TSMC boosts U.S. chip production with $100 Billion investment

Local Market Commentary

South Africa’s Top 40 index rose 2.1% to 80,196.2 points, while the All Share index gained 1.89% to close at 87,564.8. However, factory sentiment continued its decline, with Absa Group’s PMI falling to 44.7 in February, marking the fifth consecutive month of contraction amid global trade concerns, U.S.-South Africa tensions, and renewed power cuts. Business activity, new sales, and employment indicators weakened, highlighting a subdued manufacturing sector. Investors are now focused on upcoming Q4 GDP data for economic insights. Meanwhile, agricultural exports reached a record $13.7 billion in 2024, driven by citrus and grape shipments, marking a sixth consecutive year of growth as the country expands its market reach.

European Market Commentary

European defence stocks surged on Monday, driving major indices to record highs amid expectations of increased military spending and optimism around a potential Ukraine peace proposal. Germany’s DAX and Britain’s FTSE posted their strongest gains since 2022, while the STOXX 600 climbed 1.1%, extending a 10-week winning streak. Meanwhile, eurozone inflation fell less than expected, but core inflation eased, reinforcing expectations of an ECB rate cut on Thursday. In the UK, net mortgage lending reached £4.21 billion in January, the highest since September 2022, despite a slight decline in new approvals. Additionally, the Swiss National Bank reported a record annual profit of 80.7 billion francs ($89.5 billion), benefiting from strong equity markets, higher gold prices, and a stronger U.S. dollar.

U.S. Market Commentary

Wall Street’s main indices fell sharply on Monday, with the S&P 500 recording its biggest daily drop since 18 December, after President Donald Trump announced 25% tariffs on Canada and Mexico, set to take effect immediately, with reciprocal tariffs starting on 2 April. Markets had already weakened following an ISM survey showing U.S. manufacturing PMI declined to 50.3 in February from 50.9 in January, while the new orders index contracted sharply to 48.6 from 55.1. The PMI decline, alongside renewed trade tensions, fuelled investor concerns and deepened market losses.

 Asia Market Commentary

Japanese stocks led Asia-Pacific declines, falling over 2% after former U.S. President Donald Trump confirmed tariffs on Mexico and Canada would proceed as planned. Japan’s unemployment rate edged up to 2.5% in January, slightly above forecasts, while the jobs-to-applicants ratio improved to 1.26. Corporate capital expenditure declined 0.2% year-on-year in Q4, marking the first drop in nearly four years, as labour shortages constrained investment despite strong corporate profits. Meanwhile, South Korea’s manufacturing PMI fell to 49.9 in February from 50.3 in January, reflecting the sharpest employment decline in 2.5 years and weaker business confidence amid rising economic uncertainty.

Commodity Market Commentary

Gold prices dipped as markets remained cautious ahead of former U.S. President Donald Trump’s tariffs on Canada, Mexico, and China taking effect. Oil prices extended losses following Trump’s decision to pause military aid to Ukraine and the impending tariffs. Meanwhile, Russian authorities extinguished fires at an oil pipeline in Rostov after a Ukrainian drone attack, though no injuries or significant damage were reported. Iron ore futures also declined as markets braced for the implementation of U.S. tariffs on Chinese imports.

Currency Market Commentary

South Africa’s rand strengthened on Monday as the dollar weakened ahead of U.S. tariffs on Mexico, Canada, and China, while markets also reacted to former U.S. President Donald Trump’s tensions with Ukrainian President Volodymyr Zelenskiy. The euro rebounded amid hopes for a Ukraine peace deal and shifting interest rate differentials, while investors awaited key U.S. economic data later in the week. Meanwhile, the pound slipped against the euro but gained against the dollar after European leaders agreed to draft a Ukraine peace proposal, with expectations that the euro would benefit the most from a resolution, alongside Germany’s potential fiscal expansion.

Santam Limited (SNT) -1.20%
Santam reported a 10% increase in conventional insurance net earned premiums (NEP), reaching R32.2 billion, with a net underwriting margin of 7.6%, up from 3.5% in December 2023. The company’s alternative risk transfer (ART) business, comprising Santam Structured Insurance and Centriq, saw profits rise to R781 million, compared to R516 million in 2023. Santam's return on shareholders' funds stood at 31.9%, and its economic capital coverage ratio improved to 166%. The company continued to implement strategic underwriting measures, which positively impacted profitability. Its international businesses also grew, with a 20% increase in gross written premiums from Shriram General Insurance (SGI) and Pacific & Orient Insurance Co. Berhad. Santam is progressing with its FutureFit 2030 strategy to ensure continued profitability and growth. The board declared a final dividend of 985.00 cents per share, up from 905.00 cents in 2023, with a 20% withholding tax applicable for non-exempt shareholders.

 Bidvest Group (BVT) +0.39%
Bidvest reported a 6% increase in revenue to R64.5 billion, while trading profit remained flat at R6.3 billion, resulting in a slight decrease in the trading profit margin to 9.7%. The company generated R4.5 billion in cash from operations, an 18% improvement. Return on funds employed (ROFE) stood at 37.9%. Group headline earnings per share (HEPS) increased by 3% to 1,015.5 cents, while normalised HEPS rose by 1% to 1,057.7 cents. HEPS for continuing operations declined by 1% to 941.3 cents, with normalised HEPS for continuing operations remaining flat at 1,011.4 cents. An interim dividend of 470 cents, a 1% increase from the previous period, was declared.

 Aspen Pharmacare (APN) +11.75%
Aspen delivered solid operational results in the six months ended 31 December 2024, with a 4% increase in revenue to R22.0 billion (9% in constant exchange rate (‘CER’)), supported by a 12% rise in normalised EBITDA (21% in CER) to R5.8 billion. Normalised headline earnings per share (HEPS) grew by 5% (17% in CER) to 724.2 cents, while headline earnings per share increased by 4% (16% in CER) to 645.4 cents. Earnings per share rose by 3% (17% in CER) to 537.7 cents. The company faced dilution of reported performance due to the strength of the ZAR against its trading currencies, although underlying growth was robust. Key contributors included strong performances in Commercial Pharmaceuticals, particularly a 13% CER growth in revenue and normalised EBITDA, and a significant improvement in Manufacturing, which more than doubled its normalised EBITDA. The launch of Lilly’s Tirzepatide-based product in South Africa and the successful integration of Latin American acquisitions further supported revenue growth. However, earnings growth was tempered by an increase in the effective tax rate, largely due to South Africa’s adoption of global minimum tax rules.

 JSE Limited (JSE) +2.05%
For the year ended 31 December 2024, JSE reported a 10.4% increase in net profit after tax (NPAT) to R918 million, driven by a strong return on equity (ROE) of 20.2%. Headline earnings per share (HEPS) grew by 9.6% to 1,128.6 cents. The group saw a 5.2% rise in operating income to R3.1 billion, supported by growth in most business segments, including JSE Investor Services (up 20.2%) and Primary Markets (up 15.6%). Non-trading income increased by 7.5% to R1,170 million, now contributing 37.8% of operating income. EBITDA increased by 4.3% to R1.19 billion, while total operating expenditure rose 6.2%. Net finance income was up 21.3% to R205 million, benefiting from higher yields and a favourable interest rate environment. The Board declared a 5.6% higher dividend of 828 cents per share, resulting in a total distribution of R715 million, supported by strong cash generation of R1.09 billion from operations.

 MAS Real Estate (MSP) -4.16%
MAS achieved a 13.1% year-on-year increase in distributable earnings, reaching 5.09 eurocents per share for the six-month period ended 31 December 2024. The Group’s IFRS earnings for the period amounted to EUR76.1 million, comprising EUR35.0 million in distributable earnings and EUR41.1 million in non-distributable earnings. The Group’s IFRS Tangible Net Asset Value (TNAV) grew by 7.2% to EUR1.78 per share, reflecting a 14.1% total shareholder return (TSR) for the trailing 12 months. MAS continues to focus on long-term returns through direct property investments in Central and Eastern Europe (CEE), and joint ventures like the Development Joint Venture with Prime Kapital, aiming to maximise returns per share via strategic capital allocation and operational excellence.

Taiwan Semiconductor Manufacturing Company Limited (2330)

TSMC has announced a new $100 billion investment in the United States to develop five additional semiconductor facilities, including three fabrication plants, two advanced packaging sites, and a major R&D centre. This expansion, revealed by CEO C.C. Wei alongside former U.S. President Donald Trump, aims to strengthen domestic chip production and reduce reliance on Asian supply chains. The commitment builds on TSMC’s previous pledge to invest up to $65 billion in U.S. operations, including a third Arizona factory by 2030.

BYD Company (1211)

BYD has raised $5.59 billion through an upsized primary share sale, marking Hong Kong’s largest such deal in four years and the automotive sector’s biggest global equity follow-on offering in a decade. The company sold 129.8 million shares, exceeding the initial 118 million planned, with shares priced between HK$333 and HK$345 in an accelerated bookbuild. The UAE-based Al-Futtaim Family Office was a key investor, with BYD hinting at a potential strategic partnership. While expanding into the Middle East, BYD remains heavily reliant on China, where it sold over 90% of its 4 million vehicles in 2024, commanding a dominant share of the country’s EV and plug-in hybrid market.

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