Berkshire Hathaway Invests in Constellation Brands Cuts Bank Stakes Holds Apple

Local Market Commentary

On Friday, the JSE Top 40 index rose by 1.13% to 80,972.3 points, while the All Share gained 1%, closing at 88,717.1 points. Speaking at an Arbitration Foundation of Southern Africa (AFSA) event in Sandton, Kganyago highlighted the global rise of populism across both wealthy and developing nations, stressing the need to understand its appeal and formulate appropriate responses. While he did not explicitly mention US President Donald Trump, his remarks appeared to allude to the disruptive impact of populist leadership on global institutions and economic stability.

European Market Commentary

The STOXX 600 index declined by 0.3% on Friday after four consecutive sessions of record highs, as investors took a step back. Despite this dip, the index recorded its eighth straight week of gains—the longest streak since early 2024—driven by strong corporate earnings, particularly in the luxury sector, where Hermès performed well. Year-to-date, the STOXX 600 is up over 8%, outperforming US markets as European companies exceeded earnings expectations. Meanwhile, German wholesale prices increased by 0.9% year-on-year in January, according to federal statistics data.

U.S. Market Commentary

Wall Street ended mixed on Friday, with Nvidia gaining while Microsoft declined, as Treasury yields fell following US President Donald Trump’s announcement of reciprocal tariff plans without immediate implementation. Commerce Secretary nominee Howard Lutnick stated that affected countries would be addressed individually, with studies concluding by April 1. Market volatility was fuelled by proposed tariffs on steel and aluminium, a larger-than-expected rise in January’s consumer prices, and hawkish signals from Federal Reserve Chair Jerome Powell. However, stocks found support from data showing a rise in producer prices while core inflation remained subdued. US markets are closed today for Presidents Day.

Asia Market Commentary

Asia-Pacific markets traded mostly higher as investors assessed Japan’s stronger-than-expected fourth-quarter GDP growth, which expanded 2.8% on an annualised basis, surpassing forecasts of 1%. In contrast, Thailand’s economy grew 3.2% year-on-year, falling short of the expected 3.9%, with full-year GDP at 2.5%. Meanwhile, central bank decisions are in focus, with the Reserve Bank of Australia beginning its two-day meeting, potentially leading to an interest rate cut, while Indonesia and New Zealand are set to announce their rate decisions on Wednesday.

Currency Market Commentary

The South African rand strengthened on Friday following US President Donald Trump’s announcement of reciprocal tariffs on countries taxing US imports, while investors looked ahead to the domestic budget. The yen gained support from stronger-than-expected Japanese GDP data, while the Australian and New Zealand dollars remained steady ahead of key policy decisions. Meanwhile, the US dollar struggled as weaker economic data fuelled expectations of further Federal Reserve rate cuts, with Friday’s disappointing retail sales figures and a delay in Trump’s tariff measures adding to market pressure.

Commodity Market Commentary

Oil prices declined for a fourth consecutive day amid expectations that a potential Russia-Ukraine peace deal could ease sanctions affecting supply chains. Concerns over global tariff wars further weighed on market sentiment, raising fears of slower economic growth and weaker energy demand. US President Donald Trump indicated he could meet with Russian President Vladimir Putin soon to discuss ending the conflict, as both nations prepare for initial negotiations in Saudi Arabia in the coming days.

Aveng Limited (AEG) -25.00%

Aveng Limited expects to report a loss per share of A$25.3 to A$25.4 cents and a headline loss per share of A$26.0 to A$27.0 cents for the six months ended 31 December 2024, compared to earnings per share of A$0.6 cents and headline earnings per share of A$8.8 cents in the previous period. The decline is mainly due to underperformance in the Infrastructure segment, where the Kidston Pumped Hydro project in Australia and the Jurong Region Line project in Singapore are set to contribute a combined loss of A$77 million. However, the broader Infrastructure portfolio remained profitable, generating A$50 million. The Group maintains a strong cash position of A$252 million, ensuring stability amid project-related cash outflows. The Built Environs (Building) segment is on track for improved earnings, while Moolmans (Mining) remains profitable and is in advanced negotiations for a 60-month contract at Gamsberg. Aveng plans to release its reviewed results around 18 February 2025.

Metair Investments Limited (MTA) -3.33%

Metair navigated a challenging 2024, focusing on cost efficiency, restructuring, and strategic realignment to enhance long-term profitability. The sale of Mutlu in Türkiye was a key move to reduce financial volatility and rebalance debt. Despite a decline in local OEM production, the Group remained resilient, with revenue from continuing operations expected at R11.8 billion (F2023: R12.1 billion) and EBIT projected between R480 million and R520 million (F2023: R633 million). Hesto Harnesses returned to profitability after prior-year losses, while the Energy Storage segment saw a 9% revenue increase, driven by export growth. Short-term performance was impacted by restructuring costs. The R278.5 million acquisition of AutoZone supports Metair’s diversification strategy, with integration currently underway. Liquidity management remains a priority, with net debt at approximately R4 billion and refinancing efforts progressing. The Group will announce revised funding terms following Board and lender reviews in March 2025.

Berkshire Hathaway (BRK-A) -0.33%

Warren Buffett’s Berkshire Hathaway disclosed a new investment in Constellation Brands, acquiring 5.62 million shares worth $1.24 billion by year-end, while reducing stakes in four banks, including Citigroup and Bank of America. A regulatory filing revealed Berkshire halted Apple share sales, keeping it as its largest holding at $75.1 billion, despite selling $133.2 billion in stock—mainly Apple—through September 2024, raising its cash reserves to $325.2 billion. Berkshire also trimmed its Bank of America position after initially acquiring 700 million shares in 2017. The filing does not specify whether these moves were directed by Buffett or portfolio managers Todd Combs and Ted Weschler. Berkshire’s annual report, due on 22 February, will provide further financial insights.

Gazprom Neft 0.00%

Gazprom Neft, the oil subsidiary of Russian energy giant Gazprom, reported a 25.2% decline in net profit for 2024, totalling 479.5 billion roubles ($5.22 billion). Despite this, revenue rose by 16.5% year-on-year to 4.1 trillion roubles, while adjusted EBITDA increased by 5.8% to 1.4 trillion roubles, reflecting resilience in operational performance amid market challenges.

Hermès International SCA (HRMS) +0.82%

Hermès reported fourth-quarter sales growth of 18%, surpassing analyst expectations as demand for its high-end products, including Birkin bags, remained strong. Outperforming rivals LVMH and Kering’s Gucci, Hermès defied industry-wide luxury slowdowns, with global luxury sales declining 2% in 2023 due to economic pressures in China and inflation concerns elsewhere. The company’s market capitalisation, nearing €297 billion, continues to close in on LVMH. Fourth-quarter revenue reached €3.96 billion, with the leather goods and saddlery division leading at 21.5% growth, well above the expected 13%. The Americas and Japan saw the strongest regional performance, each growing by 22.3%, while Asia (excluding Japan) posted a 9% rise despite weaker Chinese consumer spending.

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