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sectors and shares

Copper: what’s behind recent price moves?

Copper has rallied strongly over the past year, rising more than 50% to a peak above US$13 400/t in late February. Tariff-related demand in the US, AI-driven data centre build-out and some market speculation in recent months have all played a role. However, in our view, the dominant driver has been mine supply disruption of more than one million tonnes, or around 5% of global supply, over the past year.

The war in Iran has triggered a sharp correction, and given its broad global industrial usage, copper is likely to remain very sensitive to macro shocks. That said, the medium- to long-term outlook remains robust, supported by steady demand growth from energy transition-related end products and a constrained mine supply outlook. We estimate that prices above US$9 000/t are required to incentivise sufficient new mine project approvals.

This is a favourable outcome for producers with high-quality, long-life copper mines in their portfolios, such as Anglo American and Glencore, which earn around two thirds and one third of their profits from the metal respectively. These producers are generating very healthy margins at current prices and also have high-return expansion opportunities at many of their existing mines.

SA food producers: execution improving, growth elusive

Recent updates from South African food producers suggest that while operational execution is improving, structural growth remains constrained.

Tiger Brands has delivered a clear uplift in near-term momentum. Its latest update was volume-led, with roughly 5% growth across continuing operations despite a simplified portfolio. Margins remain in the low double digits, and capital returns continue to underpin the investment case. That said, Tiger Brands still looks more like a self-help and cash-return story than a clean structural growth recovery.

AVI reported a solid result for the first half of the 2026 financial year, although performance was uneven. Revenue rose 4.9% to R8.9 billion, supported by improved footwear, a recovery in Snackworks biscuits, and stronger results from I&J. Beverages also provided support, while personal care remained weak.

Premier Group remains in focus, particularly given the proposed RFG Holdings transaction, which would add around R8 billion in revenue and R1.1 billion in earnings before interest, tax, depreciation and amortisation (EBITDA) – about 31% of the enlarged group base. Alongside this, core trading has been strong, driven by healthy volumes and the benefits of a deleveraged balance sheet. Management continues to position Premier around scale, disciplined capital investment and operational efficiency.

The broader backdrop remains challenging. With retailer bargaining power increasing and a greater share of the profit pool shifting downstream, listed food producers will need to sustain a high level of execution simply to hold ground.

SA banks: from rates to credit-led recovery

Our investment case for South African banks is shifting from a macro-driven bond rally to a more fundamental, earnings-led recovery, underpinned by private sector credit demand. Lending remains the core earnings driver – contributing roughly 60% of total income for the ‘Big Four’: Standard Bank, FirstRand, Absa and Nedbank. As loan growth accelerates, we expect this to translate into stronger net interest income, improved operating leverage and, ultimately, higher returns on equity alongside further valuation support.

The credit cycle is currently in its early stages, with corporate and investment banking (CIB) divisions acting as the initial transmission channel. Activity is expected to broaden over time – from corporates into business banking and, eventually, consumer lending. This progression provides meaningful runway for earnings growth as the cycle matures.

Our strategic preferences focus on specific entry points within this cycle:

• Standard Bank: Best positioned for the initial CIB-led phase due to its African scale.
• FirstRand: Offers exposure to the ‘next frontier’ of business banking and a high-return consumer franchise.
• Absa: A ‘self-help’ opportunity with a renewed focus on CIB and regional integration.

While risks remain – including potential margin pressure and geopolitical uncertainty – the direction of travel for earnings is improving, and we remain constructive on the sector.

Samsung: valuation discipline drives exit

Samsung Electronics has been an actively traded position in the Global High Quality strategy since inception, with the most recent holding period beginning in July 2021. The investment delivered strong returns, including a ~250% gain from our September 2022 add to exit, materially outperforming the broader market.

This was underpinned by a sharp re-rating in both earnings and the share price, driven by tightening DRAM supply and a surge in AI-related demand for high-bandwidth memory, which supported stronger-than-expected margin expansion in the semiconductor division.

While we continue to regard Samsung as a high-quality business, particularly given its global leadership in memory, we believe current expectations are too optimistic. A large portion of the group – including consumer electronics and telecommunications – remains structurally lower growth and lower margin. Sustained group-level margin expansion therefore depends heavily on elevated semiconductor profitability.

With significant new capacity being deployed across the industry, this level of profitability is unlikely to persist over the medium term. Following a 52% year-to-date return in US dollar terms, the shares moved beyond our assessment of intrinsic value, prompting us to exit and redeploy capital into opportunities with a more compelling risk-reward profile.

S&P Global: quality at an attractive entry point

We recently initiated a position in S&P Global – a leading provider of credit ratings, indices and data-driven analytics across global capital and commodity markets – for the Sanlam Global High Quality Fund. Its business is anchored by deeply entrenched market positions, including an effective duopoly in ratings and ownership of flagship index franchises such as the S&P 500.

These assets underpin strong pricing power, high barriers to entry, and a highly resilient revenue model, with roughly 65% of revenues recurring. Over time, this has translated into consistently high returns on invested capital and strong free cash flow generation.

Recent weakness across the information services sector has created an attractive entry point. Concerns that AI could disrupt data and analytics providers have weighed on sentiment, but we view these risks as overstated. S&P’s model is built on proprietary datasets, benchmark indices and deeply embedded client workflows, which are not easily displaced by AI-native competitors.

At the same time, the company is deploying AI to enhance its own offering and improve efficiency. Combined with structural growth drivers – including expanding capital markets activity, rising demand for data and analytics, and continued index adoption – we see S&P Global as a high-quality compounder trading at a discount to intrinsic value.