The Prosus Winner

18 May 2020 By PDSNET

It has been well said that no matter what happens in the world or in South Africa, there is always a way to make money from it in the share market - it is just a matter of seeing where the opportunity lies.

The advent of the coronavirus in late January this year, while it was a world-wide human and economic catastrophe, presented just such an opportunity. The contagion forced a sea-change in behaviour patterns world-wide requiring people to stay at home for an extended period of time. In this process, companies and individuals have been learning to work and play from their homes.

Some businesses like the airlines industry, tourism and restaurants have been virtually destroyed by COVID19, but others like online gaming have flourished.

On 29th January 2020, we published an article about the impact of the coronavirus on world markets. In that article we said, "In our view, this correction has the potential to become a buying opportunity - especially for shares like Prosus have taken a sharp fall". We suggested that you should watch Prosus and the S&P500 index to find the best buying opportunity. Since then (29th January 2020) Prosus has risen by 50% in under four months. Consider the chart:

Prosus (PRX) January to May 2020 - Chart by ShareFriend Pro

Prosus, through its ownership of 31% of the social networking and gaming giant, Tencent, has benefited from a massive increase in online gaming. National lockdowns all over the world have created a huge market for internet-based home entertainment and social media. Among its various internet-based offerings, Prosus has a share in the blockbuster game, Fortnite, which now has more than 350 million users world-wide. And that is just one of its many online products.

After the virus has run its course, we believe that consumers will remain wary of going out to restaurants and entertainment where large groups are gathered into confined spaces - like the theatre or stadium sports events. We see a semi-permanent shift towards online gaming and other online activities. This means that a share like Prosus should continue to benefit in the future.

Prosus also has the significant advantage of being a rand-hedge which for South African private investors is a major consideration.  


DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.



Share this article:

PDSNET ARTICLES

Jerome Powell

The Federal Reserve Bank (“the Fed”) is completely outside the control of the President and Executive Branch of the US government. The chairman of the Fed is appointed for a renewable 4-year term by the President. The President cannot remove the Chair without cause. The current chairman, Jerome Powell was appointed by Trump during his first term as President and reappointed by

Uncertainty Soars

Investors are by their very nature risk takers, but they are always trying to reduce the risk which they have to take to a minimum. Donald Trump, with his threat of an international trade war and his on-again, off-again tariffs has significantly increased the level of risk in markets across the world. This can be seen in the extraordinary volatility in the S&P500

Liberation Day

Trump has done the unthinkable. He has deliberately engineered the collapse of the US and world stock markets in the nonsensical belief that somehow an international trade war will make Americans richer. Nothing could be further from the truth. His actions have taken the S&P down from its all-time record high of 6144.15 on 19th February 2025 to Friday’s

The Creation of Money

The money supply of a country is a symbol of the goods and services of that country. Obviously, if the size of the money supply is increased more rapidly than the real growth of its economy, then you have more money chasing the same goods and services, resulting in rising prices. Since, over the long term, the only organisation that can create money is the government,

V-Bottom is likely

The 10% collapse of Wall Street, which is a direct result of Trump’s random policy of on-again, off-again tariffs, is very similar to what happened to Wall Street in February/March 2020 when investors tried desperately to accurately discount the impact of the COVID-19 pandemic.

Normally, corrections in the market

The Trump Correction

It is relatively unusual for the activities of American presidents or what they say to have an impact on the New York Stock Exchange, especially during their first 100 days in office. Trump, however, is the exception. His confused, on-again, off-again rulings on tariffs have rattled the market. Markets hate uncertainty and even Trump himself doesn’t appear to know exactly

Dividends

Investors know that the return on a share is made up of a capital gain plus the dividend. Private investors are mostly attracted to the prospect of making a capital gain on the shares which they buy and do not often consider the dividends. What they perhaps do not realise is that a capital gain is actually just the dividend in a different form.

Quarterlies

One of the major differences between the US equity markets and the JSE is that listed companies in America are required to report every 3 months, not every 6 months as they are on the JSE. The quarterly reports of the S&P500 companies are closely followed by investment analysts and predictions are made for their profits.

Growth by Acquisition

Hudaco (HDC) is a master of growing by acquiring smaller businesses in similar fields of activity or businesses, which then complement its existing suite of businesses. It has been making these bolt-on acquisitions for many years and has developed great expertise at selecting and evaluating appropriate targets.

These bolt-on acquisitions are mostly small