In today's Taking Stock, Daily U.S. users of PDD Holdings’ e-commerce platform Temu fell 58% in May, according to Sensor Tower, as the platform faces mounting challenges from escalating U.S.-China trade tensions.
Local Market Commentary
The JSE Top 40 index gained 1.09% to close at 87,497.8 points yesterday, with the broader All Share index rising 0.88% to 95,162.3. Despite the market gains, South Africa’s manufacturing sector showed ongoing weakness as the seasonally adjusted Absa PMI fell to 43.1 in May from 44.7 in April, marking seven consecutive months below the 50 mark and indicating deteriorating business conditions due to persistent logistical challenges. However, business optimism improved with the six-month forward-looking PMI sub-index hitting its highest level this year amid hopes of eased global tariffs and resolution of domestic political policy disputes. Meanwhile, new vehicle sales jumped 22% year-on-year in May, and agricultural exports rose 10% in Q1 to $3.36 billion, helped by improved port efficiency and increased US shipments. The latter follows a 14% trade increase to the US, though concerns persist as South Africa faces a looming 30% tariff on exports after a July grace period expires.
European Market Commentary
European equities opened June cautiously, with the STOXX 600 dipping 0.1% on Monday following a strong 4% rally in May, weighed down by renewed concerns over U.S. President Trump’s tariff plans threatening global trade stability. Eurozone manufacturing edged closer to stabilisation in May per HCOB PMI data, though Germany remained the weakest major economy with a PMI of 48.3, signaling continued contraction. Political uncertainty in Poland increased following the election of conservative nationalist Karol Nawrocki, complicating fiscal deficit reduction and investor confidence. Meanwhile, Switzerland posted a robust 0.8% GDP growth in Q1 2025—the fastest in two years—as firms accelerated exports ahead of anticipated U.S. tariffs. In the UK, house prices rose 3.5% year-on-year in May, driven by an unexpected 0.5% monthly increase, outperforming economist expectations and reversing April’s decline.
U.S. Market Commentary
The S&P 500 closed higher on Monday as investors remained cautiously optimistic about ongoing U.S. trade negotiations despite President Trump’s announcement of plans to double tariffs on imported steel and aluminium. China dismissed U.S. accusations of breaching Geneva trade agreements as “groundless” and vowed to protect its interests. The U.S. administration is pressing trade partners to submit their best offers by Wednesday to accelerate talks ahead of a looming deadline in five weeks. Meanwhile, the ISM manufacturing index signalled a third consecutive month of contraction in May, with supplier delivery delays pointing to possible future shortages linked to tariffs. Dallas Fed President Lorie Logan emphasised the Fed’s vigilance amid stable labour conditions, above-target inflation, and an uncertain outlook, as markets anticipate Friday’s key nonfarm payrolls report for further labour market insights amid tariff-related volatility.
Asia Market Commentary
Asia-Pacific markets largely advanced Tuesday, buoyed by gains on Wall Street overnight, even as global trade tensions intensified. China’s manufacturing contracted at its fastest rate since September 2022, with the Caixin/S&P Global PMI falling to 48.3 in May, well below the 50 threshold and analyst expectations, highlighting the need for stronger stimulus amid tariff pressures. Similarly, South Korea’s factory activity shrank for the fourth consecutive month in May, with domestic demand weak and U.S. tariffs weighing heavily; its manufacturing PMI inched up slightly to 47.7 but still indicated contraction. These data underscore persistent challenges for regional manufacturing sectors amid ongoing trade disruptions.
Currency Market Commentary
The South African rand strengthened against a weaker US dollar on Monday, despite a continued decline in local manufacturing sentiment, buoyed by strong vehicle sales. The dollar hit a six-week low on Tuesday amid growing concerns over the US economy’s fragility due to ongoing trade tensions under President Trump’s administration. While global equity markets have largely rebounded from tariff-related volatility, the dollar remains pressured as upcoming US factory and jobs data are expected to shed further light on the economic impact of trade uncertainties.
Commodity Market Commentary
Gold prices retreated from a near four-week high on Tuesday as a modestly stronger US dollar pressured the metal, though ongoing uncertainty around the US-China trade talks kept losses in check. Meanwhile, oil prices rose in early Asian trade amid supply concerns, with Iran poised to reject a US nuclear deal proposal that could have eased sanctions on its oil exports, and Canadian production disrupted by wildfires. The geopolitical risks surrounding Iran’s nuclear stance support oil prices by raising the prospect of continued sanctions and constrained supply.
Raubex Group Limited (RBX) +10.51%
Raubex delivered a 21.0% increase in revenue to R21.08 billion for the year ended 28 February 2025, with operating profit up 1.3% to R1.56 billion. Earnings per share and headline earnings per share rose by 27.5% and 25.9% respectively, supported by a 31.8% uplift in cash generated from operations. The Group declared a final dividend of 104 cents per share and reported a robust order book valued at R28.18 billion. While capital expenditure decreased, net asset value strengthened to R7.15 billion, underpinned by solid operational performance.
Bell Equipment Limited (BEL) -1.89%
Bell Equipment issued a trading update indicating that EPS and HEPS for the six months to 30 June 2025 are expected to decline by at least 50% from the prior period’s 322 cents and 321 cents respectively. The drop is attributed to weakened global demand, particularly in the US market, which has been affected by tariff-related headwinds. A further update will be provided as earnings visibility improves, with results due around 5 September 2025.
Telkom SA SOC Limited (TKG) +3.75%
Telkom anticipates a sharp increase in earnings for the year ended 31 March 2025, driven primarily by the R4.35 billion after-tax gain from the disposal of Swiftnet. BEPS from total operations is expected to rise by 290%–300% (to 1,503.5–1,542.0 cents), while HEPS is forecast to increase 40%–50% (to 526.4–564.0 cents). For continuing operations, adjusted BEPS and HEPS are set to grow by 125%–135% and 95%–105% respectively. Audited results are expected on or around 10 June 2025.
Momentum Group Limited (MTM) -0.60%
Momentum Metropolitan Holdings posted normalised headline earnings of R4.8 billion for the nine months to 31 March 2025, reflecting consistent operational execution and favourable market dynamics. New business volumes (PVNBP) declined by 4% to R58 billion, but profitability improved due to a positive shift in business mix and a strong showing from Metropolitan Life. Recurring premiums increased by 5%, while single premiums fell 7%, and expenses rose 5%, slightly above inflation, mainly due to regulatory and IT investments. The solvency position remains sound, with the main life entity’s SCR coverage at 2.02x. A R1 billion share buyback commenced in May following regulatory clearance.
Sygnia Limited (SYG) 0.00%
Sygnia reported an 18.8% increase in assets under management and administration to R405.6 billion for the six months ended 31 March 2025. Revenue climbed 11.6% to R495.7 million, while profit after tax rose 13.2% to R172.6 million. Headline earnings per share increased by 12.4% to 113.2 cents, with diluted HEPS up 13.0%. The interim dividend was raised to 98.0 cents per share, marking an 8.9% improvement year-on-year.
PDD Holdings Inc. (PDD) -0.07%
Daily U.S. users of PDD Holdings’ e-commerce platform Temu fell 58% in May, according to Sensor Tower, as the platform faces mounting challenges from escalating U.S.-China trade tensions. Following the White House’s termination of the “de minimis” tariff exemption on 2 May, Temu reduced its U.S. ad spend and shifted its fulfilment strategy, no longer able to leverage duty-free shipping on low-value Chinese exports. While both Temu and rival Shein have experienced slower growth since U.S. tariffs were reintroduced, Bain & Company data suggests Temu’s sales and customer trends are lagging further behind. Unlike Shein, which has managed to lift per-customer spending year-on-year, Temu has struggled to maintain momentum.
Neuralink Corporation (Not Listed)
Elon Musk’s Neuralink has secured $650 million in fresh funding to support the development and clinical rollout of its brain implant device, now being trialled in three countries. The implant, which decodes neural signals for use with digital and physical devices, is currently helping five patients with severe paralysis control technology using only their thoughts. Neuralink recently received a second FDA "breakthrough device" designation—this time for its speech restoration system, having earned the same status last year for its vision-restoring implant. The designation accelerates regulatory processes for innovations with significant potential to address unmet medical needs.
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