Strike while the iron is hot
Iron ore prices have experienced significant volatility over the past two years. After a rebound in the first half of 2022 due to tight supply and positive expectations for China’s steel demand, prices declined in the third quarter but recovered in the fourth quarter. However, keep an eye on the following analysis that might indicate a rebound from current levels:
- Q1 sees a seasonal steel inventory build-up in China, driven by the Lunar New Year holiday. This build-up helps manage post-holiday labor disruptions.
- Weak holiday demand, increased iron ore supply, and policy uncertainty impact the market. Steel mills maintain low operating rates and extend maintenance periods.
- Q2 is expected to bring a demand recovery and cost support for iron ore. Improved weather conditions and stronger demand for steel makers are anticipated.
- KIO (Kumba Iron Ore Limited) and EXX (Exxaro Resources Limited) are examples of Iron related stocks you can trade on Clarity.
All eyes on the May elections
Why is it important?
Policy Changes: Elections bring potential changes in government policies that can impact specific sectors or industries.
Investor Sentiment: Elections create uncertainty and volatility in the market, affecting investor sentiment and causing fluctuations in stock prices.
Regulatory Changes: New governments may introduce regulatory shifts that affect industries, such as stricter environmental regulations.
Economic Outlook: Elections influence the economic outlook, with investor confidence and stock prices affected by perceived favorable economic policies.
International Relations: Election outcomes impact international relations, including trade policies, which can affect industries reliant on international trade.
Top 2 instruments traded on Clarity by value for the last 7 days:
NVDA Nvidia
DSY-JSE Discovery Ltd
Some thoughts from us:
- The SA market has experienced heavy outflows and a decline in confidence levels.
- There has been speculation about an ANC-EFF coalition emerging as the base case after an IFA session.
- News sources have reported speculation about a potential reverse takeover of the ANC by the EFF and MK, raising doubts about Ramaphosa’s position post-elections.
- South Africans are considered by some as the most pessimistic nation in the world when it comes to expectations versus actual outcomes.
- The probability of a properly socialist government post-May’s elections is estimated at under 25%
- There is a probability of a more sensible outcome.
- A “sensible” scenario could potentially result in a >20% rally in SA Inc., given fear levels, light positioning, and attractive valuations.
- The returns appear decent, and a potential >10% strengthening of the ZAR against USD could enhance USD returns.
- Elevated global rates and a 20% year-to-date increase in the rand oil price pose challenges, but top-down and bottom-up factors present opportunities.
- Short-term expectations include further global rate increases, ZAR volatility, and attractive domestic valuations.
Having trouble finding the stock you want to trade? Here are some common navigation challenges our clients face:
- Ensure you are in the correct account. If you’re trading in ZAR, international stocks won’t appear in your search results, and vice versa. You can switch between your ZAR and USD accounts by accessing the profile icon.
- If you’re using the desktop platform, double-check the stock grouping. Categories like “Favourite” (stocks you’ve selected), “All”, and “JSE” can help you locate the desired stock.
- Still having difficulty? Contact us through our chatbot on both mobile and desktop. You can also suggest stocks to be added to our extensive portfolio of over 600 national and international options.
An update on Tesla
"I always have optimism, but I am realistic" - Elon Musk
Tesla’s share price has been struggling due to lower-than-expected vehicle deliveries in Q1 2024. They delivered 387k vehicles, well below the expected 454k and the previous quarter’s 485k. Market and competitive pressures, along with a slowdown in EV demand, are contributing factors.
Some views say holding onto Tesla shares is advised, as selling during tough times would be a mistake. Tesla remains a leader in the EV revolution, with self-driving capabilities. To meet their full-year expectations, Tesla needs to deliver 543k vehicles each quarter. There is speculation that Elon Musk may offset the slowdown by promoting the autonomous driving option at a higher price.
However, the fundamental issue is the slowing demand, competition from plug-in hybrids, and excess inventory in China. Chinese EVs are priced much lower than their counterparts, posing a challenge for Tesla. Despite potential tariffs, China remains an important market. The high forward price-to-earnings ratio of around 60x raises questions about owning Tesla shares.
