|Local Portfolio

Name

Local Portfolio Key information April 2024

Benchmark: FTSE/JSE Capped SWIX

About the portfolio

A diversified portfolio is constructed by selecting a specific range of individual shares, in a dedicated portfolio. An
appropriate weighting is assigned to each individual company (or ETF) in the portfolio.

We comply with PSG Wealth’s Investment Committee framework, which provides researched ideas and a layer of risk
management by prescribing limits and offering recommendations, which the portfolio managers adhere to.

We use the many resources which are at our disposal, including in-house and quality third party research and screening
tools, to identify suitable investment opportunities which contribute to long term capital growth. The combined
regional, sectoral and currency exposure of the companies is taken into consideration during this process along with
stock-specific quantitative and qualitative measurements of the companies themselves.

Investment philosophy
We prefer companies that currently appear undervalued in terms of fundamental analysis, while remaining cognisant of
the momentum factors that drive shorter-term share price performance. In addition, we look for companies with a
strong confidence rating, which means they do not have large or unmanageable debt positions. We ensure that the
portfolio is diversified across multiple sectors.

Thus, investments are not only chosen on their potential value but also their quality. As such investments are screened
for their profitability, the quality of their reported earnings, dividend policies as well as their financial structure. There is
no guarantee that all the chosen companies will outperform; a few will more than likely underperform. However, the
portfolio displays below average risk and is fundamentally undervalued. As a group, their future investment returns
should, therefore, be more than satisfactory.

Portfolio management
We review the portfolio and monitor the constituents on an on-going basis. This includes (but is not limited to) receiving
company news, reviewing analyst reports and attending company events / calls. In the event of a major change in
company / industry fundamentals, we will assess the impact of such a development and review the position of the
related stock within the portfolio. If our views on a stock change significantly or we wish to make an addition (or switch),
the portfolio will be updated accordingly with immediate effect.

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Market performance summary
Market moves | March 2024
Index % Change Index % Change
All share +3.2% MSCI World +3.3%
SA Resources +12.8% S&P 500 +3.1%
SA Financials -3.0% Nasdaq +1.79%
SA Industrials +2.6% Europe +3.9%
All Bond -2.0% Hang Seng +0.2%
Commodity % Change Currency Rate
Brent Crude +4.5% Rand/USD 18.89
Gold ($/oz) +9.1% Rand/GBP 23.88
Platinum ($/oz) +3.1% Rand/EUR 20.39
* Data and commentary from SBG, CNBC, AC

Commentary & Portfolio positioning

In March, the South African stock exchange outperformed its major emerging market counterparts, with the FTSE/JSE
Capped SWIX Index rising by 2.9% month-on-month (MoM), signalling a return towards positive territory, although it
remains down by 2.3% year-to-date (YTD). The surge was largely driven by a remarkable performance from gold miners,
which saw their shares increase by 24% MoM, mirroring the upward trajectory of gold prices, which hit new all-time
highs during the month with a 9% MoM gain. Similarly, platinum group metal (PGM) miners also experienced an 11%
MoM boost due to the rebound in metal prices. These sectors collectively contributed over 2% to the FTSE/JSE Capped
Swix's performance for the month.

However, companies geared towards the domestic economy, particularly financial firms, faced challenges. Discovery
recorded an 11% MoM decline after announcing disappointing 1H24 results attributed to complexities arising from new
reporting standards (IFRS 17), particularly affecting its life insurance division, leading to a 22% drop in embedded value.
Standard Bank also saw an 8% MoM decrease following its FY23 earnings release, coupled with a subdued outlook for
FY24 earnings growth. Surprisingly, diversified miners fared relatively well despite the slump in iron ore prices, which
fell by 18% MoM and 28% YTD due to reduced production intensity urged by China, the largest iron ore consumer,
amidst struggles in its real estate sector.

Economic data from South Africa revealed a narrow escape from recession in 4Q23 with a slight 0.1% quarter-on-
quarter (QoQ) growth, while inflation figures slightly exceeded expectations. Core inflation rose to 5% year-on-year
(YoY), surpassing the South African Reserve Bank's (SARB) target midpoint of 4.5%, primarily due to a bi-annual survey
showing a 12.9% annualized increase in medical health insurance costs. Persistent inflationary pressures, both
domestically and globally, prompted the SARB to maintain the current elevated repo rate at 8.25% p.a. The South
African rand strengthened by 1.7% MoM against the US dollar in March, but government borrowing rates increased,
reaching 12.3% for the SA 10-year bond, despite a relatively stable global interest rate environment.

Positioning: Numerous top-ups were done in March that consisted of adding to our positions in Growthpoint, Bats, MTN
and Sasol.

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Portfolio composition
Top 10 holdings
Company Sector
Standard Bank Financials
World Equity ETF Exchange Traded Funds
Naspers Consumer Discretionary
Firstrand Financials
Remgro Ltd Financials
AB Inbev Consumer Staples
Woolworths Consumer Discretionary
Anglo American Materials
Mr Price Consumer Discretionary
BATS Consumer Staples

Companies in focus
Sasol – Sasol wins SO2 emissions appeal bid [Moneyweb]

Petrochemical giant Sasol won an appeal regarding the measurements of its sulphur dioxide emissions. The court victory
means Sasol’s SO2 emissions may be regulated on an alternative basis.

Barbara Creecy, Minister of Environmental Affairs, Forestry, and Fisheries, upheld Sasol’s appeal against the National Air
Quality Officer’s (NAQO) decision in July last year to
reject the company’s application to have its sulphur
dioxide emissions from the boilers of Secunda
regulated differently from April 2025. Sasol said at
the time that it was going to appeal the decision.

In a recent statement, the company said that its

emissions will, therefore, not be measured
according to the current concentration-based limits
prescribed by legislation but rather based on load-
based limits.Sasol said the minister concluded that
its application met legislative requirements and
that the NAQO’s decision would be replaced.

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Portfolio performance summary
Measurement period ending: 29 February 2024 Currency: South African Rand

Portfolio / Period 1 Month 6 Month One Year Three Year Five Year
SA Equity Portfolio -2.28% -3.73% -3.72% +16.51% +23.37%
FTSE/JSE Capped SWIX -2.27% -2.13% -5.85% +10.84% +16.00%

*Performance figures are based on our model weights and share allocation. Individual portfolio returns may differ based on factors such as
market conditions and investment opportunities at the time of receiving the portfolio, opportunities to rebalance the portfolio to model
weights, and specific instructions to include or exclude certain shares or sectors from a portfolio.

Contact information
Suite 111, Granada Square. 16 Chartwell Drive Struan Robert Campbell

Tel: 0860 444 731 Email: Struan.campbell@psg.co.za

Web: hwww.psg.co.za/branch-office/psgumhlangastockbroking Jayson Jordaan

Email: jayson.jordaan@psg.co.za

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