At the halfway mark in 2025, we’ve lived through some huge geopolitical shifts. The world’s gaze has shifted beyond just the US market. This opens up new opportunities of course, but finding those gems isn’t easy.

Many investors choose to stick with what they know in times like these. This means homegrown favourites on the JSE. But which stocks have been the big winners thus far this year, and what do they have in common?

In this episode, I explain how the key themes of gold, platinum and telcos have proven to be the rising tide that lifts all boats in those industries. There have also been rewards for stock-pickers beyond those sectors, with the examples of Naspers/Prosus, OUTsurance and WeBuyCars all being interesting. 

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Remember, nothing you hear on this podcast is investment advice, nor does it reflect the views of Forvis Mazars in South Africa. Always speak to your financial advisor.

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Transcript:

My thanks as always to Forvis Mazars in South Africa for making Ghost Wrap possible.

We are at the halfway mark of the year and what a year it’s been. US politics have been at the forefront of market movements, along with ongoing conflicts in the Middle East in particular. Gold has continued to shine and there are even strong positive movements in platinum if you can believe it. Many commodities outside of those two have had a tough time though, putting downstream pressure on other players in the value chain.

In the consumer sector in South Africa, the main trend has been an uptick in credit sales, facilitated by retailers with more advanced credit services than before and of course the ever-growing popularity of BNPL, which appears to be exploding onto the scene in South Africa. This is a serious disruptive force for banks, as providing credit at point of sale is vastly more powerful – and arguably more dangerous – than extending general credit lines. This will be an interesting trend to watch.

Our interest rates have remained frustratingly high, although this has contributed to a stronger rand vs. the US dollar. The rand has strengthened by over 5% against the US Dollar on a year-to-date basis, although we can’t say the same for currencies like the Great British Pound where we’ve gone the other way. A weaker dollar amidst inflation concerns and an overall worry around the concept of “US Exceptionalism” – and the trade war of course – have been fascinating features in the market. But if you cast the net wider to European equities, it’s genuinely difficult to find much to get excited about.

And in all this noise, there have still been some great stories on the JSE. In this Ghost Wrap, I’ll be looking at companies that have returned at least 20% year-to-date – a genuinely great performance. In several cases as I’ll highlight here, the returns are much higher.

Welcome to the winners’ club. This is not necessarily an exhaustive list, but these are some of the names that I think have been really interesting this year at the halfway mark.

The Goldies

Not much to discuss here that you haven’t heard before, other than to point out that gold has continued its fabulous run – in a world worried about inflation and conflict, along with a weakening US Dollar, gold has been your friend. This means that names like Gold Fields, Harmony Gold, AngloGold and others have all had a great time this year. If you’ve been in gold, you’ve been smiling. You’ve been firmly in the winner’s club.

The good news is that these companies are just printing cash at the moment, paying down debt where they have any and coming out with much stronger balance sheets as a result. Who knows how long this particular strength will continue for, but gold does have a very long track record of gently ticking up – and that’s good news for investors.

The Plats

We now get to the plats, where there’s a specific theme that links all of them together and explains a bunch of names being in this illustrious winners’ club. That of course is the platinum price – platinum futures have gone ballistic, with a 44% climb year-to-date in USD terms, with platinum as the obvious one to focus on in the PGM basket. I’ve seen a bunch of explanations and theories for this, but it really comes down to the same thing every time with these commodities: supply and demand dynamics. PGMs have been horrible for a long time, which means that limited additional supply comes on-stream. All you then need is some kind of demand boost and suddenly those prices jump.

There are also technical arguments being made about punters looking beyond just gold for inflation hedges, with silver and platinum as natural landing points here. There are also references being made to jewellery demand, which I think makes more sense, as gold prices have gone so high that platinum becomes an interesting alternative in that space, albeit a different colour.

Whatever the reason, names like Impala Platinum, Northam Platinum and Sibanye-Stillwater are finally doing well. If this carries on, my Sibanye position might even dig itself out of a hole. I can only dream.

The Telcos

The third category to touch on is the telcos. This is the last broad category that I want to focus on, proving once again that if you pick the right sector, you don’t always have to pick the perfect stock to get really strong returns. In telcos, which by the way has generally been a very difficult place to make sustainable returns, things are so good that the board of MTN Zakhele Futhi (the B-BBEE scheme linked to MTN shares) chose to unwind their scheme i.e. deliver returns to investors just several months after the scheme had to be restructured to avoid maturing underwater or close to underwater. That’s how significant the rally has been.

MTN is up 42% year-to-date, Vodacom has done 33% and those who picked the riskier names have done even better, with Telkom up 50% and Blue Label Telecoms as the clear winner, up a whopping 150% thanks to the market’s love affair with the Cell C strategy.

Now, the reasons for the performance in the sector vary. Telkom has been a turnaround story, as has Blue Label if we are being honest. Vodacom and MTN offer broader exposure to both South Africa and other regions in Africa, with a generally weaker US Dollar giving some breathing room to many of those economies. Again, the macroeconomics played a big role here.

A few stock picks

What you’ve hopefully taken from this thus far is that you simply cannot ignore geopolitics and macroeconomics in your portfolio. You didn’t have to make heroic picks in gold or platinum or even telcos – you could’ve done very well just owning a couple of names in one, two or, if you’re really lucky, all three sectors. I had exposure to two of them thankfully, being a Pan African Resources position that I tactically took earlier this year (exposure to gold) and a long-suffering Sibanye-Stillwater position that I’m starting to think might even get its head above water vs. my average in-price.

Among the three names I’m going to finish off with, I also hold two: Prosus and WeBuyCars. We can lump Naspers in with Prosus of course, but that doesn’t count as the third name as it’s really just the same thing. No, the third name I want to mention is OUTsurance, which has been a solid player this year that I don’t have exposure to at this time.

Let’s do Naspers/Prosus.  The company just held a capital markets day in which they set out their strategy based on building regional ecosystems that have the ability to go and use centralised AI models using data inputs from multiple apps. At an extreme, they think that user behaviour on an app in say Latin America might teach them something useful for an app in perhaps Eastern Europe. Look, the jury is out on this. I think there might be some AI benefits to come, but probably not to the extent that AI evangelists would believe. Where I am very bullish is on three other points: (1) growth ex-US in this environment, (2) adoption of eCommerce and platforms in general by consumers and (3) the leadership style and approach of Naspers/Prosus CEO Fabricio Bloisi. So far, so good – that belief is working out very well for me.

WeBuyCars is another favourite of mine, up 31% year-to-date. With so much noise and disruption in the automotive sector, this remains my favourite overall play. They don’t represent new car brands in South Africa. Instead, they focus on providing the most efficient way to churn the existing base of used cars in our country. I must say though, I saw some concerning headlines recently around how they might consider selling new cars in time to come. That would probably be the trigger for me to sell my position or at least trim it. I sincerely hope that they stick to their knitting and don’t get tempted into less lucrative business models. A big part of that share price’s success is that they have not been anywhere near new car sales.

Finally, OUTsurance. This is one of the very few South African success stories in Australia by the way, mainly because they built that business from the ground-up rather than acquired it for a silly number. OUTsurance is a company that simply just gets on with it. The interims were released in March and the next major release will be for the year-ended June, which will come out by September. Diluted HEPS was up 46.1% in the interim period, so I wouldn’t be surprised to see a trading statement soon, which would be triggered by an expected move of at least 20%. Naturally, the complete lack of a trading statement would indicate a disastrous second half of the year, but there’s no obvious reason why that would’ve been the case, so I think we will see a trading statement in the next couple of months. Short-term insurance is all about shifting risk from the customer to the underwriter though, so one must always remember the risk of major loss events – and this can sometimes be something like the weather.

That concludes this episode of Ghost Wrap. The winners’ club has delivered some strong returns for the first half of the year. Of course, the big question is whether these winners can keep on delivering in the second half of the year, and whether new winners can emerge. The markets certainly keep things interesting!