By Louis Kruger
Gold: The last safe haven
Harmony Gold experienced a notable 16% increase this week, mirroring the broader surge in gold prices. This rally is primarily driven by ongoing gold purchases from central banks in emerging markets, combined with heightened volatility in interest rates. While recent US economic data has shown strength, weaker indicators from Europe and the UK, along with Chinese stimulus efforts, have sparked expectations of further rate cuts, boosting demand for gold. The Bank of America has even referred to gold as the “last safe haven,” positioning it as a strategic investment in the face of the U.S.’s growing debt concerns.
This optimistic outlook is reflected in gold stocks. Harmony Gold was the standout performer, but Gold Fields also rose by 14%, and AngloGold saw an 11% gain, all fuelled by the strong gold price.
BHP CEO’s SA visit sparks new Anglo acquisition buzz
There has been speculation in the media following the recent visit of BHP’s CEO to South Africa. Earlier this year, BHP attempted to acquire Anglo American but failed to reach an agreement. However, the CEO’s return has fuelled rumours that BHP is considering a renewed bid. Anglo has since offloaded some shares in Anglo American Platinum, signalling a potential reshaping of their asset portfolio—an action that could make the company more appealing to prospective buyers. Industry watchers are now keeping a close eye on any developments that could lead to another acquisition attempt.
Nepi hits new heights with €300 million raise
Last week, Nepi Rockcastle placed shares through an accelerated book build to raise €300 million (R5.7 billion), which is notably large for the South African property sector. They issued 41.7 million shares at R137.85, marking the first time Nepi has traded above its net asset value. While this is a small premium, it is still a premium, nonetheless.
Nepi has had access to corporate deals in its primary markets of Central and Eastern Europe, where pension funds and other investment vehicles are looking to sell malls that complement their portfolios. They closed a deal on October 1 and are currently in discussions for another one. Given their strong performance and market rating, they have now come to the market for equity. Their trading performance has remained robust in recent years, both during and after Covid, and they have continued to use their capital effectively to close deals and grow their business.
Coronation and Quilter see gains, NinetyOne faces challenges
In the investment management sector, Coronation stood out, with assets under management (AUM) growing substantially to R667 billion —surpassing their previous high in 2022. This growth, which exceeded market expectations, suggests a notable reduction in net outflows for the company during the quarter.
Quilter also had a strong showing, reporting an increase in AUM, with net inflows for the UK market hitting an annualised 4.9% for the quarter. This performance is a positive sign after Quilter’s recent efforts to integrate and enhance its platform, with market observers noting the improvements in backend processes beginning to yield results.
On the other hand, NinetyOne faced challenges. Their AUM dropped by 1% quarter on quarter, which was disappointing given the strong market performance during the same period. The company has been struggling with negative net outflows, a trend exacerbated by its exposure to emerging markets, which have underperformed recently. However, there is hope that a weaker dollar and a potential resurgence in emerging markets could reverse NinetyOne’s fortunes.
In summary, while the gold market shines bright amid economic uncertainty, different sectors are navigating their unique challenges and opportunities, from corporate acquisitions to strategic capital raises and investment outflows.
Louis Kruger is a portfolio manager at 36ONE Asset Management and part of the PPS Managed Fund investment team.
BUSINESS REPORT