Trading update : 17 October 2025

With earnings season here amid global uncertainty and “frothy markets”, investors are taking a more cautious tone toward key sectors and dip buying, with safe havens like gold remaining a favoured option, backed with strong fundamentals. With potential speed bumps ahead in global markets, particularly the US and UK, investors are looking locally for solid investments, with strong options in the banking and retail sectors.

Speed bumps ahead

Equity analyst sentiment toward corporate profits is losing momentum at a time when US stocks are trading near record highs, suggesting the rally could face speed bumps this earnings season. Bloomberg reported that a Citigroup Inc. index tracking US earnings revisions — the number of analysts upgrading versus downgrading estimates — has turned flat for the first time since August. At the same time, the S&P 500 (VOO-NASQ) is trading at 22 times forward earnings, above the average over the past decade of nearly 19 times, indicating sky-high valuations.

Frothy sectors

Citigroup Inc. (C-NASQ) CFO Mark Mason said it’s hard not to see “some frothiness in different sectors” on the bank’s Q3 earnings call in response to a question from a reporter about AI. “I feel good about our business and our ability to cover clients,” he went on. “But it’s hard to look at how equity valuations and multiples sit today and not think there are some sectors that are likely frothy and overvalued. But we’ll see how those play out over time.”

Fuelling the AI rally

OpenAI and Broadcom (AVGO-NASQ) announced an agreement to collaborate on custom chips and networking equipment. The news drove the Nasdaq (STXNDQ-JSE) and AI stocks higher, with Broadcom shares up 10%, adding fuel to the AI rally.

Following its worst selloff since April, the S&P 500 (VOO-NASQ) climbed 1.5%, with tech companies leading the gains. 

Gold bulls

Bank of America just stunned Wall Street with a new bold call on precious metals, raising its 2026 forecasts for gold to $5,000 per ounce, citing a potent mix of supply tightness, policy uncertainty, and a surge in investment demand that’s showing no signs of slowing. In quotes carried by Bloomberg, the bank’s commodity research team stated that gold has room to run higher despite near-term risks, particularly as investors scramble for safe havens amid ongoing U.S. fiscal imbalances and a shifting macroeconomic backdrop under the Trump administration. You can gain gold exposure through the iShares Gold Trust ETF (IAU-NASQ).

UK retail pain

UK retail sales grew at a slower pace in September as warm weather delayed purchases of expensive coats and boots, and shoppers braced for the government’s November budget. According to data from a British Retail Consortium and KPMG report shared by Bloomberg, total retail sales rose +2.3% compared with a year ago. The rate was down from 3.1% in August and 2.5% in July. Like-for-like sales growth slowed to 2% in September, from 2.9% a month earlier. Consumers are holding back as they grapple with lofty food inflation and potential added costs as Chancellor of the Exchequer Rachel Reeves deals with strained public finances, according to the BRC. Many retailers are still feeling the impact from revenue-raising measures in last year’s budget.

Weight jab hits SA

Aspen Pharmacare (APN-JSE) has secured SAHPRA approval for Mounjaro® as a chronic weight management treatment. The Mounjaro® (tirzepatide) KwikPen-pre-filled injection has launched for South African patients, marking a new level of ease and accessibility for patients requiring regular administration for both type-2 diabetes and weight loss management indications, as advised by healthcare professionals.

Building plans

Leading local REIT Vukile (VKE-JSE) announced the launch of an equity raise of approximately R2 billion, through the issue of new ordinary (bookbuild) shares. While not open to general investors, the proceeds will allow Vukile to remain competitive across any potential acquisition processes and enable the property company to capitalise on accretive opportunities.

Own the rails, own the riches

Capitec Bank’s (CPI-JSE) scale and dominant mass market banking position in SA provide the opportunity to lead the way in connecting to consumers in an increasingly digital world. Its investment in Connect and its payments ecosystem should generate good returns in isolation, but, more importantly, should develop networks that drive retention, engagement and cross-sell. It’s a stock to own as the bank looks to own the rails to own the riches.

SA growth miss

While South Africa’s gradual structural reforms are breathing life into the economy, they aren’t sufficient to lift the growth rate to the government’s 3.5% target, according to Moody’s Ratings. Bloomberg reported that Evan Wohlmann, Vice President – Senior Credit Officer at Moody’s, said:

“We don’t see in our baseline that the current reform progress to date — and our expectation of how reforms will progress — will be sufficient to raise economic potential beyond 2%.”

Stock focus: Boxer

Boxer (BOX-JSE) released its H1FY26 results, delivering a strong performance for the period, with headline earnings up 5.3% to R518 million, keeping it on track for its full-year target. The company will pay its inaugural post-IPO dividend of 45.3 cents per share, representing a 40% payout, in line with guidance. Operational performance was robust, with a 15.1% jump in trading profit driven by excellent cost control (costs grew more slowly than revenue) and a significant 18.4% increase in other income, notably from monetising data through the new Boxer Rewards Club. The key highlight is the company’s volume-led growth, where like-for-like sales grew 5.3%, far outpacing the negative internal selling price inflation, indicating strong customer traction and value proposition.

While profits were slightly weighed down by higher interest costs in the first half, the company’s exceptional cash generation, which turned a net debt of R180 million into R1.1 billion net cash, is expected to reduce this drag going forward. The retailer also remains on track with its aggressive store expansion, opening 25 new stores.

Overall, the company is proving its operational strength and is well-positioned for the full year, though management cautions that the final result will depend heavily on the critical Black Friday and Festive trading periods.