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Pleasing results from SA Inc

Retailers rally strongly as gold holds its own: Nick Kunze from Sanlam Private Wealth.

SIMON BROWN: I’m chatting now with Nick Kunze, portfolio manager at Sanlam Private Wealth. Nick, good morning, I appreciate the early morning time. Two pieces of data out there. One of them results coming out from SA Inc. We had retailers last week. We’ve had some of the Coronations and asset managers. The numbers have been pretty good.

NICK KUNZE: Good morning, Simon. Yes, I guess that has been a pleasant surprise for us sort of halfway through this year. You mentioned the earnings. It’s quite interesting for us to see; we’re so used to the big caps doing the heavy lifting. We’re so used to the usual suspects, the Prosus, the Naspers, the Billiton. How refreshing to see a bit more of a broad-based rally, quite frankly – the Truworths, you mentioned the retailers. I looked to the markets on Friday. To make it on the sort of top 10 of the leader board of the all-share by close of business on Friday, you had to have done more than 6.9% on the day. It’s an unbelievable sort of rally. For me it’s a positive. You want to see broad-based rallies and you want to see a broad-based [rally] in the smaller caps. I think it’s really [good].

SIMON BROWN: Then we got an update from Liberty – to a degree Sandton City is their big asset. They’re talking around foot count actually running ahead of April 2019 levels. They are ignoring last year, of course. And even up in March. Is there perhaps something worthwhile in having a look at some of the property sector, but retail property? Office I think is still under pressure – Sandton perhaps is different, one of the flagships, along with Mall of Africa and a few others.

NICK KUNZE: I think you’d have to pick your poison. While I was sitting in the office waiting for the call this morning, I hear in the background on Bloomberg that Apple is wanting to open over a hundred new stores. You think of Apple as being the tech disruptor in work from home and all the rest of it. So there’s definitely a space for bricks and mortar, depending on your sort of industry, I guess. Pick your poison in South Africa I think. We’re not, we’re not going back to the office in any shape or form in a hurry just yet, until the genie is out of the bottle. So I think there is some value within the smaller sort of space. But I do agree with you, Liberty Two Degree is maybe a bit of a special case for Sandton City.

SIMON BROWN: It’s that size. And it’s the sort of cachet of Sandton. Of course it’s all the rich folks going and queuing to buy Gucci bags. Apparently you have to make an appointment to get into that store.

NICK KUNZE: You’ve never seen anything like it. Do yourself a favour one day. Walk past Gucci – and I think the other one is Hermes – on a Saturday. If you think there’s a recession in South Africa, no, there is no recession.

SIMON BROWN: A last question. Commodities are strong with gold moving again. Last year when I chatted, folks such as yourself, myself as well, we were suddenly gold bulls because gold was on the move. I mean, it was a fair shout. Should we be gold bulls again, with gold holding above $1 900/oz.

NICK KUNZE: Be careful of saying that on the show. It’s such a divisive subject. I think you can. I’m a bit of a gold bull. Let me rephrase that. I’m not a gold bull on where I think the gold price is going, but with inflation starting to rear its head worldwide and at home I think there’s definitely a space for some form of gold, whether it’s a gold share or a gold miner in your portfolio. This is a hedge, as I said, not a punt on where the price is going. But as a hedge I think everyone should have a little bit of gold in their portfolio.

SIMON BROWN: A quick hit and block – [your] preferred gold stock?

NICK KUNZE: It’s difficult. Probably the big caps. So probably something like an AngloGold. AngloGold – decent cash flow, a nice balance sheet, something like that.

SIMON BROWN: AngloGold Ashanti. We’ll leave that there. Nick Kunze, portfolio manager at Sanlam Private Wealth. I appreciate the early morning.



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