Rates coming down next month, which sectors benefit most? (#601)

JSE Direct with Simon Brown

Episode Summary:

In this episode of JSE Direct, Simon Brown delves into the impact of anticipated interest rate cuts and how they may affect various sectors and stocks. He shares his thoughts on potential beneficiaries like consumer stocks, REITs, and companies with high levels of debt. The episode also covers key updates on Nvidia's earnings, Nike's stock valuation, and a new ETF listing by ETFSA.

Interest Rate Cuts and Market Impact:

• Jerome Powell's Jackson Hole Speech: The anticipation of rate cuts as early as September, with an expected reduction of around 75 basis points by the end of the year.
• Benefiting Sectors: Companies with significant debt, consumer stocks (Mr Price, Foschini, Shoprite), and REITs are likely to benefit from lower interest rates.
• Sector-Specific Insights:
  • REITs: Discusses the potential for real estate investment trusts like Storage, Spear, and the concerns around office spaces with high vacancy rates.
  • Consumer Stocks: Simon reiterates his positive outlook on consumer-focused companies and the strong performance of used and new car sales, highlighting stocks like CMH and Motus.

Stock Analysis:

• Nvidia: With results due, Simon highlights the market's expectations and the potential for significant movement based on the earnings report.

• Nvidia | Close 27 aug 24 | Weekly chart
• Nike: Simon discusses Nike’s current valuation, seeing it as a strong buy at its multi-decade support levels, despite its challenges.

Nike | Close 27 aug 24 | Weekly chart

ETF Updates:

• ETFSA's New Actively Managed ETF: Introduction of the Balanced Foundation ETF, which is actively managed due to the lack of a specific index and includes a mix of local and foreign equities, bonds, and property.
• Satrix Nasdaq ETF: The transition from a feeder fund to a standard fund, reducing total expense ratios and offering cost benefits to investors.

Housekeeping:

• No Show Next Week: Simon will be on vacation and the podcast will resume on 12 September.
• Money Summit: Scheduled for 10 September in Johannesburg with free tickets available using the code "MONEYWEBGEST" at MoneySummit.co.za.

Simon Brown

* I hold ungeared positions.

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