BusinessDayTV Sep 18, 2026
With Kyle Burgess, Portfolio Manager at Nedbank Private Wealth
Clicks traded at 25 times earnings a year ago and trades at 13 times now, Kyle Burgess, Portfolio Manager at Nedbank Private Wealth, said on BusinessDayTV.
South African retail is under pressure across discretionary and grocery, which is the usual reason to stay out of the sector. Burgess put the de-rating of one of its more defensive businesses as an open question instead: whether competition explains a halving of the multiple, or whether the market has overdone it.
"I think it's got a dominant position in the pharmacy space."
Burgess runs client portfolios at Nedbank Private Wealth that hold a small position in the stock, and he was on the program in a week that brought a Bank of Japan hike, Federal Reserve comments on inflation, and oil above $100, with the South African Reserve Bank meeting next.
The full segment is covered here so you can skip it.
Here are the 6 calls that matter.
Key Takeaways
The Bank of Japan's 25 basis point hike took Japanese rates to their highest in 30 years, which he reads as evidence the country cannot get inflation down
A bombed east-west Saudi pipeline carrying roughly 4% of global oil is the kind of small shock now moving prices, with the Strait of Hormuz closed most of the year
US diesel at $6 is a record, while South African fuel has been sheltered so far
South African inflation sits at about 4.3%, and the second-round effects into food prices are what he says the Reserve Bank will watch
GE Vernova's data center power story is one he likes, but 40 times forward earnings is the part that gives him pause
Clicks has gone from 25 times earnings to 13 in 12 months, and he holds a small position while asking whether the competitive threat justifies it
1. Japan's 30-Year High
The host opened on the Bank of Japan and asked what the move says about where the global rate cycle stands. Burgess put three of the week's events in one line.
The level, not the increment, is the signal
It's been an interesting week from a central bank perspective we've seen not only the BOJ increasing rates by 25 basis points and in fact that's the highest rate we've seen out of Japan for the last 30 years.
Kyle Burgess
What he takes that to mean
So again pointing to the fact that they are struggling to get inflation under control in that specific economy.
Kyle Burgess
The second event was the Federal Reserve saying inflation has been running too high for too long in the United States. The third was the oil price.
And the commodity in the same week
And again, in the same week, we are seeing oil prices above $100.
Kyle Burgess
Oil stocks in regions including China and the United States have been drawn down, he said, which is why he expects the effect of a higher crude price to be larger over the next couple of months than it has been so far.
His reading of the three together
So, they certainly pointing to a more clearer inflationary picture globally.
Kyle Burgess
2. The Yen Carry Unwind
Asked whether higher Japanese rates could unwind the yen carry trade and spill volatility into emerging markets including South Africa, Burgess allowed the possibility without leaning on it.
He answered on relative valuation
I guess it could. I think if you look at emerging markets in general, we have looked from an equity perspective certainly a lot more attractive than perhaps developed markets.
Kyle Burgess
Which points the other way for South Africa
So that unwind could certainly benefit South Africa to an extent.
Kyle Burgess
There are several factors at play, he said, and this is one to watch rather than one to act on.
3. Oil Above $100
On how much further crude could run if Middle East disruption continues, Burgess started by conceding the difficulty.
He would not put a number on it
Yeah, that's the million-dollar question, I guess.
Kyle Burgess
The Strait of Hormuz has been closed for the better part of the year, he said, and reserves have been drawn down, which is what turns a modest physical disruption into a price move.
The shock that moved the price this week
what we are seeing is potentially fairly small shocks like the east west Saudi pipeline being bombed by the Houthis which carries roughly 4% of global oil through that
Kyle Burgess
That pipeline is what lets Saudi Arabia bypass Hormuz, and he described extensive damage to it. He then set out three things that have to happen for the price to come down: geopolitics settling, Hormuz reopening, and the Ukrainian drone strikes on refineries reaching some resolution. On the second of those he was openly uncertain about timing, saying the United States plainly wants it sooner rather than later and that it is proving harder than it sounds.
4. Second-Round Effects
Asked what sustained higher oil means for South Africa specifically, naming inflation, the rand and the cost of doing business, Burgess started with the pump and then moved to the thing that actually worries him.
The comparison he drew was American diesel
If you look at the relative increase that you've seen in diesel prices perhaps in the US that clocking in at $6 which has essentially been a record high for them.
Kyle Burgess
South Africa has been fairly well sheltered from that so far, he said. The risk is not the fuel price itself.
Food is the transmission channel
So second round effects coming in impacting food prices and really driving that inflation number which currently sits at about 4.3% pushing that significantly higher.
Kyle Burgess
Which is what he expects the Reserve Bank to weigh
So again, the economy inflation in general has been very resilient relative to the changes that we've seen globally, but that's certainly what would be front and center for the SARB as they meet next week.
Kyle Burgess
5. The Brokers' Two Picks
The show played two picks from other brokers and asked Burgess to react. The first was a 100% capital-protected auto-call — a structured note combining a bond and a derivative, whose payoff has improved because the bond leg now earns more, with the 10-year US Treasury just under 5%. The second was a power business supplying the data center market, GE Vernova, pitched on a large order book and a possible sale of its wind business.
Burgess said he did not know the details of the note, and reacted to the shape of it.
Downside protection appeals to him right now
equity-like returns in terms of the S&P 500 average return over the last 50 years with guaranteed protection on the downside that certainly sounds very attractive specifically at a time when you've got profit margins at record highs in the US
Kyle Burgess
Hyperscaler capital spending is causing anxiety in the market, he added, and that anxiety feeds through to the index as a whole. On the power business he separated the theme from the price. He noted news reports of data centers meeting political resistance in specific communities, and said he likes the idea of owning what powers them.
The valuation is where he stops
What would perhaps maybe just worry me a little bit or cause me to have a second look at that is the fact that business is trading at 40 times forward earnings.
Kyle Burgess
It has traded there before, he said, but he still called the multiple punchy against the growth rate he expects from it.
6. Clicks at 13x
His own pick is Clicks, chosen from a retail sector he described as under pressure in discretionary and grocery alike.
Where the multiple started
I think from that perspective this is a business 12 months ago that was trading at 25 times earnings.
Kyle Burgess
Revenue has compounded well over five years and operating profit has grown, he said, and the business holds a strong position in pharmacy.
The competitive position
I think it's got a dominant position in the pharmacy space.
Kyle Burgess
Where the multiple is now
And again, this is a business that's now trading at 13 times.
Kyle Burgess
The question he posed is whether the threat from Dis-Chem is significant enough to justify a stock trading at half of last year's multiple, or whether it is overblown and the business keeps growing in a category that has been resilient. His firm holds a small position across client portfolios.
Bonus Insights
Burgess declined to put a number on where oil goes, and framed the answer as three conditions that have to be met rather than a target, which is the same shape as his answer on the carry trade — a factor to watch rather than a position to take.
Burgess's bottom line is that a week of a 30-year-high Japanese rate, Federal Reserve commentary on inflation and oil above $100 points one way on global inflation, and that in South Africa the thing to watch is whether fuel costs reach food prices and push a 4.3% inflation rate higher.
Products, Companies & Tools Mentioned
Clicks Group (His stock pick: 25 times earnings a year ago, 13 times now, with what he calls a dominant pharmacy position and a small position in client portfolios)
Dis-Chem (The competitive threat he says the market may or may not be pricing correctly in Clicks' multiple)
GE Vernova (The power business another broker pitched on its data center order book; he likes the theme and flags 40 times forward earnings)
Nedbank Private Wealth (Burgess's firm, which holds a small Clicks position across client portfolios)
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