PDSNET Market Snapshot

The fall in the Choppies share price from 795c on 2nd January 2026 to last Friday’s close at 290c is a great example of the volatility of markets, especially in shares which are relatively thinly traded. It demonstrates the importance of investor sentiment and the potential for popular shares to rapidly become over-priced once they attract the investing public’s imagination.

Choppies represents an unusual investment opportunity on the JSE, because it is a supermarket chain which is apparently highly successful in Africa outside of South Africa. This made it unique and a potential take-over prospect on the JSE. Most of the larger grocery retailers like Shoprite and Pick ‘n Pay have made an effort to establish themselves in other African countries with varying degrees of success. Those markets tend to be characterised by high levels of inflation and political instability. Choppies, on the other hand, was demonstrably successful in the rest of Africa, but found the South African market too competitive.

This made the Choppies story unique. We first recognised Choppies potential when it broke up out of an extended period of sideways movement in March last year. We added it to the Winning Shares List (WSL) on 6th March 2025 at a price of 85c and its performance was nothing short of meteoric. Eventually, by the beginning of 2026 it was trading on a price:earnings ratio (PE) of over 100. Consider the chart:

The chart shows the extraordinary climb in Choppies share price last year and then its subsequent collapse in 2026.

So, what happened? The answer to this question is that we really do not know. There have been no explanations or even comment given by the company itself in Stock Exchange News Service (SENS). There is some speculation that there was an offer from one of the other South African supermarket giants that was then abandoned, but again the company itself has said nothing.

In our view, the Choppies business proposition gained momentum leading up to the publication of its financials on 22nd September 2025 causing its share price to run up too quickly – accompanied by rising volumes. Investors felt that the company had suddenly caught the attention of institutional investors.

On 8th January 2026, probably a single investor decided to take profits and gave a market order to his broker to sell a million shares “at best”. The investor concerned was almost certainly a beneficiary of the Choppies “Long-term Investment Scheme” (LTI) and a member of the company’s senior management. The trade demonstrated his ignorance of the share market because he dumped a huge amount of shares into a relatively thinly traded market in a single day. A more experienced investor would have dribbled the shares into the market over a number of days thus giving time for the market to adjust. The problem is that 89% of the shares in issue are held by just two investors – which means that the “free float” is relatively small.  

So, how should you have handled this situation as a private investor? The answer is to strictly apply your stop-loss strategy. On the day after the share fell (Friday 9th January 2026) you should have sold out your holding on stop-loss. You would have got prices of at least 400c per share. If you bought the shares when we put them on the WSL on 6th March 2025, you would still more than quadrupled your initial investment. The lesson is never ignore your stop-loss.

And what should you do now? Well, when a share falls heavily like this, we always advise applying a 65-day exponential moving average (MA) and then waiting for the price to break up through that MA. There may still be some bad news which has not come out so you don’t want to buy prematurely. Wait for the share to settle down at these lower levels and then buy when it begins to move up again.

Notably, Choppies, at its current price (290c), is now on a P:E of 41 – which is far more attractive than its peak of over 113, but still very fully priced when compared to other grocery retailers on the JSE. Shoprite is on a PE 19.6 of and Spar is at 18,41.  

At the start of a new year, we always give our view of what we think is to come. Since our last article, published on 22nd December 2025, there have been some notable developments in the international arena which are potentially important for South African investors.

(1) As expected, the rand has strengthened further, continuing the trend of the last nine months and breaking convincingly below R16.50 to the US dollar. What is notable is that the rand has also strengthened against other hard currencies, like the euro and the British pound. We have long considered the rand to be under-valued and we expect it to continue strengthen, especially against the US dollar which has itself been weakening against other hard currencies. Consider the chart:

The rand broke below the key R17.50 level in September and then that level became a support level. But now it has moved down to R16.50 and looks set to stabilise at that level. The strengthening currency reflects a growing local and internation optimism about South Africa’s future.

(2) Gold and platinum continue to perform well bolstering South Africa’s economy and providing jobs for thousands of miners. Gold reached a new all-time record high on Friday last week closing above $4500 for the first time ever. I bought my first Krugerrand for R600 in 1985 and last week that same coin was worth a new record high value of R75 000. We reiterate our view that, because of the political risk in this country, South Africans should hold 10% of their total wealth in Krugerrands. Gold may correct from these levels on profit-taking, but the long-term trend will continue to be up – so make sure you have some of these internationally accepted, highly transportable assets in your portfolio.

(3) The unexpected invasion of Venezuela and the capture of Maduro marks a new direction for the Trump administration. The attack was executed with surgical precision and, while it sets a dangerous precedent, it has definitely boosted Trump’s dictatorial confidence. One effect is that he has suddenly become less afraid of Putin and has been willing to put in motion various measures which are good for Ukraine and bad for Russia. The first was capturing two oil tankers in Putin’s “shadow Fleet” and the second approving a Bill which will result in tariffs of up to 500% on any country which buys oil from Russia.

At the same time, the Ukrainians have been very effective in their management of the drone war, increasing their production of drones dramatically and innovating new technologies which have given them a definite edge over Russia. This can be seen in their recent use of a land drone, packed with 12 anti-tank mines, to completely wipe out an entire Russian stronghold.

We never expected the war in Ukraine to last as long as it has, mainly because we thought that, with Europe and America’s backing, Ukraine ultimately had far more resources at its disposal than Russia. We still believe firmly in Ukraine’s superiority, but this year we expect that advantage to finally force Putin to the negotiating table.  The Russian economy is crumbling under sanctions; the Urals oil price has collapsed and Russia’s performance on the battlefield has been abysmal.  

(4) The South African economy is definitely improving. There is, of course, still a great deal of room for further improvement and we remain light years away from being a first world country – but our economy is in far better shape than most third world or emerging market countries, especially most of those in Africa to the North and many of those in South America and Asia. The improvements can be traced back to the monetary discipline exercised by the Reserve Bank which has brought our inflation rate close to or even better than many first world countries. Low inflation has increased the level of real take-home pay and that, in turn, is impacting consumer spending. We expect the economy to continue improving this year, provided that there are no material external shocks. The Municipal elections towards the end of the year should be significant in consolidating our new direction.

(5) The Great Bull Market, which began in March 2009, remains intact, with the S&P500 closing on Friday last week at another new all-time record high. The productivity impact of AI and the steady move towards solar and other alternative power sources is raising the performance and prospects of S&P500 companies. Consider the chart:

The stage is set for another strong year featuring rising profits stimulated by further advances in technology and lower oil prices.

As a private investor you should be close to fully invested in this market. Just make sure that you maintain a strict stop-loss strategy. Remember, being successful in the share market is not so much about making money as it is about not losing it.    

The Rand

2025 has been a year of solid progress for South Africa. The government of national unity (GNU) has held together despite dire predictions and the country has implemented a number of notable economic reforms. At the same time, international investment sentiment has shifted firmly towards “risk-on” and the US dollar has lost significant ground against other first-world currencies.

The effect of these developments has been that in the last 8 months the rand has appreciated from an intra-day high of R19.93 on the 9th of April 2025 to the US$ to current levels around R16.75 – a gain of 16%. Consider the chart:

Combined with the falling oil price, this is having the effect of reducing the price of fuel in the country rapidly – and that has resulted in sharply lower inflation. The drop in inflation means that consumers are seeing an increase in the level of their real incomes and they have been paying off debt and spending more. In our view, the rand will continue to hold its value against other hard currencies and to appreciate against the US dollar.

Oil and Ukraine

The price of oil has continued to fall, with North Sea Brent dropping below $60 for the first time since February 2021. This decline reflects the steady movement of the world away from fossil fuels and the rapid implementation of alternative energy installations, especially solar power. We expect this trend to continue and even accelerate as the cost of solar power continues to become more efficient and more affordable.  

The price of Urals crude has fallen even further than Brent and it now trades for less than $35 per barrel. This is a direct consequence of the Ukrainian attacks on Russia’s shadow fleet both in the Black Sea and even in the Mediterranean. Together with their on-going destruction of Russia’s oil infrastructure, these attacks are rapidly eroding Russia’s ability to finance the continuation of the war.

At the same time, Ukraine has recently secured a pledge for a further 90bn euro loan from the European Union to continue paying for the war for at least the next two years. To us it seems impossible for Russia to continue funding this war under these conditions and we anticipate some sort of resolution of the situation in the fairly near future – probably next year.

The S&P500 Index

Wall Street remains firmly in a long-term bull trend, but has been moving more-or- less sideways since the beginning of October 2025. There has clearly been some rotation out of high-tech and especially AI shares into the broader market. Consider the chart.

The recent 5% correction in November took the S&P down to the cycle low of 10th October, where it found support. There was a very strong recovery from this level culminating in a new all-time record closing high at 6901 on 11th December 2025. Then the rotation and profit-taking began.

Technically, there is a possibility that what we are looking at is a double top formation with the highs on 29th October and then on 11th December. Our view is that this represents some resistance at the 6900 level and in time the market will recover and break convincingly above this level. The latest inflation and jobs figures coming out of America indicate that the economy is still performing well – albeit more slowly than it has been. There is still room for further interest rates cuts with inflation apparently well under control.

The staff and directors at PDSnet take this opportunity to wish you and your family all the best for the Festive Season and the New Year.

Please note: Our next article will be published on 12th January 2026.