ARTICLES

The Prosus Winner

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 29^th 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 (29^th January 2020) Prosus has risen by 50% in under four months. Consider the chart:

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.

PDSNET ARTICLES

Rare Earth Elements

Investors worldwide had been of the opinion that Trump’s ability to impact markets was on the decline. His erratic, on-again, off again tariff policies had either disappeared or had been mostly discounted into share prices. His attack on the second largest economy in the world, China, seemed to have been largely resolved, and a meeting with

US Shutdown

There has been much in the media recently about the US government shutdown and the fear among investors that it might begin to affect the stock market, depending on how long it lasts.

A shutdown occurs when the US government reaches its budget limit and requires a bill to be passed through both Houses to extend the government’s spending limits.

New Listings

Two new companies, ASP Isotopes and Greencoat Renewables, have recently come to the JSE. Both are developing companies that have recently made losses and have been funding those losses by raising capital and selling assets. They both have substantial “blue sky” potential but also carry substantial investment risk. This is probably truer of ASP

Exponential Growth

The  S&P 500 index is important because all the stock markets around the world tend to follow it. If the S&P is in a bull trend then London, Tokyo and the JSE will also be in a bull trend – and vice versa.

The S&P500 index began 68 years ago on 4 th March 1957 with an initial value of 43,73. It took nearly

The US Jobs Market

International investors who trade on Wall Street are generally negative about any good news from the economy because it tends to make the monetary policy committee (MPC) more hawkish and less likely to reduce interest rates. The opposite is also true. But there comes a point where bad news is so bad that investors begin to fear that the US economy is heading

Jackson Hole

Once a year in late August central bankers and academics congregate in Jackson Hole to discuss the state of the economy and consider the way forward. Traditionally, the Chair of the Federal Reserve Bank (“the Fed”) addresses the meeting and gives direction to its thinking on monetary policy in the US. This year, the comments of Jerome Powell resulted in the

Choppies

Choppies is a supermarket chain which operates in Botswana, Namibia and Zambia. It is listed both on the Johannesburg Stock Exchange (JSE) and on the Botswana Stock Exchange (BSE). Notably, the company has resisted the temptation to re-enter the highly competitive and cut-throat retail market in South Africa, having exited that market in 2020 due to sustained losses. Despite

Gold Resistance

All investments throughout the world can be ranked on a scale from high risk to low risk. As a general rule, in the world of investment, risk and return rise together. In other words, as the risks in an investment increase, so does the return necessary to attract investors.

At the one end of the scale there are very low risk investments

Sibanye takes off

We have been writing about Neal Froneman and Sibanye for years now. Beginning in 2013, Froneman assembled the Sibanye group over a period of 7 years, buying up mining operations both in South Africa and America at bargain prices. Initially he bought precious metals producers, but more recently he has been diversifying into base metals like zinc and lithium which

The 16 Year Bull Trend

Since the Second World War, the stock markets of the world, including the JSE, have always tended to follow the New York Stock Exchange (NYSE) - and the NYSE is best measured by the S&P500 index (S&P) of its 500 largest companies.

For this reason, we believe it is important for private investors to constantly