In this morning’s episode of the BizNews Briefing, investment manager Kokkie Kooyman discussed ASML’s temporary setbacks, the global banking sector’s strong performance post-COVID, and South African banks’ growth potential, highlighting government reforms and Capitec’s long-term prospects.
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By BizNews reporter
In this morning’s episode of the BizNews Briefing, renowned investment manager Kokkie Kooyman of Denker Capital shared his views on the financial markets, touching on two key topics: ASML’s recent struggles and the ongoing strength in global banking shares.
ASML: A temporary blip?
Kooyman began by addressing the recent news surrounding ASML, a Dutch company known for its dominance in semiconductor manufacturing equipment. ASML produces machines that fabricate chips, a crucial part of the technology supply chain. The company recently announced that it would only deliver half the number of machines it initially expected, a development that sent ripples through the market.
Kooyman acknowledged ASML’s unique position, describing it as a monopoly in its field, and emphasized that while the news might seem concerning, investors shouldn’t panic. “The message from Wall Street is don’t panic. It’s a blip, but it isn’t something that’s going to affect the long-term potential for ASML,” he said. He noted that the company’s monopoly status and the high demand for its technology give it resilience in the face of temporary setbacks.
Banking shares surge amid rate shifts
Shifting gears, Kooyman spoke at length about the banking sector, which has seen a resurgence, particularly in the U.S. and Europe. Over the past 12 months, U.S. bank shares have surged between 40% and 60%, while European banks have performed even better. This strong performance, according to Kooyman, is largely a result of the global economic cycle post-COVID and rising interest rates.
“Interest rates went up so sharply that European banks made literally a killing. Their margins more than doubled,” Kooyman explained. He added that the banking sector’s strong performance was initially driven by concerns over bad debts, but these fears did not materialize, leaving banks in a much stronger position than anticipated.
Kooyman also pointed out that the post-2008 regulatory changes, which made banks safer and forced them to hold more capital, contributed to their resilience. “The key is the bad debts never came through,” he said, referring to the fears that rising interest rates would trigger a wave of defaults.
Looking ahead: Inflation, interest rates, and bank valuations
As inflation begins to cool and interest rates show signs of stabilizing, Kooyman discussed how the banking sector will adapt. With interest rates now declining, there’s some confusion among investors, he noted, as they struggle to understand how banks can perform well in both rising and falling rate environments. Kooyman explained that banks are still benefiting from the economic strength and the absence of significant bad debts, which keeps their financial health robust.
He also mentioned that U.S. banks are no longer considered cheap compared to a year ago, with price-to-earnings ratios now ranging between 10 and 12. Despite this, he believes the valuations are still attractive compared to other high-growth stocks like Nvidia.
South African banks: Potential for growth
Turning to South Africa, Kooyman discussed the optimistic sentiment surrounding the country’s banks, driven by a combination of government reforms and Eskom’s efforts to stabilize electricity supply. South African banks have seen a notable improvement in corporate lending, particularly through overdrafts, which Kooyman views as a positive sign of corporate confidence. However, he cautioned that consumer spending remains under pressure, though there is potential for improvement as petrol prices and interest rates decline.
Kooyman also highlighted that South Africa’s economic future hinges on continued government reforms and capital inflows, which would bolster bank lending and drive growth. “If President Ramaphosa continues with what he’s doing now and everybody sticks together, we are going to see capital come into the country,” he said, suggesting that South Africa could be on the cusp of a new growth cycle.
The future of Capitec
Kooyman wrapped up the discussion by offering his thoughts on Capitec, one of South Africa’s most successful banks. He acknowledged that Capitec is expensive compared to other banks but praised its long-term growth potential. Drawing a parallel to visionary leaders like Steve Jobs and Elon Musk, Kooyman described Capitec’s management team as “unbelievable” and expressed confidence in the bank’s future.
“If I didn’t have [Capitec shares] now, I would add some,” Kooyman advised, though he suggested waiting for a potential market dip before making the investment.
In conclusion, Kokkie Kooyman provided a balanced perspective on ASML’s short-term challenges and the long-term growth opportunities in the banking sector, both globally and in South Africa. His insights highlighted the importance of understanding market cycles and the resilience of well-managed companies in navigating economic shifts.
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