Simon’s weekly wrap: The case for preference shares, and gold

Preference shares are a great listed asset for those looking for prime-linked yield, with the caveat being that dividend tax is higher than the highest capital gains tax rate, so it’s really best for those who’ve used their interest exemption. I spoke with Keith McLachlan of Integral Asset Management about the changes as banks shy away from them, as well as options in the non-bank second-tier preference shares that offer strong yield. (Read transcript)

Petrol, food inflation and interest rates are all puting the local consumer under pressure. I asked Evan Walker of 36ONE Asset Management if the consumer has cracked. His view is that they have not, but that the risks remain. He’s closely watching margins from major retailers to gauge when the pressure becomes unbearable. (Read transcript)

Vehicle sales in South Africa are growing off pandemic lows, while pent up demand is showing its head. I spoke with Mark Dommisse, chair of National Automobile Dealers Association, about supply squeezes and the demand from the rental companies which currently can’t get enough new stock. (Read transcript)

Gold is supposed to do well in high inflation environments, yet here we are with US inflation at four-decade highs and gold has moved sideways so far in 2022. Perhaps that is the point: gold is flat so far in 2022, while equity indices that are all in the red are out-performing. However, might there be a case for gold eventually moving higher or is the shiny metal simple old school? I discuss this and more in this podcast.

Also this week:

Redge Nkosi of Firstsource Money on community-driven lending to SMMEs and SA bank lending policies (Read transcript)