years and the logic is to reduce risk (risk that I buy dogs) and make my life easier. So far this is on track but also has impacts in other parts of my portfolio as the current split is 30% in 'til death do us part long-term stocks. Then 10% in second tier small and mid caps and the final 10% for trading. So what gives if I squeeze my ETF holding to 65%. The easy answer is that each of the other three drops their weighting by 5%. The hit on the long-term is fairly modest but very pronounced on the second tier and trading portions of the overall portfolio as they drop from 10% to 5%. The second tier I will cheat and buy some ASHMID ETFs that tracks the local midcap and this will be part of my 65% into ETFs. So easy solution. Till death do us part will get a large pile of cash as my Metrofile* (JSE code: MFL) get bought out at 330c later this year. This is currently my largest holding after I was a large buyer between Christmas and New Year as some seller got aggressive in the market knocking the price down to 265c (my lowest purchase was 272c). Most of this cash will go into ETFs when it arrives (likely around mid year) and this will boost my ETF holding to over 60% and easily on track for the 65% target. Then the biggie is my trading portfolio, essentially I'll be halving it's size so either I trade smaller size or I remove one of the two strategies. Current trading strategies are; The lazy trading ETFs Trading ALSI futures pre-open every morning. My plan here is to discontinue the lazy ETF trading. It's a small percentage of my overall portfolio and it will then free my ALSI trading to carry on carrying on. The question then is what of the weekly lazy update I send every Sunday. In short it will expire in time, but send me thoughts. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Deutsche Bank has redeemed three of their ETNs. DBCHIN, DBEMER & DBAFRI. As ETNs they would have expired anyway, but that was due to happen next June. Holders of these ETNs last week will receive cash at net asset value (NAV) for the ETNs and it lso means Deutsche Bank is no longer active in the listed passive space on the JSE. Richemont* (JSE code: CFR) trading update was strong, but with one concern - online. Single digit growth is very pedestrian for online even if they had issues with flooding at one of their warehouses. Strong Shoprite* (JSE code: SHP) trading update. Revenue +7%. Rest of the continent is still struggling, home local was lekker. Wednesday saw Naspers (JSE code: NPN) sold 22million (1.4%) or their Prosus (JSE code: PRX) holding at a price of about R1,080. Naspers claims this is due to demand for the shares from investors. Prosus was off some 3% at just over R1,100. The logic here was that many would buy their new Prosus and sell straight away into the market, netting a small but easy profit in about half an hour. Prosus price will rebound, Naspers was trading up almost 2% as this sale happened. Nasper has said they'll use the Euro1.5billion (about R100billion) for a share buy-back in another attempt to close the discount that exists. But as Piet Viljoen of RE:CM points out in the Tweets below, it's not likely to work. Thank you for asking, I had hoped someone would. We are in a similar (albeit much, MUCH smaller) situation, so we have thought about it. A lot. Here follows a thread. https://t.co/DkyYmX9zAo — Piet Viljoen (@pietviljoen) January 22, 2020 How to start saving (Cash Club) Three secret ETF fees OUTvest ONEfee RA at 0.2% Upcoming events; 20 February ~ A new Tax-free year starts * I hold ungeared positions. fff Download the audio file here Subscriber to our feed here Sign up for email alerts as a new show goes live Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

2020 predictions show Every year Marc Ashton, Keith McLachlan and Simon Brown do a predictions show. Three wild and wooly predictions for the markets followed by a call on the Top40 and ZAR for the year ahead. Importantly we start each show with a review of the previous years predictions and you'll find the 2019 predictions show here. Subscriber to our feed here Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

FTSE 100 structured product In the last show for 2019 Simon chats to Viv Govender and Gary Booysen from Rand Swiss on their latest structured product. This time it is an auto call over the FTSE100 in US$. We also chat a bit about Brexit and what it actually means; good, bad or ugly. Subscriber to our feed here Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Len Jordaan, Index and Structured Solutions, Absa CIB Simon and Len delve into understanding risk and how it applies to your Exchange Traded Fund (ETF) selection, both as a basket of different ETFs you put together but also as to which individual ETF you may be buying for a tax-free or discretionary portfolio. Some links we refer to; Managed volatility JSE Direct interview. Managed volatility ETF blog. MAPPS Protect. MAPPS Growth. Subscriber to our feed here Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Upcoming events; 05 December ~ Position your portfolio for 2020 Subscriber to our feed here Subscribe or review us in iTunes Simon Shares Third quarter GDP came in at -0.6% making the fourth negative GDP in the last seven quarters (since Jan 2018). Our economy is dying. Important the economy is not the market, but it is still dying. Sygnia will not be charging you 0.34% to exit their Itrix ETFs. But man the communication around this was a horror show that a final tweet seems to suggest it only if you're directly exiting via the ManCo. So moot for us ordinary investors. Tongaat (JSE code: TON) report is out and it another horror show. They're going after previous executives, including the previous CEO and CFO. But are refusing to release the full report. Talking of reports, Steinhoff (JSE code: SNH) is being sued by the PIC for their full PWC report. They only released a short version of the +3,000 page report claiming it was confidential. But if shareholders are going to sue, and they are. Then this report is an important part of the case against Steinhoff and the former executives. Purple Capital (JSE code: PPE) owners of Easy Equities results show much improvement in terms of number of clients, revenue and ultimately a reducing loss. Their path to break even seems easy enough now, likely two - three years. That said the share still has some large sellers now at 33c/34c, above the 30c they camped at for some eighteen months. A thought on the trade wars which Trump is heating up rather than winning 'easy'. We(the world)has always assumed that Trump was largely in control and could end them at any point. But I think that narrative may be totally wrong. Firstly China wants any phase one to include going back to zero tariffs and Trump is saying no. But I also think that frankly China may just did in their heels and wait out the next 1-5 years Trump is in power. They're not happy with him signing the Hong Kong bill and they can manage the crisis way better than he can. A side note; bail out to farmers is now larger than the vehicle manufacturer bailout of 2008 and still farmer bankruptcies is up 24% this year. SAA. I have flown SAA every flight I could for 20 years. But no more and it is frankly time to let the airline go to the wall. Rumours are that's exactly what Moboweni wants, but Gordhan is digging in his heels, incorrectly at this point. Lots of hysteria about the CompCom declaring mobile operators must reduce data fees by 30%-50%. Firstly read the actual report, this is a recommendation for ICASA to deal with if the telcos don't respond within two months. Secondly, remember when ICASA enforced reduced interconnect rates? According to the telcos this was the end of the world. Funny how they still make massive profits. The short version is the telcos price gouge because they can and they won't willing stop. Here's an example; "(MTNs) 2nd most expensive pricing is in Rwanda where a GB of MTN data costs almost half of what it costs in its home market". "Only in the DRC ($8) does Vodacom charge its customers more, on average, for a gigabyte of data than in South Africa ($7.83)." Grand Parade (JSE code: GPL) cautioned they are in negotiations about the "disposal of a material interest in Burger King SA". So after exiting Sun Slots what would they have left? And who is the potential buyer? JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Woolies* (JSE code: WHL) update is same old same old. Local food doing great, fashion okay and Australia still under pressure with the refurbishments due to end March 2020. Brait (JSE code: BAT) announces a large recapitalisation with a cR5.5billion rights issue at a 27% discount to the share price and about 60% new shares. This is also a massive discount to net asset value (NAV) which is now 3800c and a share price at decade lows. Christo Wiese will not take up his rights, rather Ethos Capital (JSE code: EPE) will and they'll become about a c15% shareholder. Transaction Capital (JSE code: TCP) monster results. Very strong, double digit everything. This was one of the stocks Petri Redelinghuys picked on my Small Cap Portfolio show recently (along with Jubilee Metals (JSE code: JBL)). British American Tobacco (JSE code: BTI) update was good in all areas and margins are growing. They do however warn that e-cigarette sales growth to hit low end of target. Charles Schwab is taking over TD Ameritrade. Not surprising after Schwad cut brokerage to zero, and everybody else was forced to follow suit. It's now a game of size. More clients, more cross selling, more interest turn etc. Bigger is way the way forward for now. Understanding the Krugerrand Custodial Certificate Creating returns in a low growth world Upcoming events; 05 December ~ Position your portfolio for 2020 * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes It's not ok to just be your best "It's not ok to not be the best trader you can be.....it's NOT OK" Mike Bellafiore You have to be better than your best. You have to continually be getting better. There is no rest for traders. We have to be always improving. Trading is largely a zero sum game, you have to better than the others. 've often stated that any trader who thinks they have arrived as a trader will swiftly be shown the door by the market. It is a continual process of improvement and caution against believing our own hype. So, what do you do in order to always be improving? The easy answer is a trading journal that you keep and a constant reviewing of your trades. The journal would include trade details, but also what happened post exit. Your perfect trade score and how the trade felt. It would also include the entry and exit which you'll be able to review. Did you jump too soon? Is this a frequent problem? If so what are you doing about it? Are exits a problem? Taking profits too soon? Ignoring stops? If so what are you doing about it? For me personally I have a journal and track my perfect trades. But as I also only trade for about 10-15 minutes after the 8.30am futures open, I'll often record my screen while trading and I review these videos. The review is not only checking to see if my entries were good (exits are either at target or stop so automated and not important for this process). Did I get in timeously? Or late or early? Am I missing information? I am watching the bids/offers and last trades, so not a lot of data. But I can miss data as I move between screens (trade, orders, chart, depth, etc.).What I find at time is that I take a long trade, for example. And it was right, but as I was entering the trade it switches to neutral or even short and I miss that change. It's almost as if I am rushing, scared of missing out (or paying a higher price). So now I have a process. I set the trade screen. But as I go to click 'trade' I run my eyes over the bids/offers a last time to make sure I am on the right side of the trade. My other problem is I flip between the different screens too much. I really only need to watch the depth and last trade screen (which is same block for my platform). But while waiting I get restless so I am flipping around for no real purpose. The solution here is easy. Close all the tabs/browsers and also get rid of all other data on my trade screen, except what I need - depth and last trades. Point is alway be improving. Alway be checking in on yourself. Always be striving to be better every day. My last point is to always remember that trading is like a high wire trapeze artists without a net or safety harness. We get no second chances. We can do 99 perfect trades and then 1 horrid trade gives it all back. As a trader we need to be 100% all the time. Not 100% in terms of profitable trades. 100% in terms of perfect execution every time. Because one slip and our money pile is back at the beginning, or as a trapeze artist, we a pile of broken bones on the floor. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Upcoming events; 21 November ~ Creating a portfolio at the market highs 05 December ~ Position your portfolio for 2020 Ironman your trading This is an hour long recording of a live event I presented in Cape Town on Tuesday. The PDF is here. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares SAA retrenchments, a test for the bigger Eskom process? Telkom (JSE code; TKG) to buy CellC? R1 would seem a fair price and would benefit both Blue Label (JSE code: BLU) and Telkom. Rumours that MTN (JSE code: MTN) is also in the running to buy CellC, but I can't see the competition commission allowing that. Of note is that Blue Label have not issued a SENS (Telkom has, but not naming CellC). The reason is that with CellC being written down to zero the deal is not material. Aspen (JSE code: APN) sells Asian operations for Euro400million. This should take the groups debt down to just a little over R30billion and will within debt covenants and manageable. Rebosis (JSE code: REB) failed to declare a dividend in the latest results yet as a REIT it is required to do so by law otherwise they have to pay tax n the profits. The protests in Hong Kong continue on and are getting more violent as the authorities dig in their heels. This is hurting the economy in Hong Kong but I don't see the authorities giving in any time soon. Also remember that after the 1997 handover Hong Kong operates as a "One country, two systems" with China. This expires in 2047 and truthfully nobody knows exactly what that means. But likely China will want Hong Kong to move closer to it and so is not going to back down on the current protests. Good results from Spar (JSE code: SPP) continuing the results trend from Pick n Pay (JSE code: PIK) and Shoprite* (JSE code: SHP) trading update. An update from Steinhoff (JSE code: SNH) saying they're still considering listing Pep Europe. But the biggie is they may also do a rights issue to help pay legal fees? Really? Not sure many shareholders would be happy to partake in that waste of money. An yes I still think Steinhoff is heading for zero. Brexit, election on 12 December. Likely Conservatives win, but not guaranteed and will they have a majority or not? Upcoming events; 7 November ~ Millennials navigating markets and the investment landscape 21 November ~ Creating a portfolio at the market highs 05 December ~ Position your portfolio for 2020 * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Short squeeze (or a long squeeze) A short squeeze is when a stock surges, usually on some good news - but the surge seems disproportionate to the news. The theory is that a lot of people were short (had sold the stock to profit from the downside), then the good news sends them all heading for the exits. In order to exit they have to by so you have the positive buyers sending prices higher but you also have the short sellers who're sending the price higher. This is potentially what we saw on Blue Label on Tuesday when rumours started circulating that they had two potential buyers for CellC. This is one of the real risks of shorting stocks, you're downside in a short position is unlimited as a stock can go forever. With options your risk is always only 100% as it is the right wheres other derivatives are the obligation. One could also see a long squeeze, but this is a phrase I have never heard mentioned before. This would be when bad news sends a stock crashing as holders of the stock all head for the exits at once, think Steinhoff. The difference is that short sellers are also short-term in nature. Sure that may be months or even years, but it's never forever whereas as holders could be looking to hold forever. Also short sellers profit or loss is paid daily whereas long holders losses are only on paper. Real but always a hope of recovery. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares October was a decent month for the Top40, adding almost 3% and now 9.5% year-to-date excluding dividends. Moodys makes us negative but not junk and the ZAR soars. Finance minister, Tito Mboweni, says government 'not considering' the idea of prescribed assets. https://www.businesslive.co.za/bd/national/2019-11-05-treasury-not-considering-prescribed-assets-mboweni-says/ The Shoprite* (JSE code: SHP) update what was way more interesting for the fact that Christo Wiese got voted off the board, until he used his zero economic but voting shares that he tried to sell to Shoprite for some R3billion. The actual update shows SA doing well and importantly we're seeing some inflation while the rest of Africa continues to struggle and the new Xtra Savings Rewards Programme got 1million sign ups in the first week. Afrimat (JSE code: AFT) results knocked it our of the park with their iron ore business (Demaneng) is paying for itself in double quick time. Famous Brands* (JSE code; FBR) results show things still tough, especially in the UK as operating margins get killed. They used to be over 20% and are now hanging onto 11% by a thread. Uber lost another $1billion in one quarter, again due to interest, depreciation and stock based compensation costs. Last quarter they blamed listing costs this time they point out Uber taxi is profitable if it weren't for the costs above and Ubereats lost almost $400million. How does food delivery lose money? What are the costs? At listing Uber aid they may never be profitable, and maybe they were right? ETF blog ~ New CoreShares property ETF (CSPROP). VIDEO: Live trading ALMI price action for 300 points. Upcoming events; 7 November ~ Millennials navigating markets and the investment landscape 21 November ~ Creating a portfolio at the market highs 05 December ~ Position your portfolio for 2020 * I hold ungeared positions. ddd Download the audio file here Subscriber to our feed here Sign up for email alerts as a new show goes live Subscribe or review us in iTunes Goals, processes and habits Goals need process and process becomes habit and achieves goals In my trading presentations I always talk about goals and the problem of having a single giant size goal that while desirable is frankly overwhelming. My advice is always to break goals down in small bite size pieces, with one example of those bites always being doing a single perfect trade, followed by another perfect trade, and another and another. This idea applies to everything we want to achieve in life. Truthfully we have the ability to do almost anything. Almost because doing a marathon in under 2 hours is going to be out of our reach - by an hour. But the goal of doing a first marathon is easy enough, if we break it down. First couch-to-5km, then 10km and so on. Buy breaking a large goal down into small pieces we're able to achieve as we go along and hence we also make it 100% achievable. Then as we're going along achieving our smaller goals via processes they fast become habits and soon our goals are done. I started swimming just over a year ago, my goal was a Midmar Mile which I did back in February in a horror time of 44 minutes. But back then my target time was 48 minutes, so I was chuffed. Now my goal for the 2020 Midmar Mile is under 30 minutes. Hard, very hard. But it breaks down into 4 pool sessions a week and every pool session has it's own goal. Distance or speed or technique. So 4 times a week I wake up eager to try and hit my goal and most weeks I end the week having hit at least 3 sometimes all 4 of my goals. And slowly I am moving forward. Important is that I really look forward to and enjoy my training sessions, something that 18 months ago seemed like a crazy idea. Most important is that is that I structure my process to fit within me. So I do not do early morning training, I train mid morning because that works better for me and hence is easier for me to do. If I was also trying to wake up at 5 to be at the pool by 6, it would be way harder. So we need to move this into our trading and investing. What's the goal? Large dividend paying portfolio? FIRE? Trading for income? It can be anything but then it has to be broken down into small processes that enable that goal. Example, invest enough to live off investments within ten years? Get family onboard. Cut living expenses. Live small and cheap. Max out tax-free. Buy ETFs. None of these are hard, but all will require effort and work. Want to be successful trader living off trading income. How much capital do I need? Do I have enough? How do I get enough? Pause, do I even know how to trade? Learn technical analysis and price action. Practise ~ place 1,000 stop losses. Practise ~ enter 1,000 trades. Practise ~ exit 1,000 trades. What would make a perfect trade? Now do one, and another and another.You now have goals that can be broken down into processes. You'll also notice that none of this results in overnight success because overnight success takes years. JSE

Yield focused ETF from CoreShares CoreShares has merged their PTXSPY EF into PTXTEN and now converted it into a new CSPROP. CSPROP is a new property ETF that has yield as 75% of the weighting adding both diversity and yield to the ETF. Simon chats to Chris Rule about the new ETF, why the changes and the details. Find more here. Subscriber to our feed here Subscribe or review us in iTunes Up coming events; 31 October ~ Live Fat Wallet Show recording 7 November ~ Millennials navigating markets and the investment landscape JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Crowd1 ~ I been digging into it. Scam, a multi level marketing gimmick with no actual product apart from getting other friends, family and fools involved. Ascendis Health (JSE code: ASC) trading updates illustrates the risks of relying too much on net asset value (NAV). They are writing down R4.2billion of "goodwill, intangible assets and property, plant and equipment". In other words everything. But the company has a market cap of only R2.2billion and that R4.2billion equates to some 850c per share totally destroying the reported NAV of 1435c. Calgo M3 (JSE code: CGR) and Balwin (JSE code: BWN) results were both under pressure form a stretched consumer with Balwin having less issues and producing the better results and profits. Both are well positioned for when the economy improves with Balwin in the slightly higher LSM market and Calgo with their burial operations. I sold Calgo a way back and would look to be buying one or both, but not just yet. Buying property requires confidence so they will turn later than say food, big box and white appliance retailers as these are cheaper products and hence bought earlier in the up turn. Rumours of an offer for Capital and Counties (JSE code: CCO). UK property assets are cheap, most trading well below NAV and sure Brexit is real risk and will hurt. Many, such as Capital and Counties, are great assets and will survive. Speaking of Brexit. One week to go. Tic. Toc. Rand R14.65/USD. Never write off the Rand. Over the long-term it is a one way bet at a few percentage points a year. But short term is really is all about flows in and out of South Africa and what drives those flows is not as simple as load shedding and the like. Sasol (JSE code: SOL) taking pain again on Tuesday, off over 7% on a Cadiz report suggesting the dividend may be cut. For the past 10-15 years the Sasol dividend yield has averaged just under 4%, chunky. Right now the historic is almost 5% but a slashing of dividend by 50% will still see 2.5%. So maybe an even greater slash of the dividend? I think that's pretty certain as they need to pay down debt aggressively. This share has been a horror show. Prosus (JSE code: PRX) is making a takeover bid for Just Eats, which has been rejected by the board but time will tell. More interestingly is the Prosus theory which is that eating at home is going to largely disappear. Much like we mostly made our own cloths in the 1800s but today nobody does. They say cooking at home will be the same, in time nobody will cook at home. Interesting idea, especially in terms of home design - saving space in the kitchen and money on appliances. But then spending that money on delivery. Rhodium, almost 700% in three years. I am doing an ALMI trading demonstration webcast on 28 October at 8.15am Book here. Up coming events; 31 October ~ Live Fat Wallet Show recording 7 November ~ Millennials navigating markets and the investment landscape * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Operating margins Pick n Pay (JSE code: PIK) results were good, but the increase in operating margin was outstanding and this had a serious boost to profits. Operating margin is the profit after the costs of sales, such as salaries, rentals and products, but before paying interest or tax. Hence a 'clean' profit margin as opposed to net margin that will also have interest, tax and other costs deducted first. It is especially important for retailers but not banks or miners for example. For those sectors we need other metrics such as impairments, cost-to-income and head grade etc. Every since Richard Brasher took over at Pick n Pay I have been moaning about their operating margin. He's been getting much right but the operating margin was stuck at 2%. Then in the last set of results tey crept a little higher and now are solid 2.8% up from 2.5%. This too me suggests the turn around at Pick n Pay is now complete. Of note is that Shoprite* (JSE code: SHP) has an operating margin of over 5% and even the recent earnings collapse saw it stay above 4%, so they earn about double from every 100c spent at their tills. The question is how high can the Pick n Pay operating margin go? Shoprite benefits form higher margins in the rest of Africa, Pick n Pay doesn't. So 5% may be too far for Pick n Pay, but can they get to 4%? A last point. Pick n Pay Tuesday results saw most retailers rally on the back of hope that the result wee not only a good performance from Pick n Pay but maybe also an improvement in consumer confidence and spending. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares A late and short show this week, discussing the chart below showing return so far for 2019 (to close 17 October 2019). Surprisingly, all positive and some real good returns. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares #WhatsAppStokvel This is a scam, of course it is. You're only asking because you know it is and you're hoping somebody will give you 'permission' to go ahead anyway. Anything that requires you to recruit others in order for you to profit is always 100% a scam. Long4Life* (JSE code: L4L) upping their stake in Spur (JSE code: SUR) to over 10%. Is it a pure valuation play or does Joffe have something bigger in mind? Brexit, tic toc. Three weeks to go. Clicks (JSE code: CLS) issued an improved and updated trading update that sent the share to new all-time highs. One can argue about valuations here, but not the quality. Clicks is best of breed. 4Sight (JSE code: 4SI) was a stock i warned against since day one. Far too much jargon and hype that have not turned into profits. But go read the resignation letter of Geoffrey Carter from 7 October. Man is he maximum unhappy. I am doing an ALMI trading demonstration webcast on 28 October at 8.15am Book here. Will Trump juice the markets? A few people pointed out that maybe China will not want to do an agreement to hurt Trump and maybe get a democratic party winner in 2020. certainly possible. Understanding your statement. Understanding momentum ETFs. Up coming events; 10 October ~ Is it time to buy listed property? 31 October ~ Live Fat Wallet Show recording 7 November ~ Millennials navigating markets and the investment landscape * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Commodity miners catch 22 Implats (JSE code: IMP) is buying a Canadian palladium miner for some R11.5billion. Now the deal looks decent, 3m ounces producing about 220k a year with an all in sustainable cost of some $820 and making EBITDA of some R1.6billion a year, so PE of 7x. But those numbers are all grand with palladium just off all-time highs of $1,700. What happens when palladium falls? This is the challenge of single commodity miners. You can't buy at the bottom because you have no money, but buying at the top screams a 'hail mary' pass. The catch 22 is how else do miners grow? Every day the mine they lose some value as they mine reserves. Maybe the smallish size of this deal is what saves it? JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Up coming events; 10 October ~ Is it time to buy listed property? 31 October ~ Live Fat Wallet Show recording 10x South African Retirement Reality Report 2019 Simon chats with 10x Investments founder and CEO about their second Retirement Reality Report and a 1million give away into a retirement annuity. You can find the full report here. Subscriber to our feed here Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Blue Label (JSE code: BLU) shares flying after writing down CellC to zero. Up some 30%. I guess the market is relived CellC is only going to zero. WeWork gets a new CEO as founder Adam Neumann steps aside. Makes sense, aside from a lot of crazed decisions he's made. Founders are a different type of person from a CEO. The new top end iPhone is on sale for pre-order locally. At almost R33k, yip a full years tax-free. Even if buying on contract, that's an insane amount fo money for a phone that doesn't even make coffee. Peter Moyo again refused entry to work at Old Mutual (JSE code: OMU). This is beyond messy. Banking strike, with way more horror stories than actual facts. Facts are the union is not happy about retrenchments. But the many many messages I have received about cash running out and online banking not working I suspect are bogus. I suspect I am one of the few left who still use cash anyway? JUUL CEO Kevin Burns has just announced he is quitting. Wealthy Maths: Calculating dividends Up coming events; 10 October ~ Is it time to buy listed property? 31 October ~ Live Fat Wallet Show recording Subscriber to our feed here Subscribe or review us in iTunes Can Trump juice the markets? More than anything he wants a second term and the election is in November next year (still over 13 months away). Now he has a lot of troubles, including a possible impeachment attempt being announced Wednesday afternoon. But Bigger is the trade wars impact on global economies and hence stock markets. We're seeing real evidence that they are hurting with Germany at risk of a recession and some horrid data out of Asia on Monday. Point is winning a second term with a weak / tanking economy and stock market is hard, very hard. So he needs to juice the economy and the market and he can do that easy. Announce full and real trade peace with China, spinning it however required. This will set the market alight and help a struggling global economy and if he times it right, winning him a second term The trick is when does he do this? Thirteen months out from the election may be too soon. But waiting for April or so may be too late. In fact it all may be too late. But I expect him to try. Of course ultimately this would be sticking a band aid on a severed limb, but if all that is wanted is enough juice for a second term, it may work. Eventually we'll get the recession and global markets will slide, and very likely this has already started. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Local inflation came in at 4.3% in August from previous of 4.0%. This a little higher than expected with food one of the main drivers. Maybe we're finally seeing food inflation that will help the retailers. MPC rate announcement on Thursday, 20 out of 25 economists say no change. If they'e right then I think a November cut is certain. Prosus (JSE code: PRX) remains in the Top40 and Indi25 indices that it went into when spun out of Naspers (JSE code: NPN). I haven't been able to confirm weightings but the big question is does the two of them exceed what Naspers was weighted? For capped indices this gets real messy, say Naspers was capped at 10%, it'll still be 10%, but will now also include Prosus. Flavoured vaping, flavoured cigarettes next? Two states and President Trump are hitting out against flavoured vaping with a ban the likely outcome. I have spoken about this before, the tobacco industry went full tilt into vaping as a new gateway into getting new smokers and it's working. Except now regulators are pushing back and the question is if menthol cigarettes will be next? If it is then the industry is dead in the US market. Breaking news is that "India's cabinet approves ban on e-cigarette sales and production". Saudi Arabia oil production is coming back, majority this week 100% within 2-3 weeks. Currently we have over supply (before the attacks) so oil will revert back lower. Sasfin (JSE code: SFN) results show a book value of around 5000c yet the share has, for years now, traded well below book value. Otherwise not bad results, but they cut the dividend cover from 40% of HEPS to only 20%? Comair (JSE code: COM) results boomed on the back of the payment from SAA (ie: us). But otherwise it seems that the market is ignoring their non airline businesses that are now some 40% of group profits. They also seem to be benefiting from SAA reducing their flights early last year and the grew air traffic. Up coming events; 10 October ~ Is it time to buy listed property? 31 October ~ Live Fat Wallet Show recording Subscriber to our feed here Subscribe or review us in iTunes The Netflix Challengers Apple has launched Apple TV+ for $5 or free for a year if you buy a device. Disney+ also launches in November for $5.99 or $12.99 if you also take Hulu and ESPN+. We also have HBO, Peacock (coming next year), Amazon Prime (essentially free in the US) and a bunch of others. Locally we only have Netflix, Amazon and Showmax. But don't forget YouTube, I mostly watch YouTube, but I am a very light TV watcher, maybe 5 hours a week at most. YouTube is of course free, or you can pay to make the ads go away. So now things get real for Netflix. At last results they had 151.6million globally with some 55million in the US. A recent price increase saw 130k US subscribers exit, but at an extra $1 per month that still added over US$600million to annual revenue. But here's the Netflix problem; They're spending some US$15billion on content which is US$100 per subscriber who is paying around US$150 on average in the IS and lower in the rest of the world. So the numbers add up. But that content bill will continue to grow and competition has got real in the last year. Disney has an advantage of a serious back catalogue whereas Netflix has a much shorter and weaker back catalogue and has lost a lot to Disney, Stars etc. who have pulled their content for their own services. The idea was that cutting the cable and moving to streaming would markedly cut the bill. But now with all these services it ends up the same or even more. Users are going to start to be icky abut what and when they subscribe. For example, subscribing to HBO when GoT is on, then pausing. Netflix is not dead, but for the first time competition is real and investors need to watch subscriber numbers and content spend. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Hello Prosus (JSE code: PRX). Spun out of Nasper (JSE code: NPN) and trading on JSE and Amsterdam Euronext. I expect Prosus to be the better deal as Amsterdam is a larger market for those wanting access to Tencent and the other assets. And the local fun damager saying that Prosus will do well as local fun damagers don't understand tech should hang his head in shame. The issue was simple weighting, one couldn't have Naspers at full weight in a fund, never mind over weight. So they had to decide how under weight they wanted to be and as such a large discount happened. As I record value unlock is some 3% with Prosus at R1,204 and Napsers off R1,100 adding R104 of value. Bottom line for me is that I expect Prosus to be the better asset due to the Amsterdam listing. And the awkward moment was the JSE not reflecting the indices right as they hadn't included Prosus in the indices that Naspers was in. So everything looked real ugly for a while. They fixed it. For next day or two Prosus will live in same index as Naspers, then JSE will rebalance either kicking Prosus out or keeping it in and kicking out the smallest. Subscriber to our feed here Subscribe or review us in iTunes Intu (JSE code: ITU) flies on reports of a possible bid for the company by Orion Capital Managers. The problem is that the first two bidders both walked away, but I guess at some price the deal works? Labat (JSE code: LAB) is buying into cannabis, well kinda. A very small deal and we'll see. But I for one would not being buying the shares. Labat do not have the best track record on anything and sure cannabis is becoming legal all over. But that doesn't mean the profits flow, where I come from we don't call it cannabis we call it weed, because it grows like a weed. Famous Brands* (JSE code: FBR) trading update mostly as expected. GBK doing better after last years restructuring while local brands doing modest after inflation and new stores removed. The new issue is manufacturing where Lamberts Bay Foods is down 39% after losing one client? Talk about concentration risk. Moody's says no junk status for 12-18 months. So no need for immediate panic and first they need to drop us to negative outlook anyway. Jack Ma steeping down at chair of Alibaba. He stepped down as CEO in 2015 and is an amazing individual. He's 55 and got his first computer at age 33 starting Alibaba in 1999 and the company is now worth some US$460billion. * I hold ungeared positions. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Simon Shares Local Q2 GDP came in at 3.1%, higher then expected but what struck me was the comment from Stats SA ~ "spurred on by a build-up of inventories and increased household expenditure". Now we have seen Woolies* (JSE code: WHL) and Shoprite* (JSE code: SHP) both comment that the second half to end June was stronger than the first, and this statement would suggest it was the second quarter. But who are these people? Or is it maybe base effect? An Eskom briefing on Wednesday seems to show that the utility has been stabilised with issues such as not enough coal largely fixed. But important point is stabilised, not yet improving. A start I suppose. Group5 (JSE code: GRF) is leaving the JSE as it exits business rescue. Shareholders can expect to get zero back. This is the risk of investing, we get the upside, but if it goes wrong we can lose it all. Discovery* (JSE code: DSY) results were pretty much in line with the first half and they continue to spend a lot of the new businesses. Price is, as always, slightly ahead of embedded value and PE is now a little under 15x. David Shapiro Tweeted; — David Shapiro (@davidshapiro61) September 4, 2019 Ring fencing tax losses Upcoming events; 05 September ~ JSE Power Hour: Benefits of offshore investing * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes US recession US ISM came in at 49.1 which is contraction. This is now another recession warning adding to the inverted yield curve. It is frankly looking more and more likely the US will have a recession in 2020 or maybe early 2021. Technical recession is two consecutive quarters of negative quarter-on-quarter GDP growth. OECD data shows 6 US recessions since 1970, about one a decade which is frankly not very many. But what it also shows is that when the US hits a recession so does most of the rest of the world. No surprise there, either because they lead everybody down or because they only enter recession when globally things are real bad. So what to do? In short nothing. Just carry on carrying on. Firstly, maybe the US won't enter a recession any time soon, or maybe not for an age. Secondly, maybe the recession is only in 2021 and the market rallies first than collapses back to levels above the current levels. Remember Trump has an election next year and he can juice the stock market (and US economy) like crazy by making real trade peace with China and what does he want more; a second term or better trading terms with China? Thirdly, it may be a mild recession. Still not fun, but not earth shattering. Fourth, maybe locally we don't get hit too hard by it? I know that sounds crazy, but say Eskom debt gets fixed and consumer confidence and growth start returning? May sound unlikely, but not impossible. Point is there are simple too many variables and as such, we just carry on carrying on. Buy your ETFs, keep a well stocked emergency fund and if you're nearing retirement, recession or not, be in the process of de-risking your short-term cash needs. If you're really scared, and you should not be, have a look at the target volatility ETFs from Absa. Here's an interview I did and a blog post from Kristia here. JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.