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Platinum: finally some green flags?

After years in the doldrums, platinum has rallied in 2025, surging to highs of around US$1 480/oz – levels last seen in 2014. Several forces have converged to push prices higher. On the supply side, flooding and smelter maintenance have hampered production. On the demand side, record-breaking gold prices (~US$3 500/oz) have triggered aggressive stock-building by Chinese jewellery wholesalers in April and May. Lastly, speculative activity has amplified the momentum.

While there may be some pullback in the near term as these short-term drivers normalise, we remain positive on the outlook for platinum. Demand for automotive catalysts (around one third of total use) should remain broadly stable, with internal combustion engines and hybrids proving more enduring than expected. However, we see jewellery as the potential wild card. Should just 1% of total gold jewellery demand shift to platinum, we estimate a ~10% uplift in total platinum demand. With supply growth looking constrained, prices could still go much higher.

At Sanlam Private Wealth, we hold exposure to platinum miners in our local portfolios through Northam and Valterra. We recently added to Valterra after receiving a small stake via Anglo American’s unbundling. The demerger has created an overhang, and operations have struggled (flooding at one mine, low grades at another) – this has created an opportunity to build a position in a business that owns some of the finest platinum mines in the world.

TSMC: powering the AI rally

Taiwan Semiconductor Manufacturing Company (TSMC) – a key holding in our portfolios – sits at the centre of the AI revolution as the world’s most advanced semiconductor foundry. Regardless of who designs the chip, the odds are high that TSMC manufactures it, making the company indispensable to AI infrastructure, from data centres to end-user devices.

At the sub-5nm frontier, meaningful competition is scarce, strengthening TSMC’s strong and well-protected technological advantage. Despite the capital-intensive nature of its business, the company continues to deliver strong returns on invested capital, underpinned by scale, pricing power, and best-in-class manufacturing yields.

While TSMC’s valuation is not as appealing as when we first invested 18 months ago, it remains fair given the company’s structural growth outlook and the high valuations across the broader AI ecosystem.

TSMC’s recent ~US$160 billion commitment to expand in Arizona – equivalent to ~15% of its market cap – enhances geographic diversification while securing a key exemption from new US chip tariffs. This not only protects access to its vital North American customer base but further cements TSMC’s strategic role in the global semiconductor ecosystem.

Nubank: a structural growth holding

We have increased client exposure to Nu Holdings (Nubank), Latin America’s largest digital bank, as we see the business well placed to deliver strong, sustained growth over the long term. Nubank’s fully digital, low-cost operating model enables rapid expansion across Brazil, Mexico and Colombia without the overhead of a traditional branch network.

The bank’s edge lies in customer-centric innovation, disciplined cost control and data-driven underwriting – capabilities enhanced by its 2024 acquisition of Hyperplane. Founded in 2022, Hyperplane builds AI models that help financial institutions unlock the value of their own customer data in areas such as credit risk, collections and marketing. The deal advances Nubank’s ‘AI-first’ strategy, enabling more personalised services and deeper insights into customer behaviour.

We view Nubank as a long-term compounder with a significant runway for growth. With a strong track record of acquiring customers at scale and expanding margins, the company is increasingly focused on deepening engagement through cross-selling. Starting with credit cards and digital accounts, Nubank has expanded into personal loans, insurance, investments and most recently secured lending, further broadening its appeal to higher-income clients.

As more customers adopt multiple products, monetisation improves and lifetime value increases. We believe ongoing digital adoption, continuous product innovation and prudent capital management will continue to drive strong shareholder returns over time.

Vodacom: a compelling opportunity

We’ve also recently added Vodacom to our clients’ portfolios. The company is targeting more than 10% earnings before interest, taxes, depreciation and amortisation (EBITDA) growth per annum over the next five years, mostly driven by strong performance in Egypt. There will be further upside through its associate ownership in Safaricom’s operations, spanning Kenya and Ethiopia. In our view, the market is still underestimating both the scale of this shift and the compounding impact of growth in these higher-return markets.

Fintech now contributes around 12% of group earnings, with momentum building in Egypt, South Africa, Kenya and Ethiopia. With Vodacom now disclosing more about fintech and beyond mobile earnings, we expect the segment to attract greater investor recognition – potentially commanding a premium multiple of 15 times or more and unlocking significant upside to the group’s valuation.

On the regulatory front, Vodacom’s partnerships are a competitive strength. In Egypt and Ethiopia, its relationship with government-aligned stakeholders has enabled smooth tariff increases, even during periods of currency volatility. Foreign exchange risk is partially reduced by the ability to adjust pricing quickly.

Egypt and Ethiopia remain underpenetrated, youthful markets with strong demand for both data and mobile money. Vodacom is already recording robust growth in local currency terms. While the South African business is mature, R3 billion in planned cost savings should help protect margins. Add to this a secure 5-7% dividend yield, full upstreaming of cash and a valuation that remains attractive, and we see a compelling opportunity.

Why we trimmed BAT

After a strong share price run, we’ve reduced our position in British American Tobacco (BAT), while still maintaining it as a core holding. The investment case is still solid: dependable cash flow, a 6.5% dividend yield, and a self-funded shift into next-generation products (NGPs) make BAT a reliable, steady-growth business that holds up well in tough markets.

That said, a re-rating will depend on better execution – particularly in heated tobacco, where competitors like PMI are ahead. NGPs currently account for less than 20% of revenue, with a target of over 40% by 2031. While this shift is under way, progress has been uneven.

Regulatory risk remains a headwind. Menthol bans, FDA scrutiny and declining cigarette volumes continue to weigh on sentiment. Much of this is already reflected in the current earnings multiple, but without clearer traction in products like Glo or Velo, we see limited near-term drivers.

Deleveraging is on track, and share buybacks are likely. However, we’ve chosen to reallocate part of our BAT exposure to higher-conviction growth opportunities elsewhere. In short: BAT still belongs in our core portfolios – but we need stronger evidence before adding more.

Beijing’s belated population pivot

China’s efforts to drive domestic consumption are getting meaningful government support in a move that should be positive for Chinese equities broadly and Tencent in particular. Given China’s declining population, the government has just launched a national childcare subsidy programme, ostensibly aimed at lifting birth rates.

This is a striking shift for a country that had a one-child policy from 1979 to 2015. China’s population began declining in 2022 and continues to fall. The population is also ageing rapidly: 18% are already over 60, and almost half are over 40. Over the next five years, 8.2% of the current population will retire, while only about 5.6% will enter the workforce.

Childcare subsidies have rarely succeeded in reversing demographic trends elsewhere, and China’s programme is modest – about US$500 per child per year for only the first three years. For perspective, nappies alone would cost US$200 annually. Still, the subsidy could be extended or increased over time, and China has a track record of achieving its demographic goals. The challenge is that any impact on the workforce would take more than 20 years to materialise.

Another possibility is that this policy is less about boosting births and more about stimulating spending. Framed as a childcare subsidy, it may be a politically acceptable way to put more cash in households’ hands without calling it a ‘handout’. If so, it could be an early sign of more direct consumer support to come – a potentially meaningful tailwind for domestic demand.