Post COVID-19 reality emerging (#399)

Simon Shares

Day 49 of lockdown

• Pick 'n Pay (JSE code: PIK) results were slightly down, but no dividend as they conserve cash.
• Sibanye Stillwater* (JSE code: SSW) first quarter results knock it out of the park, strong cash flow and debt down 40%.
• Tongaat (JSE code: TON) sale of their starch business to Barloworld (JSE code: BAW) has collapsed with the buyer claiming "material adverse change" due to COVID-19.
• UK two-year government bonds traded negative this week. UK GDP was -2.0% for the first quarter (QonQ) with March saw a 5.8% contraction. Retail sales fall 19% year on year. Biggest drop in 25 years as 'excess deaths' top 50,000 but look to maybe have peaked, for now.
• Norway oil fund exits Anglo American (JSE code: AGL), Glencore (JSE code: GLN) & Sasol (JSE code: SOL) as they "derive at least 30% of their income from thermal coal, base at least 30% of their operations on thermal coal, extract more than 20 million tons of thermal coal per year, or have a coal power capacity of more than 10,000 megawatts from thermal coal.".
• Naspers (JSE code: NPN) and Prosus (JSE code: PRX) have both hit new all-time highs over the last week ahead of Tencent earnings that came out ahead of expectations.

• Upcoming events;

  • 13 May ~ Know your derivatives: CFDs, indices and FX
  • 20 May ~ Trading 101: Getting started in trading
  • 21 May ~ Solvency and liquidity in the time of COVID-19
  • 28 May – Managing risk as a trader with Garth McKenzie
  • 03 June ~ Pandemic investment scenarios

* I hold ungeared positions.

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The post COVID-19 reality is starting to emerge

It's very early days but an announcement from Twitter shows how things may look as the company says it will "allow its employees to work from home forever".

Hello new world.

This is surely going to be a large part of our post COVID-19 reality and has serious implications across many sectors. A recent IBM survey during April of 25,000 US adults found;

• 54% of Americans say they want to work from home primarily
• 75% say occasionally

Commercial property in this example will simple need less office space. This will hit not just office rentals, but for example also car an Uber usage as we travel less to work reducing fuel and car needs hurting the respective industries. Then of course lower insurance rates as less driving means less risk, and so the all rolls.

The flip side of course is that less travel time means more money and free time for an individual and how will we spend that? Reading? Eating out? Family?

Taking the Twitter example a step further, working from home means more virtual meetings (such as Zoom) and then it is a small step to less corporate travel as meetings or events that may required travel are now done virtually.

It'll be a long time before we get to the new post COVID-19 reality, but it's not going to be a new normal, it'l be way more. A new reality and importantly we get to define what this new reality will look like.

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