Market scorecard
On Tuesday, US markets rebounded a bit, with the Nasdaq Composite closing near its record highs from 2021. Among the eleven S&P 500 sectors, communication services and utilities saw increased buying activity, with Netflix (NASDAQ:NFLX) rising by 2.4% and American Electric Power Co. (NASDAQ:AEP) leading the charge with a gain of 4.1%.
In company news, Norwegian Cruise Line Holdings (NYSE:NCLH) jumped 19.8% after reporting numbers that showed healthy consumer demand for travel. Carnival (NYSE:CCL) was up 7.7% in concert. Elsewhere, Macy's (NYSE:M) rose 3.4% after the department store operator said it would close 150 stores in the next three years in line with relevant shopping trends.
At the end of the day, the JSE All-share closed down 0.65%, the S&P 500 rose 0.17%, and the Nasdaq was 0.37% higher.
One thing, from Paul
A client asked me yesterday what I thought was going to happen in the forthcoming South African election, on May 29th. Here's what I said to her.
Turnout will be low, because of high levels of dissatisfaction with politicians and because people will only be allowed to cast votes at their "home" stations this time.
The ballot papers will be very long and confusing, with way too many parties listed. That will result in some spoiled votes and wrong choices.
Polling is not always accurate and we are still three months away from voting day, but since I have to offer a forecast, I think that the ANC will end up with less than 45% of the vote.
That leaves them in a pickle, because they really don't want to be in government with any of their own "breakaways" (EFF, MK, ACT, etc) because that would encourage future splitters. They'd also hate to be in a government with the DA, for ideological reasons.
As a result, a lot depends on how well the IFP and the Patriotic Alliance do, and who their respective leadership decide to ally themselves with.
It will also be interesting to see how many votes Rise Mzansi, Action SA and Change Starts Now get. I suspect that they will not do very well.
It's going to be fascinating. I'm really looking forward to the whole process. I'm optimistic.
Byron's beats
According to Statista, the annual cost of cybercrime is expected to explode over the coming years. Take a look at the picture below. What is really interesting is how small the amount was back in 2018.
Naturally, as the world digitises, the risk of cybercrime will increase. The emergence of AI has seriously sped up our reliance on a functional, crime-free digital world.
We have earmarked CrowdStrike as our horse in this race. However, I do believe there will be many businesses that will do well out of the sector, including tech giants such as Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOGL).
Michael's musings
At the 2022 budget speech, it was announced that retirement annuities and pension funds would be able to increase their offshore exposure from 30% to 45%. According to this Business Times article, Godongwana's big offshore boo-boo, National Treasury now regrets these changes. The argument is that our savings could be better served helping to grow South Africa, instead of helping other countries grow.
Well, that is sort of true. Having more money in South Africa allows our companies and the government to raise capital at cheaper rates. A huge benefit to our national budget has been the ability for the government to issue debt in Rands. Many of our developing peers have been forced to issue their debt in USD or EUR, which is extremely problematic, especially if the home currency starts to depreciate.
Allowing people to invest their savings offshore, for higher returns is hugely valuable. Having a bigger pot of money in retirement, means those individuals will then spend more in the economy, which is a very good thing.
A few years ago, asset managers were mostly invested in local assets because that was where they saw the most growth. The cap on international assets wasn't an issue because the money didn't want to leave. We shouldn't be looking to restrict where people can invest their retirement savings, rather we should be trying to make our local economy more appealing. It's like an ugly person entering a beauty pageant, not winning, and then complaining that the reason for the loss was too much competition.
Bright's banter
BYD launched a $233 000 luxury sports car to compete with Lamborghini, McLaren, and Ferrari (NYSE:RACE). It is a way to expand its market share across different buying segments and enhance profitability through higher returns from luxury models.
The U9 model, introduced under BYD's premium YangWang brand, represents the company's priciest vehicle yet, signalling its foray into the luxury car market.
Targeted for delivery in mid-2024, the two-door coupe boasts impressive features such as a unique suspension system and sports car credentials. The U9 has a top speed of 309 kilometres per hour and acceleration from 0 to 100 in 2.36 seconds.
Analysts expect BYD's revenue from luxury brands to increase significantly, with projections indicating a rise from 12% in 2023 to 20% in the current year.
Petrolheads unite, who's going to tell their spouse that they spent R5 million on a YangWang? I dunno, Ferrari has a better ring to it, YangWang is going to take a while to become a recognisable ultra-luxury brand.
Signing off
Asian markets are mixed this morning. Benchmarks fell in Hong Kong, India, and mainland China while Japan and South Korea were in the green. The rally in Southeast Asia has cooled off ahead of economic data across the region this week.
Distressed Chinese property developer Country Garden Holdings (HK:2007) dropped 12.5% after receiving a winding-up petition in Hong Kong.
US equity futures are flat pre-market. The Rand has weakened to around R19.12 to the US Dollar.
Today, Salesforce (NYSE:CRM), Snowflake (NYSE:SNOW), Monster Beverage (NASDAQ:MNST), and China's Baidu (NASDAQ:BIDU) will report their earnings.