Potential 2% VAT Hike: The two companies likely to thrive in that reality
Recent developments in South Africa’s national budget have sparked political uncertainty and economic policy challenges. The unprecedented postponement, driven by internal disputes and a controversial 2% VAT hike, has raised concerns about trade relationships and a weakening rand. While such fiscal turbulence may dampen domestic consumer spending and inflate costs for companies reliant on local markets, firms with strong international exposure and export-oriented operations could benefit significantly. Here are two key players on the Johannesburg Stock Exchange (JSE) that could potentially come out ahead:
1. Anglo American (AGL)
● Rationale:
Anglo American’s diversified mining portfolio, with significant exposure to platinum and copper, positions the company well should the rand weaken. A lower domestic currency value can boost export revenues, particularly in sectors like renewable energy where copper is essential.
● Comparison with Benchmarks:
Unlike many domestic companies that primarily serve local consumer markets and are directly impacted by a VAT hike, resulting in increased costs and lower disposable income, Anglo American operates on a global scale, which insulates it from localised fiscal pressures. The company's diversified mining portfolio spans continents and includes valuable commodities like platinum and copper which are critical to global industries, particularly in the renewable energy sector. As the rand depreciates due to domestic policy challenges, Anglo American benefits from a higher conversion rate of its foreign-denominated revenues into local currency, effectively increasing its profit margins.
● Technical Outlook:
The share price is currently hovering around R550, near the high levels seen in 2008. A sustained close above the R600 mark would break through the descending trading channel, indicating a potential reversal in trend and signaling a bullish shift in market sentiment.
2. Naspers (NPN)
● Rationale:
With a large stake in Tencent and other global tech investments, Naspers is less exposed to domestic policy volatility and leans more towards international growth. A depreciated rand can significantly amplify its foreign currency earnings when converted back into the South African rand.
● Comparison with Benchmarks:
Naspers leverages a diversified, global portfolio to manage local economic and fiscal uncertainties. With its large stake in Tencent, a technology powerhouse driving growth in digital advertising, e-commerce, and online gaming, Naspers benefits from strong revenue streams in high-growth international markets, insulating it from challenges like VAT hikes and political instability that may slow local consumer spending. Naspers emerges as an ideal investment in an environment of fiscal uncertainty, providing a stable hedge against domestic risks while capitalising on global growth opportunities.
Technical Outlook:
The share price hit an all-time high of R4 892.12 on Tuesday, marking a robust 20% gain for February. However, momentum indicators suggest the stock is nearing overbought conditions, which may trigger a short-term pullback toward the previous support level around R4 460. This potential retracement could be viewed as a healthy consolidation phase that may set the stage for a continued upward trend.
BROKSTOCK SA (PTY) LTD is an authorised Financial Service Provider and is regulated by the South African Financial Sector Conduct Authority (FSP No.51404). BROKSTOCK SA (PTY) LTD Proprietary Limited trading as BROKSTOCK. BROKSTOCK SA (PTY) LTD t/a BROKSTOCK acts solely as an intermediary in terms of the FAIS Act, rendering only an intermediary service (i.e., no market making is conducted by BROKSTOCK SA (PTY) LTD t/a BROKSTOCK) in relation to derivative products (CFDs) offered by the liquidity providers. Therefore, BROKSTOCK SA (PTY) LTD t/a BROKSTOCK does not act as the principal or the counterparty to any of its transactions.
The materials on this website (the “Site”) are intended for informational purposes only. Use of and access to the Site and the information, materials, services, and other content available on or through the Site (“Content”) are subject to the laws of South Africa.
Risk notice Margin trading in financial instruments carries a high level of risk, and may not be suitable for all users. It is essential to understand that investing in financial instruments requires extensive knowledge and significant experience in the investment field, as well as an understanding of the nature and complexity of financial instruments, and the ability to determine the volume of investment and assess the associated risks. BROKSTOCK SA (PTY) LTD pays attention to the fact that quotes, charts and conversion rates, prices, analytic indicators and other data presented on this website may not correspond to quotes on trading platforms and are not necessarily real-time nor accurate. The delay of the data in relation to real-time is equal to 15 minutes but is not limited. This indicates that prices may differ from actual prices in the relevant market, and are not suitable for trading purposes. Before deciding to trade the products offered by BROKSTOCK SA (PTY) LTD, a user should carefully consider his objectives, financial position, needs and level of experience. The Content is for informational purposes only and it should not construe any such information or other material as legal, tax, investment, financial, or other advice. BROKSTOCK SA (PTY) LTD will not accept any liability for loss or damage as a result of reliance on the information contained within this Site including data, quotes, conversion rates, etc.
Third party content BROKSTOCK SA (PTY) LTD may provide materials produced by third parties or links to other websites. Such materials and websites are provided by third parties and are not under BROKSTOCK SA (PTY) LTD's direct control. In exchange for using the Site, the user agrees not to hold BROKSTOCK SA (PTY) LTD, its affiliates or any third party service provider liable for any possible claim for damages arising from any decision user makes based on information or other Content made available to the user through the Site.
Limitation of liability The user’s exclusive remedy for dissatisfaction with the Site and Content is to discontinue using the Site and Content. BROKSTOCK SA (PTY) LTD is not liable for any direct, indirect, incidental, consequential, special or punitive damages. Working with BROKSTOCK SA (PTY) LTD you are trading share CFDs. When trading CFDs on shares you do not own the underlying asset. Share CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail traders accounts lose money when trading CFDs with their provider. All rights reserved. Any use of Site materials without permission is prohibited.