BROKERS’ NOTES: Buy Sun International, sell the dollar

Rowan Williams, CIO of Nitrogen Fund Managers, on what the smart money is doing

Buy: Sun International

Sun International is an omnichannel leisure and gambling group operating principally in the South African market. The recent results were strong, with stellar growth of over 60% in its online gambling operation, SunBet, offsetting some softness in its land-based casino operations. The growth in tourism provides a steady demand underpin, and we expect that pressure on the South African consumer will begin to ease, further driving tourism and gambling. The group owns and operates several iconic leisure properties, including Sun City and the Table Bay hotel, which will reopen in December after refurbishment. The group also recently announced the appointment of renowned gaming executive Ulrik Bengtsson as CEO. Bengtsson comes with significant experience, having led several international listed companies and consumer services groups across gaming, betting, broadcasting and telecoms. With a modest single-digit earnings multiple and a double-digit dividend yield, the valuation is appealing for a well-run leisure business with solid growth prospects.

Sell: The dollar

The greenback has effectively served as the world’s reserve currency since the establishment of the Bretton Woods system after World War 2. The hegemony of the dollar is now being undermined by the policies of the Trump administration, and in particular the aggressive approach to tariffs, impacting world trade, global capital markets and the outlook for US inflation and assets. As the global trade order is threatened, exacerbated by the unpredictability of the Trump administration’s policies, the world will begin to lose confidence in the dollar. After the “liberation day” tariff announcement, the dollar index declined by more than 2%, its worst single-day loss in almost 10 years. As US equity markets decline and US Treasuries weaken, this may signal the end of US exceptionalism, when the US economy and financial markets outperformed the rest of the world, drawing significant investment and keeping the dollar strong. Savers will do well to diversify their foreign cash holdings into other fiat currencies, including the Japanese yen, euro and Swiss franc.