Xiaomi YU7 SUV surges with 289,000 orders, shares hit record high

Local Market Commentary

South Africa’s Top 40 and All Share indexes rose 0.71% and 0.69%, ending at 88,396.9 and 95,968.3 points respectively. The gains were supported by slowing producer inflation and improved consumer sentiment, helped by lower interest rates, declining fuel prices, and early pension withdrawals easing household financial pressures. Despite political tensions arising from the dismissal of a senior Democratic Alliance deputy trade minister, foreign direct investment flows remained robust, reflecting underlying economic resilience and investor confidence amid ongoing fiscal reforms and global economic uncertainties. Retail sales and manufacturing data also indicated a steady recovery trajectory, adding to cautious optimism in the market.

European Market Commentary

European equities ended largely unchanged amid investor caution over US interest rate outlooks and global economic uncertainties. The STOXX 600 edged up slightly, driven by Germany’s DAX gains as industrial output showed signs of stabilising. Inflation uncertainties persist in the UK, despite signs of labour market softening, while German consumer sentiment weakened due to rising savings amid inflationary pressures. UK vehicle production fell sharply amid supply chain disruptions and ongoing US tariffs impacting export competitiveness. Investors are closely monitoring monetary policy decisions and geopolitical developments affecting the region’s growth prospects.

 U.S. Market Commentary

US markets advanced near record highs, boosted by a sustained Israel-Iran ceasefire and supportive economic data indicating possible Federal Reserve rate cuts later this year. Inflation remains contained though tariff-related inflation effects may be delayed, prompting a cautious Fed approach ahead. Strong corporate earnings and improving labour market data also contributed to positive investor sentiment, supporting broad-based gains across technology and consumer sectors. Market participants are also focused on upcoming employment reports and fiscal stimulus discussions that could influence future market dynamics.

Asia Market Commentary

Regional markets mostly rose following US gains and White House easing of tariff concerns, which helped improve risk appetite. Japan’s retail sales and core inflation slowed, while unemployment remained steady, signalling moderate economic growth. Job openings slightly declined but remain healthy, indicating a resilient labour market ahead of looming tariff deadlines. Markets remain watchful for developments in trade negotiations and geopolitical risks affecting supply chains, with investors assessing the impact of monetary policy adjustments across the region and China’s economic data releases.

 Commodity Market Commentary

Gold prices declined for a second consecutive week, pressured by a firmer US dollar and easing Middle East tensions reducing safe-haven demand. Oil prices showed mixed movements, rising on seasonal US demand due to the summer driving season but restrained by the Israel-Iran ceasefire which alleviated supply risk concerns. Market focus remains on upcoming US inflation data and OPEC production decisions influencing future commodity price trajectories. Additionally, demand outlooks for industrial metals continue to reflect China’s manufacturing activity trends and global infrastructure spending patterns.

Currency Market Commentary

The South African rand remained flat amid mixed US economic signals and local political developments, reflecting cautious investor sentiment. Sterling strengthened to a near four-year peak against the dollar, which hovered near multi-year lows against major currencies on expectations of deeper US rate cuts and upcoming trade deal deadlines. Geopolitical risks receded with the holding ceasefire in the Middle East, refocusing markets on monetary policy and global growth prospects. Emerging market currencies showed varied performance influenced by commodity price fluctuations and capital flows amid shifting risk appetites.

Thungela Resources Limited (TGA) -3.52%

Thungela delivered strong H1 2025 operations despite thermal coal headwinds, supported by improved rail performance, South African underground growth, and full control of Australia’s Ensham asset. Export saleable volumes reached 8Mt, but realised prices fell due to oversupply and weaker demand. Slightly elevated FOB costs resulted from weather and geology, though FY guidance is unchanged. R1.1bn was spent locally, R127m in Australia, and R328m on buybacks, with R1.4bn in dividends paid. Net cash is forecast at R5.9bn–R6.1bn. The balance sheet remains flexible, supporting consistent shareholder returns and key capital projects.

Hyprop Investments Limited (HYP) -0.91%

Hyprop posted a firm update for the five months to May 2025, driven by tenant demand and trading growth across South Africa and Eastern Europe. SA turnover rose 7% year-on-year, with leasing gains at Canal Walk and other flagship malls. EE centres held near-zero vacancies and enhanced tenant mix. The Group maintained disciplined capital use, reducing LTV to 36.3% and euro equity debt to €87m. Strategic upgrades and sustainability initiatives support its return-focused retail strategy in key economic zones.

Argent Industrial Limited (ART) +1.71%

Argent delivered strong FY2025 results to 31 March, with HEPS up 12.5% to 493.3 cents and EBITDA rising 9.9% to R433.7m. Revenue increased 3.6%, while profit rose 9.7% to R276.8m, supported by operational efficiency. The balance sheet strengthened, with assets up 13.6% and NAV per share growing 12% to 3,488.1 cents. A final dividend of 127 cents, up 10.4%, reflects confidence in Argent’s capital position and cash generation.

Schroder European Real Estate Investment Trust plc (SCD) +1.67%

SERE reported a 0.3% NAV return for H1 2025, underpinned by fully covered dividends of 2.96 cps and capital discipline via buybacks and a €11.8m post-period Frankfurt disposal. A marginal €0.1m IFRS loss was driven by valuation shifts, while EPRA earnings held firm at €3.9m. Portfolio value dipped 1.3% to €205.6m, with industrials up 4%. With 95% occupancy, strong leasing, and reduced LTV of ~18%, SERE remains well positioned amid sector volatility.

Growthpoint Properties Limited (GRT) -0.15%

Growthpoint advanced its strategy during the nine months to 31 March 2025, completing or transferring R2.3bn in disposals toward its R2.8bn FY target, with R1.2bn invested in upgrades like Bayside Mall and logistics hubs. Retail fundamentals remained firm with 4.5% trading density growth and 4.6% core vacancies, while reversions improved to -0.8%. Office stabilised with gains in the Western Cape, though tenant retention dipped. Logistics vacancies fell to 4.4%, aided by prime space and R968.4m in disposals. Offshore, Growthpoint exited Capital & Regional for R2.4bn, reinvesting in NewRiver REIT (14.2% stake), while supporting Growthpoint Australia and Globalworth. Capital discipline and ESG-focused expansion remain central.

Xiaomi Corporation (1810) +0.44%

Xiaomi’s new YU7 electric SUV surpassed expectations with 289,000 orders in its first hour, more than triple the launch volume of its SU7 model. Priced at 253,500 yuan, the YU7 undercuts Tesla’s Model Y by nearly 4%, boosting Xiaomi shares up to a record high. The strong early demand highlights Xiaomi’s growing foothold in the EV market, complementing its smartphone business and signalling robust consumer interest in its expanding electric vehicle portfolio.

Nike Inc. (NKE) +2.81%

Nike plans to reduce its China production exposure for the US market to mitigate tariff-related cost pressures, targeting a decrease from 16% to a high single-digit percentage by May 2026. Despite a 12% drop in Q4 sales, Nike exceeded revenue forecasts and expects a smaller-than-anticipated Q1 decline, supported by strategic sourcing, price hikes, and increased marketing spend. Challenges in China persist amid economic softness and competition, but Nike is focused on cost optimisation and sustaining long-term growth.

BNP Paribas S.A. (BNP) +0.08%

BNP Paribas aims to restore profitability in its French retail division by 2028 through sustained revenue growth and workforce reductions. The unit targets a return on normalized equity exceeding 17%, driven by 5%+ annual revenue growth primarily from net interest income recovery. Cost efficiencies will be realised via accelerated branch closures, headcount cuts averaging 2.2%-2.5% annually from 2026 to 2030, and operational streamlining including AI adoption. These measures address recent underperformance, enhancing long-term profitability.

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