U.S. unleashes AI infrastructure investment
President Trump has teamed up with SoftBank, OpenAI, and Oracle (ORCL-NASQ) to pour billions into AI infrastructure. The joint venture fund will “immediately” deploy $100 billion into the sector, increasing to “at least” $500 billion in AI projects, including data centres and physical campuses. The spending should support continued strong earnings growth in the big AI infrastructure and component providers, like Nvidia (NVDA-NASQ), Synopsis Inc. (SNPS-NASQ) and Teradyne Inc. (TER-NASQ). According to Bloomberg, Trump’s team has brought in prominent tech figures, including billionaire Elon Musk and venture capitalist David Sacks, to help shape its tech and AI policies.
China courts Europe
China is inviting European companies to leverage their advantages and improve competitiveness by investing and deepening their presence in the country, with representatives from more than 70 companies, including Novartis (NOVNZ-TRQX), SAP and Nokia, recently attending a round table event. A Bloomberg report said these representatives opposed breaking away from China and are willing to make a long-term commitment to deepen their presence in the market.
ARM’ed for future growth
With ArcelorMittal South Africa (ACL-JSE) planning to wind down its long steel business, the African Rainbow Minerals (ARI-JSE)-owned Beeshoek mine is in a tough spot with few options. Putting the mine into care and maintenance makes the most sense. If this is the route that African Rainbow Minerals takes, it should position the mining company for future opportunities when market conditions improve. This scenario would make this stock a worthy addition to portfolios.
MTN Nigeria woes ease
Nigeria has finally agreed to let telecom providers hike tariffs for the first time in 12 years. However, the 50% adjustment is half of what companies including MTN Group’s (MTN-JSE) Nigeria unit asked for to weather harsh economic conditions. With the pricing issue somewhat resolved, it could shape up to be a good year for MTN, which plans to grow voice and data revenue by increasing coverage into rural areas and 5G penetration.
Infrastructure upgrades lifts construction sector
Construction looks set to boom nationwide as President Ramaphosa’s massive infrastructure plan picks up speed. Construction companies are already hard at work upgrading key routes, including the important Gauteng-Durban transport corridor. These much-needed upgrades are part of a broader plan to modernise ageing infrastructure and boost the economy. Bloomberg shared that the strategy aims to inject $88 billion in public sector funds by 2030, with private investors contributing $177 billion. The activity has already had a positive impact on the local construction sector, which is adding jobs and reporting increased revenue.
Sector focus: Mining
Industrials are off to a great start this year, with the mining sector benefiting from higher demand and better economic growth. BHP Group’s (BHPL-TRQX) copper output surged +17% in its second quarter, compensating somewhat for a dip in its traditional iron ore asset base, which was largely unchanged due to softening demand. South32 (S32-JSE) also provided a solid production update with aluminium growing +5% and copper +16%.
Sector outlook: Luxury
China’s luxury market took a hit in 2024, with sales dropping by about 20%, according to Bain & Co. Bloomberg reports that this is the steepest drop since at least 2011, as the country’s economic slowdown dents consumer confidence, dragging the country’s luxury market size back to near 2020 levels. The drop has snapped years of exponential growth, which was driven in part by a domestic spending boom during China’s COVID closure.
Trading update : 27 January 2024
Global superpowers like China and Europe are getting closer because of Trump’s pro-US policies. While these global players turn up the volume on the rhetoric and posturing, South Africa continues to make small gains on the path to an economic revival – the boost to the construction sector from increased infrastructure spending is the latest greenlight for the local economy.
Trump wants EV mandate gone
US President Donald Trump is scrapping the electric-vehicle (EV) mandate that he believes unfairly limits consumer choice. He will undo regulations that govern pollution and fuel-economy standards, and wants regulators to consider doing away with “unfair subsidies and other ill-conceived government-imposed market distortions that favour EVs over other technologies and effectively mandate their purchase.” This measure would include the popular $7,500 consumer rebate that supported sales in EVs like Tesla (TSLA-NASQ). However, Trump can expand limits on which companies remain eligible to receive the rebate, which might be good news for Trump’s biggest supporter, Elon Musk, and his EV company.
Dollar tumbles on tardy tariffs
US dollar (USD) traders expecting a boost from Trump’s tariffs were disappointed when the dollar fell after reports that Trump wouldn’t implement aggressive tariffs right away. The severe currency swings that characterised Trump’s first day in office suggest investors might be overestimating the aggressiveness of his trade policies. Despite threats to slap a 25% tax on Canada and Mexico by 1 Feb, the bigger picture is that major currencies have room to climb further against the dollar if Trump continues to underwhelm with his tariff plans.
U.S. unleashes AI infrastructure investment
President Trump has teamed up with SoftBank, OpenAI, and Oracle (ORCL-NASQ) to pour billions into AI infrastructure. The joint venture fund will “immediately” deploy $100 billion into the sector, increasing to “at least” $500 billion in AI projects, including data centres and physical campuses. The spending should support continued strong earnings growth in the big AI infrastructure and component providers, like Nvidia (NVDA-NASQ), Synopsis Inc. (SNPS-NASQ) and Teradyne Inc. (TER-NASQ). According to Bloomberg, Trump’s team has brought in prominent tech figures, including billionaire Elon Musk and venture capitalist David Sacks, to help shape its tech and AI policies.
China courts Europe
China is inviting European companies to leverage their advantages and improve competitiveness by investing and deepening their presence in the country, with representatives from more than 70 companies, including Novartis (NOVNZ-TRQX), SAP and Nokia, recently attending a round table event. A Bloomberg report said these representatives opposed breaking away from China and are willing to make a long-term commitment to deepen their presence in the market.
ARM’ed for future growth
With ArcelorMittal South Africa (ACL-JSE) planning to wind down its long steel business, the African Rainbow Minerals (ARI-JSE)-owned Beeshoek mine is in a tough spot with few options. Putting the mine into care and maintenance makes the most sense. If this is the route that African Rainbow Minerals takes, it should position the mining company for future opportunities when market conditions improve. This scenario would make this stock a worthy addition to portfolios.
MTN Nigeria woes ease
Nigeria has finally agreed to let telecom providers hike tariffs for the first time in 12 years. However, the 50% adjustment is half of what companies including MTN Group’s (MTN-JSE) Nigeria unit asked for to weather harsh economic conditions. With the pricing issue somewhat resolved, it could shape up to be a good year for MTN, which plans to grow voice and data revenue by increasing coverage into rural areas and 5G penetration.
Infrastructure upgrades lifts construction sector
Construction looks set to boom nationwide as President Ramaphosa’s massive infrastructure plan picks up speed. Construction companies are already hard at work upgrading key routes, including the important Gauteng-Durban transport corridor. These much-needed upgrades are part of a broader plan to modernise ageing infrastructure and boost the economy. Bloomberg shared that the strategy aims to inject $88 billion in public sector funds by 2030, with private investors contributing $177 billion. The activity has already had a positive impact on the local construction sector, which is adding jobs and reporting increased revenue.
Sector focus: Mining
Industrials are off to a great start this year, with the mining sector benefiting from higher demand and better economic growth. BHP Group’s (BHPL-TRQX) copper output surged +17% in its second quarter, compensating somewhat for a dip in its traditional iron ore asset base, which was largely unchanged due to softening demand. South32 (S32-JSE) also provided a solid production update with aluminium growing +5% and copper +16%.
Sector outlook: Luxury
China’s luxury market took a hit in 2024, with sales dropping by about 20%, according to Bain & Co. Bloomberg reports that this is the steepest drop since at least 2011, as the country’s economic slowdown dents consumer confidence, dragging the country’s luxury market size back to near 2020 levels. The drop has snapped years of exponential growth, which was driven in part by a domestic spending boom during China’s COVID closure.
Petro Wells
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