XML Feeds

What is RSS?

This is the Sharenet company blog where we will bring you the latest news and events on the go at Sharenet, together with tips on using our site and our products.

Top Rated

    The Day's Summary

    The JSE ALSI ended the day down 0.13% at 25448, after hitting a new all time high earlier in the day at 25654. Value traded was over R10 billion. Advances led declines 202 to 186 with 83 shares unchanged out of 471 active. Mining closed up 0.03% at 29642, while Industrials were up 0.09% at 22303 and Financials ended the day off 0.86% at 23460.

    The best performing sectors of the day were Industrial Metals Index up 3.7%, Electronic & Electrical Equipment Index up 3.4% and Gold Mining up 2.1% at 2794, while the worst were Beverages Index down 1.5%, Life Insurance Index down 1.3% and Diamonds Mining down 1.3%.

    There were 26 new 12 month highs today, including Masonite which closed up 5.8%, Taste up 4.8%, and Kumba Iron Ore up 3.9% at R118.50.

    Of the major stocks Gold Fields was up 3.6% at R121.21, Billiton lost 0.29% at R135.40, Anglos also ended down, off 0.81% at R336.50, MTN gained 2.13% and Sasol gained 0.18% to close the month at R245.45.

    The Dow was unchanged at 12527.96 and the S&P 500 was off 0.3% at 1424.99 a few moments ago.

    Gold was up 0.5% at $648.50/oz and Platinum was at $1181/oz.

    The rand was last trading at R 7.27 to the dollar, R 14.20 to the pound and R 9.43 to the Euro.

    Kind regards,


    Permalink2007-01-31, 17:19:05, by ian Email , Leave a comment

    Record High at Opening


    Resources led the JSE to a record high this morning. This comes after the market closed positively yesterday due to renewed optimism in equities. Impala Platinum has been the top performer so far after selling off in a closing auction yesterday.

    The rand is awaiting local trade and US GDP data to be released this afternoon. Analysts believe it will remain range bound, trading between R7.25-R7.31/$ until these announcements.

    Cold weather in the US has kept the oil price at just over $56 a barrel today.


    Investor confidence spurred Wall Street higher at the close yesterday. This came despite some weak corporate earnings reports. The market is looking for direction from the outcome of the Federal Reserve meeting which is expected to keep interest rates steady.

    European markets closed higher on Tuesday thanks to a good start on Wall Street and a spate of mergers and acquisitions.

    Most Asian markets ended lower today. Profit-taking in Japan and fears that shares are over-valued in China resulted in the various market declines.


    Vodacom has announced that they hope to submit a proposal regarding a black economic empowerment deal valued at R7.5 billion to their group's board in March.

    Brait SA has launched the Brait Fund IV. This will be Africa's largest private equity pool of capital worth $880 million. The fund will be invested in various private equity transactions.

    Gold Fields have successfully raised R9 billion in their capital raising venture. The proceeds of this will be used to pay off debt in their acquisition of Barrick Gold Corporation's 50% interest in the South Deep asset and their rights under the agreement with Western Areas.

    Permalink2007-01-31, 12:56:19, by Marika Email , Leave a comment

    Another Positive Day

    After a couple days of closing in the red, the JSE moved up today, with the ALSI closing at 25 481, up 0.55% for the day. The broad market measure (advances vs. declines) showed positive market breadth, with 219 shares up compared with 143 which ended the day down. Value traded was fairly brisk. The market was driven by Large Cap Industrials (up 1.04%) and Financials (up 0.79%), while Resources ended up only 0.14%.

    Telkom surged another 2.5% today, after the release yesterday of Vodacom’s subscriber numbers, while MTN was up by 2.77%, last trading at R84.89. Other shares that performed well were PSG up 3.5% at R28.10, RMB up 2.87% and Remgro at R178.80 up 2.87% for the day.

    Old Mutual moved up just over 1.5% for the day, after reports in the media yesterday that they are bankrolling Robert Mugabe’s regime. This bankrolling is through the purchase of Zimbabwean treasury bills and government bonds. Old Mutual ended the day at R24.98.

    Pick n Pay Stores (PIK) ended the day up 1.04% and Pick n Pay Holdings (PWK) ended up 0.34% on the day that current CEO Sean Summers sold over R 22 million worth of shares held in the two companies. There shouldn’t be much read into to this, other than the fact that Mr Summers is stepping down as CEO at the end of February, and he obviously wants to start reducing his exposure to Pick n Pay. This is common practice among executives that are leaving.

    News that hit SENS at the market close (5pm) was that Implats expects headline and basic earnings per share to be between 120% and 140% higher for the half year ended 31 December 2006, when compared to the half year ending 31 December 2005. This is mainly as a result of stronger US dollar prices received. Their financial statements are expected to be published on 15 February 2007. We will see what effect this announcement has on its share price tomorrow. Implats ended the day down 1.90% at R 206, Angloplat was flat.

    Many shares are reaching new highs, with 25 on the list today. Among those hitting new highs are: Peermont, Peregrine, Santam, Bell, Cadiz, Naspers, CBS Property, Astral and Tongaat.

    Have a good evening.

    Kind regards,


    Permalink2007-01-30, 18:11:16, by ian Email , Leave a comment

    Mixed Start for JSE


    The JSE opened slightly weaker this morning after closing lower yesterday. Lower metal prices have dragged resources down. The market has been a bit mixed these last two days, making it difficult to pick up an overall trend.

    The rand didn't react to better-than-expected money supply data released earlier and is expected to trade in the R7.30-R7.35/$ range today. Analysts believe that people are awaiting Wednesday's US Federal Open Market Committee (FOMC) announcement on interest rates for direction.


    US markets ended mixed yesterday as traders remained cautious ahead of the Federal Reserve interest rate meeting this week. Most people believe that rates will remain unchanged but are waiting for the statement released after the meeting. The bond market remained tense as they topped 5% yesterday.

    European markets drifted lower this morning thanks to losses in the resources, telecommunications and banking sectors. The markets closed mostly higher yesterday after a good performance on Wall Street and the news that a strike at British Airways had been averted.

    Most Asian markets ended slightly higher today as the yen fell to its lowest figure in four years against the dollar.


    Sun International, South Africa's biggest casino operator, has announced that they are continuing with a major development plan in Moscow. This comes despite President Putin's law which aims to exclude and place restrictions on gambling and casinos in major urban areas.

    Kelly, the staffing services group, has decided to seek a listing on the main board of the JSE in the second quarter of this year. The company is looking to raise funds to pay off their debts.

    RMB Private Bank has appointed Sean Farrell as CEO with immediate effect.

    Permalink2007-01-30, 13:21:11, by Marika Email , Leave a comment

    Vodacom Numbers

    Telkom released a SENS announcement this morning with regards to Vodacom’s results to the end of December 2006. Telkom owns 50% of Vodacom, and with 30% of Telkom’s operating profit coming from their mobile phone interests (Vodacom) the movement in Vodacom’s customer base is therefore of material importance to Telkom’s bottom line. With number portability also finally going through in this quarter (10 November) it is interesting to note what effect this has had on Vodacom’s client base.

    As of 31 December 2006, Vodacom has a total of 28.2 million customers, of which 21.8 million are South African, with 18.8 million of these South Africans on prepaid deals. The South African subscriber base is up 7.8% over the quarter to 31 December, although Vodacom’s estimated market share has decreased from 59% to 58%. Average Revenue Per User (APRU) is down slightly on contract phones, but up by almost 5% for prepaid customers.

    With South African SIM card penetration up to 80%, growth locally will be hard to achieve (although European countries do have penetration rates of above 100%). It is therefore imperative that operations in the rest of Africa provide a larger proportion of subscribers. In this regard numbers are up by 15.7% in the quarter to 6.4 million customers (22.7% of total subscriber base), with the most growth coming from Mozambique (up 23.3%) albeit off a fairly low base. Vodacom Tanzania (just short of 3 million) and Vodacom Congo (2.3 million) are their two largest non South African operations. Estimated market share in African operations has remained static with the exception of Mozambique, which is up 2% for the quarter.

    To date porting has been immaterial to Vodacom’s subscriber numbers, with the cellphone giant being a net gainer on contract customers, and a net loser on prepaid customers. Vodacom has been affected by 20 000 porting requests (both ways) which is less than an average day of new connections, and porting has thus had a negligible effect on their operations. This lack of porting action (either gains or losses) probably comes down the high cost of cancelling an existing contract and signing up a new one. Contract customers are probably waiting for their existing contracts to expire before they port their number.

    If existing trends are anything to read into though, and porting does pick up, then Vodacom (and Telkom) could be net winners as they are receiving the more lucrative contract customers (APRU of R524), compared to prepaid customer's APRU of R64.

    The market obviously liked these results, as Telkom moved up by 2.97% to end the day at R154.10 compared to MTN which was flat (up 0.12%), Large Cap Industrials which were flat (down 0.04%), and the ALSI, which ended down 0.14% for the day, last trading at 25 342.

    That’s all for today.

    Kind regards,


    Permalink2007-01-29, 17:48:43, by ian Email , Leave a comment

    Quiet Day For JSE


    The JSE has progressed slightly higher this morning after closing softer on Friday. A quiet trading day is expected.

    A range bound day (R7.26-R7.32/$)is expected for the rand which has opened steady against major currencies today. Analysts believe the rand should remain in this range until the South African Reserve Bank's Monetary Policy Committee convene for their two-day meeting in a few weeks time.


    US markets ended on a lacklustre note on Friday. The market was hit by a report released by The Commerce Department showing a bigger than expected increase in new home sales. This raised concerns that the Federal Reserve wasn't likely to cut interest rates anytime soon.

    Profit taking and a slow start on Wall Street led European markets down on Friday. The dollar firmed against the euro on the back of strong durable goods orders.

    Asian markets ended mixed today. The Nikkei rose thanks to bullish corporate news and a weakness in the yen. A strong drop in tech stocks ahead of the release of key economic indicators led Seoul shares lower.


    The acquisition of the remaining 62.6% of Stanlib from Standard Bank and Quantum Leap Investments 740 Ltd has been approved by Liberty Life shareholders this morning.

    The strike at the Modikwa platinum mine has resulted in a loss of 25 000 tonnes of ore worth around R20 million. The strike , which started on Friday, continues today but Chief Executive Andre Wilkens hopes an agreement will be reached by the end of the day.

    Vodacom, jointly owned by Britain's Vodafone and Telkom, has announced a 9.5% rise in third-quarter subscribers to 28.2 million.

    Permalink2007-01-29, 12:51:07, by Marika Email , Leave a comment

    The Opportunity Cost of being in Cash

    When the market is continually reaching new highs, like the JSE has been doing over the last couple years, investors often get wary about investing their hard earned (after tax) money into the market, or into equity unit trusts. They worry that the market is getting too high, and as such decide to park their money in cash, until levels are “more reasonable” or once “the market has corrected”.

    These investors are then typically too scared to invest at the market bottom (which in itself is extremely difficult to pinpoint) and miss out on the following bull market. They convince themselves that their money is safe as cash is pretty much guaranteed to track inflation. Even worse, these ‘nervous’ investors sometimes wait so long in a bull market until eventually they just can’t stay out of the frenzy, only to invest right before the market corrects. They then pull their money out of the market, back into cash, chastising themselves for making such a “risky investment” and vowing never to get back into equities.

    Obviously each person has their own specific circumstances with regards to investment needs and capabilities, but someone with an investment horizon of 10 years or more should be wary of the crippling effect on one’s net worth that sitting in cash will have.

    Take for example two investors who have R 1 000 to save. Investor A puts his money into equities, and B into cash. Assuming an annual return of 15% for equities and 8% for cash they will end the ten year period with R 4 046 and R 2 158 respectively (equities returning nearly double). This excludes the effects of dividends (probably adding another couple percent onto the equity yield) and the fact that interest is taxed at a higher rate than capital gains.

    In another scenario, with these two investors, assume that the market crashed in year 1 by 40% (even the 69 and 87 crashes were ‘only’ in the order of 25 and 35 percent sell offs), and then 15% p.a. for the remaining 9 years. If investor C stays invested in equities throughout the period, and investor D invests in equities, and then sells out after the crash, and puts his money into cash, they would end up with R 2 111 and R 1 199 respectively. Investor C falling R 47 short of an 8% annual return for the entire term that investor B made.

    Where the market to booms, the equity investor has great upside, while the cash investor has to be satisfied with a predictable, but low, cash return.

    Having a trusted advisor or having the personal capacity to formulate a robust financial plan and stick to it is crucial in the pursuit of long term wealth creation. Even when times are tough one needs to have a clear idea of the big picture.

    I trust that you will have a great weekend.

    Kind regards,

    Mike Browne

    Permalink2007-01-26, 17:41:29, by ian Email , Leave a comment

    World Markets Lead JSE Lower


    Weaker world markets and a lower gold price resulted in the JSE drifting lower this morning.

    Losses have been tempered by a softer rand which has traded lower this morning after weakening yesterday afternoon. Analysts believe that trading just above R7.30/$ will help the rand break out of it's current range bound trading range. A fall in commodity prices thanks to a stronger dollar and weaker emerging market currencies hasn't helped the rand.


    Rising bond yields added to fears that a low interest rate currently fueling the US economic and profit growth could be in trouble. The Dow Jones and Nasdaq led in the drop in Wall Street shares.

    European markets have fallen in early trading after Wall Street's sell-off last night. Banks, mining stocks and oil have all drifted lower. A decline in German business confidence and profit taking in London led the market lower yesterday.

    Most Asian stocks closed lower this morning. Tokyo stocks were pushed down by poor quarterly results for NEC Electronics.


    Jeff Makhetha has been appointed as their chief operating officer for Investment Solutions. His appointment comes into affect on 1 July 2007.

    More than 2000 miners have gone on strike at the Modikwa Platinum mine in Limpopo. They are striking in demand to end racism in the company owned by African Rainbow Minerals (ARM) and Anglo Platinum.

    Verimark Holdings issued a cautionery yesterday saying that they expect their headline earnings per share to be down by between 50-70% for the financial year ending 28 February 2007. This is compared to the previous year's earnings.

    Permalink2007-01-26, 13:08:02, by Marika Email , Leave a comment

    Industrials and Banks Lose Ground


    The JSE opened weaker this morning after closing at a record high yesterday. Industrials and banks have lost ground after a strong run in the market. Yesterday's performance was fuelled by resources and stronger world markets.

    Better-than-expected inflation data hasn't affected the rand which remains constant against major currencies this morning. Traders believe it will stay in the R7.09-R7.20/$ range today.


    Profit reports from Yahoo and Sun Microsystems led the Dow Jones Industrial average to a record high yesterday. This renewed optimism in the tech sector comes after concerns that growth was slowing this year.

    The FTSE 100 index has risen to a new six-month high this morning after a strengthening in the oil price. European markets ended higher yesterday thanks to a boost in mining stocks on the back of higher commodity prices.

    Asian stocks fell today after an eight-month high. A strengthening in the yen dragged the Nikkei down after they hit a six-year high in earlier trading.


    Gold Fields has announced that they will place $1.2 billon worth of shares through a book building exercise to pay off some debt they incurred when acquiring the South Deep gold mine. This came after they reported that they had generated a 5% higher headline earnings per share for the quarter ending December.

    The local unit of Standard Bank, Stanbic Bank Kenya, is in merger talks with Kenya's CFC Bank. If successful, Stanbic will own a controlling stake in CFC.

    Permalink2007-01-26, 09:36:21, by Marika Email , Leave a comment

    New Highs

    The JSE All Share Index ended the day up 0.50% at 25 572, a new closing high, after trading at a new all time high of 25598 just before market close. This performance came on the back of strong performance of the heavyweight resource shares. The Resource 20 index was up by just over 1%, with the major drivers being Platinum and Oil stocks.

    Platinum stocks were up by an average of 1.60% with Implats up by over 2.5%, Angloplat up 1.23%, Sasol up 1.331%, and Anglos up 1.4% last trading at R346.50. Billiton ended the day slightly in the red, down 0.11% at R136.25. All platinum shares weren’t up, with Northam down over 5% for the day, ending at R48.01.

    Goldfields ended the day up slightly after releasing interims that indicated that they have slightly increased their gold production, and they also mentioned the net profit was up 136% compared to the same quarter in 2005! Clearly the market was pretty much anticipating these results as the share only moved up 0.21%, less than Gold Mining which was up by 1.50%.

    The broader winners/losers measures saw 238 shares advancing, while 167 declined, showing that there is still positive market breadth, a good sign that the large caps aren’t entirely driving the market. Value traded was fairly brisk, with over R 10 billion traded.

    Industrial’s performance slightly lagged the Resources, ending the day in the green by 0.28%, but this was ahead of Financials which ended the day down 0.40% dragged down by the banking sector which was off 1.39%.

    Barloworld ended the day up a massive 7.35% closing up just above R190 a share. Of the banking shares, RMB was down 3.41% and Firstrand was off 2.22%.

    Some shares ending the day at new highs included Simeka, Implats, Mr Price, Sallies, Metorex, Tongaat, Mvela Resources, Grindrod and Massmart. Definitely a sign of a broad increase in the market!

    At writing Gold was trading at $651.80/oz, with the rand losing some of its shine off over 1% to the major currencies, last trading at 7.21, 14.21 and 9.36 to the dollar, pound and euro respectively.

    Global markets ended the day, or are currently trading, in the red, so the JSE bucked the trend here.

    That’s all for today.

    Kind regards,

    Mike Browne

    Permalink2007-01-25, 17:40:08, by ian Email , Leave a comment

    The Power of Dividends

    Investors often neglect the effects that dividends can have on the performance of their share portfolio over time. If one went about constructing a portfolio based primarily on large and mid cap companies with a high dividend yield, the ‘dividend return’ could conceivably be around 4-5% (tax free) in the first year! At current rates, and assuming a 40% marginal tax rate, an after tax cash yield would only equal this dividend yield.

    Doing a simple, back of the matchbox, calculation shows that investing in a share that has an initial dividend yield of 5% (whose dividends grow at 15% p.a. in line with earnings growth) will result in the investor receiving a 10% yield (on cost) by the end of the 5th year, and a 20% yield after 10 years! This excludes the impact of reinvesting dividends which, over time, adds significantly to performance.

    Obviously one may argue that dividends are at the discretion of management. This can be countered somewhat by only selecting those companies that have a good history of regularly declaring dividends. Companies are loathe to reduce/cancel their dividends owing to the negative signal it sends to the market. By selecting companies with a stable dividend policy, one is generally implicitly selecting stable companies, which should further reduce the volatility of the portfolio.

    If one went about slowing picking up high yielding stocks early in life, or even 10 to 15 years before retirement, and held onto these stocks, reinvesting when the dividend cash account is high enough (or by adding dividends to other savings), one could conceivably live off the dividends in retirement. The attraction of living off dividends is that there is no pressure in deciding when to sell shares, and the fact that dividends will generally increase at a rate higher than inflation.

    At the moment dividend yields are historically low (reflecting a bull market that is nearly 4 years) but there are still companies with attractive yields.

    As always, patience is a requirement for long term capital accumulation.

    Kind regards,

    Mike Browne

    Permalink2007-01-24, 17:13:52, by ian Email , Leave a comment

    JSE At Record High


    Higher commodity prices and positive world markets has led the JSE to a record opening this morning. The higher gold and oil prices have helped boost commodity stocks. Yesterday, the JSE closed slightly softer, buoyed by higher gold and platinum prices.

    The rand remained steady against major currencies. This comes after better-than-expected inflation data released this morning: 5.8% y/y in December, slightly up from the 5.4% y/y increase in November. Another range-bound day is expected.


    US markets closed higher yesterday thanks to solid earnings reports. The late day surge in oil prices tamed the market's recovery. Analysts believe that the market has been primed for profit taking and a correction.

    European markets ended mixed on Tuesday. London closed higher despite a 15% fall in sugar giant Tate and Lyle's share price. Paris fell after telecoms group Alcatel-Lucent suffered a 8.4% loss in share price after warning investors that fourth-quarter sales would fall to €4.42-billion from €5.25-billion the previous year.

    Tokyo stocks ended on a fresh high today due to the weakness in the yen and rising oil prices. A weaker yen has resulted in exporters revising their profit forecasts for the year, pushing the bourse higher. Taiwan shares have risen on the back of a surge in blue chips.


    Brait has announced an increase in their offer for Shoprite from R26/share to R28/share. This has led analysts to believe that the first offer was merely a "fishing expedition" to test market response. This new offer now brings the opposition on board.

    The merger between Alexander Forbes and Cleansheet Investments has been unconditionally approved by the Competition Tribunal. Actis Africa Fund 2 LP (acting through Cleansheet Investments) will acquire the entire issued share capital of Alexander Forbes, consequently delisting Alexander Forbes from the JSE.

    Permalink2007-01-24, 14:01:37, by Marika Email , 1 comment

    Interest Rates

    One is often asked, “What is the interest rate?” This question can be asked in a wide variety of circumstances, and frequently has implications for the questioner’s wellbeing, and decision making.

    We all know the effects of rising interest rates on our bond repayments. It hurts the pocket at the end of the month, and allows for less spending on more ‘luxury’ items. Conversely a falling rate allows us to spend more on these items. What the rates mean for markets varies across the sectors and varies depending on the magnitude of the movement.

    South Africa’s prime rate experienced a significant decline from 17% in September 2002 to a 25 year low of 10.5% in April 2005. The first cut in rates in that cycle occurred in June 2003, significantly around the time that the ALSI bottomed out. The subsequent run in the Bull market is closely aligned with falling rates.

    Exchange rates have a complex relationship with interest rates. An increase in interest rates results in a higher yield. Capital should therefore flow into the market, with the currency appreciating. An increasing interest rate is often, however, associated with negative sentiment towards the country, e.g. the central bank wanting to curb spending, with foreigners pulling their capital out of the market, resulting in the currency depreciating. Currencies are notoriously difficult to forecast.

    Tito Mboweni faces a tough question in the coming weeks as to whether rates will continue up a notch or if they are going to pause. Obviously data that comes out between now and the Reserve Bank meeting will have a major influence to the final decision, but either way you can be sure that there will be lots of market activity once the decision has been made in the middle of February.

    Have a good day.

    Kind regards,

    Mike Browne

    Permalink2007-01-23, 17:38:36, by ian Email , Leave a comment

    Welcome to the Marketviews Blog!

    A warm welcome to the Marketviews blog! We thought it would be fitting for Marketviews to have its very own blog as we want our readers to have a rich source of information on all aspects and issues pertaining to investing.

    Blogging is growing as a trend worldwide and there's no better way to link people through their views and opinions than on this very resource. A variety of experts will be contributing to this venture and you will be able to engage with them on whatever topic or information they wish to share with you.

    Investing is all about thorough research and getting the right kind of advice. If this is exactly what you're looking for, then join us on this blog where we aim to inform and educate you in all matters of investing!

    Permalink2007-01-23, 13:33:17, by Marika Email , Leave a comment

    A Small Cap Dividend Portfolio

    With all the recent number of new listings on the AltX the Small Cap investor's options have almost doubled. No doubt some of these listings will fail (such is the intrinsic risk of an IPO or newly formed company), but enough of these companies appear to offer real value to growth investors.

    Hence all the over-subscribed private placements.

    Although I will not discuss all of the new listings here, I have noticed that a number of them either have dividend policies in their offering to the market (i.e. they promise to or already do pay dividends) or already pay dividends.

    Now, most of us know that dividends are tax free, thus a dividend yield on a share of 4% actually beats an interest rate on a bond of, say, 6%. This is because (excluding the interest exemption allowed by SARS), if you are paying the marginal tax rate of 40% then you will only receive 3.6% return on the interest of 6% after tax. I’ll take the 4%, thank you.

    So the higher your income tax bracket, the more appealing dividends are - basic logic.

    The other (hidden bonus and flaunted risk) of dividends is that the fair value of the underlying share paying them can (and probably will) fluctuate. Thus, if you pick a "dividend yielder" correctly, you make a nice capital gain. At the marginal tax rate for a natural person that means you only include 10% of the gain on the sale in your taxable income.

    A double bonus for the smart investor.

    So…what does this have to do with Small Caps?
    Well, Small Caps often have the best potential for a growth and—taking into account the risks—can offer the best chance for capital appreciation. Their dividend yields are traditionally higher too, as they are traded at a risk premium (i.e. a lower PE ratio than Blue Chips, as their risks are higher).

    Let me show a quick break down of a couple Small Caps potential "dividend yielders" I have noticed. Note that 3 out of the 5 are newly listed ones and Esor has yet to pay its first dividend at the end of the 28 February 2007:

    Name Code Closing Price (22/01/07) Dividend or Proposed Dividend Dividend Yield (or Future Dividend Yield) Price Earnings
    IFCA Tech IFC 51c 1.87c 3.67% n/a
    ISA ISA 69c 6c 8.7% 11.12
    Gooderson GDN 85c 3.55c 4.1% 21.19
    SAB&T Ubuntu SUL 36c 0.74c 2% n/a
    Esor ESR 370c 1.97c 0.05% 17.51
    Average 3.704% 16.61

    The Dividend Yield of the All Share is approximately 2.22%, so an average Dividend Yield of 3.704% for a portfolio holding equal weightings of all five shares above would beat the market’s "safe" dividend return. Not only this, but it would expose you to the construction industry (Esor), the financial services industry (SAB&T and IFCA), the tourism industry (Gooderson), and the IT industry (ISA and IFCA)…all with companies that have potentially good growth aspects, enthusiastic management, and promising futures.
    Note, the All Share also has a PE of 17.42, thus this "virtual portfolio’s" PE of 16.61 might allude to it being a value play too.

    I haven't included Silverbridge Holdings Ltd ( SVB ), a niche software company that's newly listed on the AltX. But it derives more than half its income from annuities. This makes it cash-flush like ISA and it may well also pay hansom dividends in the future. Although, it does have startup risks associated with it, whereas ISA has been producing profits for a number of years now…

    I also haven’t included IPSA (IPS), although once it receives its Carbon Credits and begins to produce power at its Newcastle Powerplant on 23 February 2007, its first dividend should follow within a year.

    I'm definitely not advocating blindly going out and buying all the Small Cap shares that hint at dividends, but rather I am aiming to give a different spin on things for private investors interested in tax free money with Small Cap growth potential attached.

    Keith McLachlan

    Keith McLachlan is an active equity investor and is the editor of the blog "Small Caps with Keith McLachlan" (www.smallcaps.co.za). This is a collection of financial/investment theory for the self-education of investors and a site dedicated to high potential Small Caps on the JSE with full length valuations and research reports.

    Permalink2007-01-23, 13:32:06, by Marika Email , Leave a comment

    Slow Start To JSE


    Weak international markets set the tone for the slow and uneventful opening this morning. This follows the market which was lifted yesterday by higher commodity prices and surging bank stocks. There is renewed optimism on the bourse after indices rebounded after Friday's losses.

    The rand has remained steady against world currencies and should remain range bound ahead of tomorrow's release of local consumer inflation data.


    US markets closed lower yesterday amid concerns over Boeing and drug giant Pfizer announcing job cuts. Investor sentiment was affected by lower than expected corporate profile reports. This comes despite a further reduction in the oil price. The release of certain quarterly results could impact the market today.

    Losses on Wall Street and a surge in oil prices affected European markets which closed lower yesterday. Analysts believe the market should have a stable trade today due to the release of a number of corporate results.

    Most Asian markets closed flat today. Profit taking in both banking and property stocks in Tokyo led the market down at the close, despite sharp rises in steel stocks.


    Manila Mining announced today that they are in talks with a unit of Anglo American plc. This joint venture will explore their Bayugo copper-gold prospect in the southern Philippines.

    Edgars is a finalist in the Emerging Market Retailer of the Year category at the inaugural World Retail Awards. These awards are a benchmark by which retail businesses around the world aspire to be measured by.

    Gold Fields has sold their second junior gold holding in a month to Pala Investments. This is part of their move to narrow their strategic focus and to look for large deposits in China.

    Permalink2007-01-23, 13:21:11, by Marika Email , Leave a comment

    Contruction's Prospects?

    The Construction and Materials Index has been a sector of the market that has received quite a bit of attention since South Africa was awarded the rights to host the 2010 Soccer World Cup in May 2004. This attention has been justified, owing to South Africa's shortage in stadia with sufficient capacity to host the largest sporting event on the earth.

    Companies such as Murray and Roberts, PPC, and Group 5 will all be beneficiaries in the massive infrastructure spend over the next few years, both directly in the stadia, but also to the supporting systems, such as roads, rail (Gautrain) and upgrading of the airports.

    It should come as no surprise then that investors who invested in the C&M Index the day after South Africa was awarded the right to host the World Cup have seen the prices in these shares appreciate by 64% per annum, more than 20% above the ALSI's excellent price return(42%) over this period! (These returns exclude the effect of dividends). With these shares hitting new highs, many investors are wondering whether the party will continue, or if these shares have priced a perfect run-in to the 2010 event (resulting in disappointing returns)?

    The sector's PE is currently at just over 22 (ALSI 17.45) with dividends yielding only 1.89% (ALSI 2.22%). This level is high, when compared to the overall market, but not at astronomical levels. Companies are facing bottlenecks as raw materials are at a premium (PPC will be importing cement until their newest quarry comes online - squeezing their margins). The construction companies also have their problems, with a lack of skills often hampering the projects.

    Despite these problems, order books continue to show record breaking levels, with developers and government in a situation where they NEED building done NOW and are often willing to pay inflated prices to get it done in time.

    While at high levels, this sector still has many attractions. One needs to do homework on each of the companies in this sector to fully understand their operations before diving in. Now isn't a time when you can blindly buy into the sector and expect excellent returns (like one could have done a couple years back).

    The Construction and Materials Index closed up 1.04% today at 53335, near its record high of 53668 achieved on Thursday. Aveng was up over 3%, Murray and Roberts was down 0.44% and PPC was up 1.91% for the day.

    Kind regards,


    Permalink2007-01-22, 18:22:12, by ian Email , Leave a comment

    JSE Bounces Back


    The JSE opened higher this morning thanks to a recovery in commodity prices. The market closed lower on Friday after profit-taking. Commodities have performed well as oil rose higher over the weekend. Emerging markets have also added to the market's better form today.

    Higher commodity prices and a stronger euro has helped the rand which opened a tad stronger against the dollar. Analysts believe it should reach the R7.06/R7.08 range today.


    Fourth quarter earnings reported by companies such as Motorola and General Electric failed to excite investors, resulting in Wall Street ending mixed on Friday.

    European markets have reached new 6-year highs this morning on the back of gains in metal and oil prices which have boosted commodity prices higher. Most markets will be holding out for developments at the World Economic Forum to be held later this week.

    Asian markets closed higher today. The Nikkei advanced to a 9 month high at the close thanks to gains in the banking and technology industry. Positive news from the US and higher commodity prices fuelled this overall performance.


    Absa's shares have lept by over 4% this morning after announcing on Friday that they expected their full year earnings to rise as much as 24%. This is considerably higher than the market's expectations of headline EPS growth of between 13-15%.

    The recently created Exxaro has announced that they plan on buying Anglo American's Namakwa Sands mineral sands project, as well as a 26% interest in the company's Black Mountain and Gamsberg zinc projects for R2.2 billion. This deal will position them as the world's largest suppliers of titanium dioxide feedstock and zircon.

    Permalink2007-01-22, 13:13:46, by Marika Email , Leave a comment

    JSE ends the week down

    The JSE closed down 1.23% at 24921 with value traded at R 6.90 billion. Declines led advances 256 to 126 with 90 shares unchanged out of 472 active. Mining closed down 1.02% at 28325, while Industrials were off 1.04% at 22090 and financials ended the day off 1.73% at 23664.

    The best performing sectors of the day were Diamonds Mining up 2% at 619, AltX up 1.7% at 2998 and Industrial Engineering up 1.5% at 49814, while the worst were Mobile Telecommunications down 3.1% at 133, Gold Mining down 2.7% at 2691 and Telecommunications down 2.7% at 43524.

    There were 24 new 12 month highs today, including Afdawn which closed up 8.9% at 196, Tourvst up 5.6% at 264 and Dtp up 5.5% at 115.

    Of the major stocks Anglo was off 0.85% at 32650, Sasol moved down 2.09% at 22701, Naspersn moved down 0.87% at 17000, Richemont was down 0.73% at 4090, Edcon was off 1.16% at 3850.

    Biggest gainers of the day where Afdawn up 8.89% at 196 , Tourvst up 5.6% at 264 , some of the losing shares included Masonite down 19.6% at 2010

    The Dow was down 0.2% at 12543.82 and the S&P 500 unchanged at 1426.06 a few moments ago.

    Gold was down 0.9% at $ 629.10/oz

    The rand was last trading at R 7.16 to the dollar, R 14.13 to the pound and R 9.27 to the Euro.

    Permalink2007-01-19, 17:08:06, by admin Email , Leave a comment

    Commodities Slip In Quiet Trade


    A slip in commodity prices has led the JSE lower in morning trade after yesterday's gain. Weaker world markets have also contributed to a quiter day's trade.

    The rand remained steady against major currencies this morning. This is despite a weaker dollar against the euro. The rand is expected to remain range-bound.

    Banks and construction stocks led the way as top performers on the bourse yesterday.


    A weaker outlook by Apple affected tech stocks in the US, driving the overall market down. Positive news was that US consumer prices rose a more-than-expected 0.5 percent in December and oil dropped to below $50 per barrel.

    Concern over inflation prospects in the US weighed down investor sentiment in Europe, leading to mixed performances in the various stock exchanges.

    The overnight fall in US tech stocks impacted on Asian markets which closed lower today. Strength in the property sector helped cushion the blow to an extent by climbing 2.3%.


    Aluminium production at the three smelters owned by BHP Billiton will be affected by the power cuts in the upcoming weeks. Smelters are big industrial users of power and steps are being put in place to minimize the impact on the smelters.

    Goldfields are now owners of a 95.6% stake in Western Areas' shares. They now intend to force the remaining majorities to tender their shares before January 26.

    The MTN Group yesterday announced that they had acquired a privately-owned Nigerian fixed-line firm in a deal rumoured to be worth between $60 and $72 million. This move consolidates their market position.

    Permalink2007-01-19, 14:02:23, by Marika Email , Leave a comment

    JSE ends the day up 1%

    The JSE closed up 1.01% at 25232 with value traded at R 9.45 billion. Advances led declines 279 to 96 with 91 shares unchanged out of 466 active. Mining closed up 0.93% at 28618, while Industrials were up 0.68% at 22323 and financials ended the day up 1.23% at 24081.

    The best performing sectors of the day were Oil & Gas Producers up 3.6% at 9451, Oil & Gas up 3.6% at 17578 and Pharmaceuticals & Biotechnology up 3.1% at 4534, while the worst were Beverages down 0.8% at 58475, Real Estate down 0.4% at 832 and Non-life Insurance Index down 0.2% at 18730.

    There were 45 new 12 month highs today, including Gvm up 18.2% at 650 and Sable up 10.5% at 3315.

    Of the major stocks Anglo ended up 0.4% at 32931, Sasol gained 3.55% at 23185, Stanbank was up 2.49% at 10300, Billiton ended up 1.81% at 12808, Firstrand was up 1.36% at 2382.

    Some of the top gainers included Gvm up 18.18% at 650 , while the major losers were Sanyati down 5.33% at 213 and Capemp down 5.06% at 150

    The Dow was down 0.1% at 12570.10 and the S&P 500 down 0.2% at 1427.39 a few moments ago.

    Gold was up 0.3% at $ 627.65/oz

    The rand was last trading at R 7.15 to the dollar, R 14.10 to the pound and R 9.25 to the Euro.

    Permalink2007-01-18, 21:35:21, by admin Email , Leave a comment

    Rand Awaits US Inflation Data


    An increase in metals prices helped the JSE open higher this morning after closing in the red yesterday. Higher commodity prices and dollar weakness has put the rand on the front foot but it remains to be seen how US CPI data to be released at 15:30 this afternoon affects it.

    The Producer Price Index rose by 0.9% in December. This is likely to influence the central bank who meet at the end of the month and should keep interest rates unchanged.


    Mixed economic news and a sharp rise in wholesale price inflation led to US shares losing ground at yesterday's close. The labour department announced a higher than expected 0.9% rise in producer prices for December which resulted in the market losing momentum in the morning.

    These renewed inflation fears and a weakness in the oil sector affected European markets who fell for a second day.

    Most Asian markets closed higher today as the Bank of Japan voted to leave interest rates unchanged and near-zero until their next meeting in February.


    The merger between Absa Capital and Thebe Investment has been unconditionally approved by South Africa's Competition Tribunal today. This means that Absa has acquired 15.47% of the issued share capital of Thebe, thereby having a private equity investment in Thebe.

    Anglo American has announced that they are considering selling their 41.8% stake in AngloGold Ashanti to another firm as well as placing their shares on the market.

    Woolworths Holdings expect their headline earnings per share for the six months ending December to be more than 20% higher than last year's performance. This is on the back of strong consumer spending over the festive period.

    Permalink2007-01-18, 13:02:18, by Marika Email , Leave a comment

    Industrials gain on Resources

    Another very strong day for the JSE despite the All Share declining some 0,7%. Because of the weightings of the resource shares, it masks the performance of the industrials, which were the real big winners. Anglos and Billiton fell while the likes of Barlows and SAB Miller were marching forward.

    These industrial and consumer related companies are literally printing cash and investors continue to benefit. Today saw the release of trading updates from SAB Miller, reporting its 3rd quarter to end of December. It saw organic volumes up “some 10%”.

    China saw growth of 30% for the quarter.

    A number of the retailers have been providing updates and today we saw Woolies come out with excellent numbers. For all those who paid a visit to the stores in December and ahead of the New Year, you can understand. Food especially was literally flying off the shelves as if there was no tomorrow.

    They reported comparable sales growth of 13,6%. Food was up 25,9% in total and 15,1% in comparable stores, while inflation ran at 7,4%.

    The shares raced up to over R20, touching 2044 and ending up 4,4% to 2015c

    Nu Clicks reported same store sales up 14,8%. The shares jumped 3,8% to 1173c

    Controversial Shoprite reported that its 6 month sales had increased by 14,7% to R19,1 billion, with internal inflation moving up at 5,6%. Its shares gained 1,2% to 2606c

    Largest furniture retailer JD Group reported total sales up 22% for the 4 months to 15 January. It also announced that arrears and provisions for bad debts had increased. It’s also got something called receivable arrears, and this has come down as a percentage of total gross receivables. JD shares gained just 32c to 8835c

    Kind regards


    Permalink2007-01-17, 17:42:44, by ian Email , Leave a comment

    Profit Taking Curbs JSE


    The market's strong run in the past few weeks has resulted in the JSE opening marginally weaker today following profit taking. Strong numbers released by retailers has boosted the financial and retail sector thanks to upbeat sales figures over the festive trading period. Traders are keeping an eye on November retail sales data which is likely to affect the market.

    The rand has remained range bound this morning, trading softer against major currencies. Softer commodities prices and the dollar's strength against emerging market currencies have affected the rand which is currently trading at about R7,2655/$. Analysts believe the rand's range for the day should be 7.20 to 7.28 to the dollar. US inflation figures to be released later today should give the dollar some direction.

    The US holiday resulted in our market heading lower at yesterday's close, largely as a result of directionless trade.


    Markets were quiet in the US after the public holiday the day before. The market was mixed as traders awaited a wave of corporate earnings reports and information from the technology sector. Trade shold be quiet today as most analysts believe that investors are positioning themselves for earnings reports and economic data.

    A slump in oil prices and profit taking from Frankfurt and Paris markets led to a decline in European stock exchanges.

    Most Asian markets rose modestly before today's close. Tokyo's market remained cautious ahead of tomorrow's Bank of Japan's rate decision.


    The Shoprite Group has announced that it has increased its turnover for the six months leading up to 31 December by 14.7% to R19.1 billion. This is in comparison to the R16.6 billion reported last year over the same period.

    Hyprop, the property investment group, has agreed to sell its 46% stake in fellow listed property company SA Retail Properties to the Public Investment Corporation (PIC) for R1.1 billion. This deal is dependant on SA Corporate winning support from investors holding 90% of SA Retail's linked units.

    A trading statement released by New Clicks has announced that they have increased sales by 12.7% in the weeks ending 24 December. Their retail brands, including Diskom, Musica and The Body Shop, all recorded strong trading during the festive season.

    Permalink2007-01-17, 12:35:34, by Marika Email , Leave a comment

    Another Big volume day

    The JSE closed off 0.16% at 25155 with value traded at R 8.20 billion. Advances led declines 213 to 186 with 79 shares unchanged out of 478 active. Mining closed down 1.13% at 28999, while Industrials were up 0.43% at 22045 and financials ended the day up 0.69% at 23851.

    The best performing sectors of the day were Media Index up 2.8% at 39983, Food & Drug Retailers Index up 1.8% at 20222 and Construction & Materials Index up 1.7% at 50541, while the worst were Oil & Gas Producers Index down 1.9% at 9317, Oil & Gas Index down 1.9% at 17328 and Other Mineral Extractors down 1.6% at 6510.

    There were 48 new 12 month highs today, including Gvm which closed up 20% at 450, Wearne up 6.1% at 435 and Spar up 4.9% at 4675 while there were 3 new lows of which Imuniti topped the list, down 11.3% at 110, Pzgold down 5.6% at 1700 and Anooraq down 3.8% at 770.

    Of the major stocks Anglo lost 1.6% at 34025, Sasol was off 1.87% at 22855, Billiton moved down 1.8% at 12850, MTN lost 0.41% at 8500, Angloplat was up 1.67% at 91100.

    Biggest gainers of the day where Gvm up 20% at 450 , Sizafika up 8.7% at 300 , some of the losing shares included Delta down 15.4% at 1950 and Imuniti off 11.29% at 110

    The Dow was unchanged at 12557 and the S&P 500 unchanged at 1431.36 a few moments ago.

    Gold was up 1.2% at $ 626.95/oz

    The rand was last trading at R 7.23 to the dollar, R 14.17 to the pound and R 9.35 to the Euro.


    Permalink2007-01-16, 17:28:24, by ian Email , Leave a comment

    JSE Reaches Near Record High


    Trading has opened on a high note after strong world markets and higher commodity prices led the JSE to a near-record close yesterday. Reasonable volumes were reached despite a public holiday on Wall Street and technical problems in the morning.

    The gold index was up by more than 2% as an unstable dollar made this precious metal appealing as an alternative investment tool.

    An improved inflation outlook has given retailers and banks a reason to smile as analysts believe that the Reserve Bank's monetary policy committee won't raise interest rates when they meet next month.

    Despite trading thinly yesterday, the rand firmed slightly against the dollar on the back of a firmer gold price.


    No news from US markets which were closed for Martin Luther King day yesterday.

    Firmer commodity prices helped European markets reach six-year highs yesterday, boosting energy and mining shares.

    Most Asian markets closed higher this morning. An anticipated interest rate hike in Japan and strong economic data in the US should prompt strong selling pressure near current levels in the benchmark index this week.


    Northam Platinum expect their interim earnings and headline earnings per share to more than double for the six months to end-December 2006. This is in comparison to the same period the year before due to higher prices.

    Gold Fields Ltd, the world's fourth largest gold producer, has 89.2% of shares of Western Areas Ltd. This is short of the 94% it needs to delist the firm. They are offering 35 of their own shares for every 100 of Western Areas in an offer that closes on January 26. If their target is reached they will gain control of South Deep, on the world's deepest gold mines.

    Murray and Roberts (M&R) Holdings was chosen to build the Greet Point stadium for the 2010 soccer World Cup yesterday. The project is estimated to cost R3.73 billion in total.

    Permalink2007-01-16, 09:48:58, by Marika Email , Leave a comment

    Looking back at History

    After trading at a new high on the first day of the year, the market pulled back. Today saw many investors come back from Christmas leave and if it’s any indication of what lies ahead, then it could well be another big year. The JSE All Share index traded up to a new record high at 25194.

    Very few investors expected the 41% that the JSE All Share index produced in 2006. For the last three years now the annualised gains for the overall index have been 37,6%. There is no denying that the real returns have been above the long term trend.

    But this is the very nature of returns from an ownership in real assets. Unlike a fixed deposit account, the returns are not linear in nature. Rather they are lumpy. No one complains when they receive the big positive returns, but over time this is generally tempered back with some nasty declines. Long term investors require patience and they are rewarded.

    I had a quick look back at the annual equity returns going back since 1960 and it makes for very interesting reading. For example in 1977 to 1980 annual returns were 29,4%, 36,2%, then a monster 91,3% and then a 41,4% in 1980.

    1981 gave exactly 0%, and then 34% in 1982. Then a slowdown but still positive and then 41% in 1985 (the debt standstill and sanction year) and then 54,8% in 1986. So the years 1977 until the crash in 1987 were extremely positive for investors.

    The crash in 1987 only produced a negative 3,4% for the full year. Ten years later in 1997 and 1998 with the Russian and Asian debt crises, the local market produced negative returns.

    Looking at discrete calendar years then does mask the extent of movements, especially declines. 1969 and 1987 experienced large declines, but ended the year reasonably well.

    The current market is not cheap after a strong run up from 2003. Investors may however still be pleasantly surprised, as it moves up even further. I always say that an investor must be positioned for possible further gains, but as always have a well defined investment plan. This includes ongoing monitoring and active management.

    Kind regards


    Permalink2007-01-15, 18:51:25, by ian Email , Leave a comment

    Order Driven Market


    After starting the week on a bearish note, the JSE ended Friday on a high following a more positive sentiment towards local equities and a strong US market. Analysts say that the market is very order driven at the moment. Platinum stocks led the way in the market, boosted by an overall strength in platinum group metals.

    The rand remained range bound late on Friday afternoon having failed to significantly react to better-than expected US retail sales data. Trade should be very quiet today due to a public holiday in the US.


    US markets ended on a high on Friday thanks to a surge in retail sales in December, giving investors renewed optimism in the economy.

    European markets also advanced on Friday due to better-than-expected US retail sales data.

    Asian markets closed higher this morning after a good performance on Friday buoyed by Wall Street's record close and the dollar’s rise above ¥120. Expectations of strong corporate earnings should improve market sentiment this week, despite reservations ahead of the Bank of Japan’s policy meeting.


    The JSE Ltd announced on Friday that it anticipated its consolidated earnings and headline earnings per share for the year ended 31 December 2006 to be marginally higher than the previous years reporting period.

    The JSE-listed provider of human capital management services, Adcorp Holdings Limited, has announced the sale of Research Surveys to a consortium led by TNS, Kapela Investment Holdings and the senior management of Research Surveys.

    Charges of anti-competitive behaviour against unlisted public company Senwes, a maize business operating in the northwest of SA, has been referred to the Competition Commission. This follows a complaint lodged by CTH Trading, a trader of grain, that Senwes was abusing its dominant position in the market for the provision of commercial handling and storage facilities of grain in all markets within the broader Senwes area.

    Permalink2007-01-15, 10:23:27, by Marika Email , Leave a comment

    Week ends on a good note

    The JSE closed up 0.94% at 24909 with value traded at R 9.47 billion. Advances led declines 259 to 113 with 69 shares unchanged out of 441 active. Mining closed up 1.33% at 29003, while Industrials were up 0.92% at 21743 and financials ended the day up 0.58% at 23355.

    The best performing sectors of the day were Platinum Mining up 4.1% at 79332, Household Goods up 2.4% at 139 and Technology up 2.4% at 13253, while the worst were Fixed Line Telecommunications down 0.8% at 1470, Media down 0.7% at 38496 and Gold Mining down 0.6% at 2732.

    There were 39 new 12 month highs today, including Elbgroup which closed up 9.4% at 1050, Paracon up 8.8% at 185 and Topfix up 5.9% at 197.

    Of the major stocks Stanbank ended down 0.1% at 9690, Sasol was down 0.43% at 22901, Implats ended up 3.98% at 18300, Billiton ended up 1.54% at 13058, Anglo was up 0.73% at 34349.

    Biggest gainers of the day where Compclear up 12.24% at 275 , Afovr-n up 10% at 660 , while the major losers were Jubilee off 11.9% at 903 and Glenmib off 8.11% at 170

    The Dow was off 0.1% at 12506.33 and the S&P 500 up 0.1% at 1425.32 a few moments ago.

    Gold was up 1.3% at $ 619.85/oz

    The rand was last trading at R 7.23 to the dollar, R 14.14 to the pound and R 9.34 to the Euro.

    Permalink2007-01-12, 17:19:17, by admin Email , Leave a comment

    Positive Outlook for Local Economy


    Gains in local retailers and stronger world markets helped the JSE rebound yesterday. A strong Christmas season and a positive outlook for this year's economy also aided in this regard. Analysts believe that the market will remain volatile this month as portfolio managers go about rejigging their holdings. The market opened quietly today and should react to US retail sales data announcement expected later.

    A weakening in the Euro following European Central Bank president Jean-Claude Trichet's comments resulted in the bank’s decision to leave European rates unchanged. This affected the rand slightly in a fairly uneventful day as it remained range-bound in late afternoon trade.

    The top performer for the day was mid-cap fashion retailer Mr Price, jumping 3.86% to R26.90 after Wednesday's announcement that sales had shot up by 24.1% in the quarter leading up to the end of December.

    BHP Billiton gained 2.06% to R128.60 after receiving a boost from recovering industrial metal markets.

    Primedia gained 4.35% after announcing that their controlling shareholders had received a buyout approach.


    The Dow Jones soared to a record close yesterday after crude oil prices plunged under $52 per barrel. Investors hoped this news would stimulate economic growth. Strength in technology shares helped the Nasdaq finish up a strong 25.52 points.

    European markets advanced yesterday after the European Central Bank announced that there was no need to raise interest rates until March thanks to positive corporate news.

    Most Asian markets closed higher this morning on the back of the Dow Jones Industrial index's performance and reduced futures selling.


    Sun International leisure group expects a 30-35% increase for their headline earnings per share for the six months ended December.

    Absa Capital's proposed acquisition of 15.47% of the issued share capital of Thebe Investment Corporation will be ruled on by the Competition Tribunal next Wednesday.

    Glenrand MIB, the diversified financial services group, has issued a cautionary announcing that it has entered into negotiations. If successfully concluded, it may have an effect on the price of the company's shares.

    Permalink2007-01-12, 10:19:54, by Marika Email , Leave a comment

    January is stock picking time

    Virtually all financial publications do it. They come up with names of their top share selections for the year. Today the Financial Mail came out with their list of top share picks and online financial site, Moneyweb has been asking a range of fund managers for their top share selections.

    Invariably investors and speculators jump in and buy the shares.

    In 2006 virtually all share selections performed well and naturally stock picks looked prescient. This could very well be the case again this year. While daily prices are volatile and valuations more expensive, we may all be pleasantly surprised should the market climb a further 20% or 30%

    Some of the top shares selections and their sectors coming through included.

    Comair (airlines)
    Enviroserv (environment control)
    Sasfin (investment banks)
    Investec (investment banks)
    African Bank (consumer finance)
    Sanlam (life assurance)
    Metropolitan (life assurance)
    Didata (computer services)
    BTG (computer services)

    So clearly across these two publications, within certain sectors there is some difference of opinion as to which share will benefit. It’s not an exact science. Many will benefit but the vast majority won’t.

    It’s easy to offer up a stock pick and anyone can do so. The shares being offered up as good investment bets may prove to be winners at the end of 2007. However the only way to benefit is to be meaningfully invested, and this is the difficult part.

    The problem is that there are too many stock picks being thrown up and this makes share selection difficult. The question is do you try and select the top five or top ten (and if so how) or do you select all in equal proportion?

    The biggest problem with this method of investing is that buying on a “hot tip” basis means buying with low levels of conviction. With reduced conviction, often what happens is that smaller investors are quick to sell out when the price suddenly dips, or indeed sell when they receive conflicting advice from other publications.

    Solid investment portfolios are built on high conviction ideas and not share tips. High conviction money will stick around when prices zig and zag, and be invested for the longer haul. In general low conviction investments will not stand up to the fluctuations in the market.

    My advice is to do your own homework and work alongside a trusted advisor in building your portfolio. By all means put some capital into certain hot tips, but for the bulk of your wealth ensure that it is being managed properly. Have a high level of conviction that your portfolio strategy will see you through to and beyond retirement.

    Kind regards

    Ian de Lange

    Exsequor Investments is a registered financial services provider.

    Permalink2007-01-11, 17:14:25, by ian Email , Leave a comment

    Is the trending market coming to an end?

    One look at the global main indices and all I see is red. Asian markets all closed down, Europe is down, the US markets have opened into negative territory and the local market all closed down. Remember the one point that I mentioned yesterday that came from the Bloomberg interview with Marc Faber?

    He said when asset prices move up, liquidity increases. An increase in liquidity further helps to keep prices moving up. The converse is also likely, when prices start falling, liquidity is also likely to fall off, putting asset prices under pressure.

    On a technical basis most markets are still trending up, but a few days and weeks of prices starting to fall will get investors nervous.

    The JSE All share index started the year at 24915, moved up to a fresh high on the first day of trading to above the 25000 level, and then came under some pressure, now at 24535. But I am not saying everything is about to collapse. While there is clearly not as much value in most company prices, investors are still pushing certain shares to new highs.

    Looking specifically at the consumer shares, investors will be questioning the extent to which all the good news is factored into prices, but I am not sure consumers have even yet felt the interest rate hikes. Shopping centres and retail stores including food retailers like Woolies and clothes retailers like Edgars were enjoying a phenomenal Christmas boom.

    We saw two announcements today:

    A positive trading announcement from Mr Price in the morning, saw the share price gain 2,7% to 2590c after trading at a new high. It reported that sales for the 3rd quarter to the end of December grew by 24,1%. The newer Home division grew sales by a massive 31%.

    Edcon came out with its update saying that it also benefited from strong consumer confidence, and reported sales up 12% for the quarter to end of December. This compared to selling price inflation of only 2%. The CNA was a winner with sales growth up 23%. The price fell 1,25% to 3861c.

    I don’t think that the upward trend is yet broken. It could very well be another positive year for share prices. But it’s definitely going to be more of a stockpicking environment than has been the case over the last 4 years. Investors must make sure that they have a very good grasp of their overall asset allocation and how they should be adjusting this.

    Kind regards


    Permalink2007-01-10, 17:46:48, by ian Email , Leave a comment

    Banks Boost JSE


    Trade opened slightly lower today after surging banking stocks pushed the JSE into positive territory yesterday. This was amid rising hopes that the Reserve Bank might hold off on more interest rate hikes. Banks have also been doing well in London and this has fed through to our market.

    On the downside, Sasol fell on the back of a weaker oil price, reaching its lowest level in a year and a half by falling more than $2/barrel. Mild winter temperatures in the US and expectations over tomorrow's US inventory data has led to this performance.

    The rand is still awaiting international interest rate announcements expected on Thursday. It remained steady against major currencies late yesterday, this despite a marginally strong dollar and a pullback in the gold price.

    The major movers for the day was Standard Bank soaring 5.74%, FirstRand climbed 4.01% and Absa advanced 3.12%.


    In the US yesterday, the Nasdaq rose as Apple Computer unveiled a hotly anticipated cellphone and boosted optimism about the tech sector. Blue-chip stocks slipped as energy shares fell on lower oil prices.

    European markets closed higher yesterday on the back of lower oil prices and a wave of fresh takeover speculation.

    Most Asian markets closed lower this morning. Analysts believe that the markets will trend lower as many stocks are overpriced, resulting in the market adopting a more conservative attitude.


    The global mining house, Xstrata, has completed its empowerment requirements by announcing a R575 million empowerment deal on its Rhovan vanadium facility near Brits in the North West province. The community is now a material shareholder in the business and has the opportunity to participate jointly with Xstrata to the benefit of both participants.

    Shares in Set Point Technology Holdings (STO), the technological equipment manufacturer and supplier, surged 22% in early trade yesterday. This is as a result of the issuing of a cautionary announcement saying they have received "expressions of interest" from various parties to acquire certain divisions of Sethold, as well as an interest in acquiring all or a material shareholding in the company.

    Implats and Aquarius Platinum have agreed on a $23.2 million project at the Mimosa Platinum mine in Zimbabwe which should boost annual production by at least 40%. They are joint venture partners in this project called Wedza Phase five. This follows four other expansion projects at the mine which involves increasing the concentrator capacity at the mine to 175 000 tons miled per month.

    Permalink2007-01-10, 10:23:22, by Marika Email , Leave a comment

    Views on global markets from a renowned investor

    I listened to an interview today that Bloomberg had with Marc Faber. He was giving his latest views on global markets and prices. Marc Faber is a Swiss national residing in Hong Kong, and acts as a global investment advisor and market commentator.

    He has strong views and a very good perspective of global markets, prices and above all valuations. These are some of the points that he made:

    Spending, which drives the US economy remains high. He says despite the higher interest rates in the US, that economy has not really experienced a massive tightening in liquidity, largely because of the effects of asset price inflation. Higher asset prices give investors the ability to extract liquidity and spend.

    He distinguishes between the real economy producing goods and services on the one hand and then the asset shuffler economy on the other. The latter has done well and continues to do so because of the extent of excess liquidity in the world.

    The decline in the US dollar has masked the gains on the US markets. While in dollar terms the S&P500 preformed strongly, he pointed out that the euro has gained some 60% against the US dollar since 2000. His view is that the US dollar is still likely to slide steadily against precious metal prices, but not necessarily too much against the euro in 2007.

    He was asked what is likely to happen to US share prices:

    He answered by saying that he has a theory, which is actually quite interesting: “rising asset markets actually create liquidity. When markets go up liquidity increases. When markets start to decline, so liquidity vanished quickly.” So if share prices come down, then this is likely to squeeze down liquidity, which in turn will negatively impact share prices.

    On gold? The price is likely to continue to go up and in the future probably substantially. New mining output is under pressure.

    Energy and specifically oil prices? Prices will move in large cycles but the trend is up and we are unlikely to ever again see $12/barrel. Demand is continuing to increases and is not matched with new production. He reckons that the valuation of global oil companies is relatively cheap though.

    He is somewhat concerned about share valuations in some emerging countries like Russia, India and China but he likes real estate in some emerging countries.

    Asked about his specific calls for 2007. He thinks that Yen and some Asian currencies are under valued and so believes these to be good investment calls. On the Japan currency he says that investors have been borrowing yen and buying risky assets all around the world. If some global asset prices start to go down, then the investors will have to liquidate position and buy back yen.

    He is also positive about the Japanese markets but prefers some of the other Asian markets.

    Locally we saw volumes pick up substantially. Big trades and price increase for Standard Bank, up 5,7% to 9776c. 25 shares trading at new highs and the JSE All Share index putting on 191 points or 0,78% to 24603.

    The Financial index gained 2,7%.

    Any long term investor cannot afford to be out of the market. The big question is determining the risk of being invested into so called risky assets (aka shares) and the risk of not being invested and optimising between the two extremes.

    Kind regards


    Permalink2007-01-09, 17:35:47, by ian Email , Leave a comment



    Trade has picked up considerably this morning following yesterday's slow start. The JSE secured a positive finish last night due to the demand for mining stocks. Anglo American led the way in this regard, reflecting their strong performance in London.

    South African insurance companies were amongst the best performers in the market, led by Old Mutual, Liberty Life and Sanlam.

    The rand was a tad firmer against the dollar after resisting a push towards the 7.30 dollar mark. This was prompted by strong local importer demand and a firmer greenback. The rand should remain in a consolidative range ahead of the European Central Bank and Bank of England statements on interest rates to be announced on Thursday.

    Gold remains under pressure due to a decline in base metal prices, despite moving higher yesterday. Physical demand for this commodity should provide some form of support.


    US share prices gained on Monday in a late-day rebound. This followed a drop in crude oil prices and upbeat comments on the US economy from the Federal Reserve vice chairperson. Investors also scaled back their expectations for economic and earnings growth for the upcoming year. Tech shares led the way thanks to brokerage upgrades on bellwether companies such as IBM boosted investor optimism about this sector's outlook.

    Tokyo trading was closed on Monday due to a public holiday in Japan. The Hang Seng closed lower after China's central bank raised the reserve requirement for commercial banks further in an effort to rein in lending. The Nikkei was up 0.86% at this mornings close.

    European markets ended a touch lower yesterday. Gold and copper prices rebounded while health stocks fell on US news.


    Johnnic Communications (Johncom) is expected to post a circular to shareholders on Friday which will outline the details of an offer from Naspers for their 38% stake in M-Net/Supersport. Shareholders will be asked to vote on the offer on January 31 which has increased from the initial pitch of about R2.2 billion to almost R4 billion. This increase in value of the offer reflects the steady rise in Naspers N share price.

    The South African Transport and Allied Workers Union (Satawu) has threatened to strike against SAA in protest of the company's planned retrenchments to curb operating costs. Satawu have initiated a meeting with SAA in an attempt to come up with alternative cost-cutting strategies.

    Berry Wiersum has been appointed chief executive of Sappi (the forestry and paper company) . He will replace the retiring Wolfgang Pfarl and take over it's European operations - Sappi Fine Paper Europe.

    Permalink2007-01-09, 10:21:55, by Marika Email , Leave a comment

    What Do Investors Want?

    Potential investors often say to me, Ian perhaps I should wait 6 months or a year when the outlook for investments looks a bit clearer, before I invest. My reply is that the outlook is never crystal clear. Investors must make decisions in times of uncertainty.

    The uncertainty is compounded by the daily market movements and swaying market sentiment.

    The plethora of investment articles also don’t help matters.

    A look at the headlines today on the Sunday Times web pages highlighted the following:

    - Property to slow in 07
    - JSE mixed, uncertainty abounds
    - Strong rand may dent Sasol
    - Dollar keeps rand weak
    - Golds firmer after tumble
    - Rand leaves rates unpredictable

    So even on one day and from one publication, headlines are indicating both a strong and a weak rand. Its headlines and stories such as these that leave private investors confused, and unsure of what approach to take.

    Many investors are shooting in the dark, with little indication of whether their savings and returns are sufficient.

    Often they chase the latest fad or hot tip, and with very little conviction don’t have the ability to exercise the necessary patience. The result is not too dissimilar to gambling at the casino. Some big gains, some big losses, with no steady compounding of gains.

    This results in many portfolios being a hodge podge of investment products, mixed risk and investment policies (which I absolutely hate) and with no asset allocation or performance tracking.

    A shot gun approach to investing hard earned capital will not work.

    My experience is that investors typically want one main thing for their financial position:

    An inflation beating risk adjusted return on their funds that, that together with saved capital will provide a more than sufficient retirement asset base.

    My motto this year is to plan, consolidate and simplify. The definition for consolidate is to “make or become stronger or more stable”. I believe that investors need a strong foundation for their investments. This includes quality planning.

    I trust that 2007 is an extremely successful year for you.

    Kind regards


    Permalink2007-01-08, 16:42:53, by ian Email , Leave a comment

    Quiet day expected


    The JSE should continue its recovery today after it bounced into the black on Friday, going against the trend in overseas markets. Trade volumes are low after last weeks profit taking as the market is still trying to settle after a very strong run at the end of December.

    The rand remained soft on opening this morning after its fall on Friday. We should expect a quiet day today following last week's activity. The rand weakened to R7.22/$ on Friday after the release of higher US non-farm payrolls data which boosted the dollar. This news as well as lower metal prices hit commodity currencies particularly hard.


    Analysts are waiting for a full slate of economic indicators scheduled for release this week in the US. Pre-earnings announcements and deal news should put Wall Street back into rally mode this week.

    Most Asian markets fell on Friday after profit-taking from investors ahead of the 3 day weekend.


    Telkom SA has concluded a deal to acquire a 51% stake in Uganda Telecom company Ucom. This follows mounting pressure from shareholders for Telkom to expand their company.

    SABMiller announced last week that their joint venture in China is now the co-owner of 14 breweries. They will buy the remaining stake for $320 million early this year following satisfaction of pre-closing conditions. This acquisition will boost their operational efficiency in the western and south-western regions and strengthen their brand portfolio.

    The JSE and Aim-listed diversified junior miner Petmin is trading 75% up on its initial offering price in London. Their share price in Johannesburg has remained relatively constant at 142 cents. The London market is expected to be the price maker of Petmin in the future.

    Permalink2007-01-08, 10:27:15, by Marika Email , Leave a comment

    Bank Salesman

    Bank client’s can expect more calls from salesman. All financial institutions are competing for a bigger slice of the consumer pie. Banks, with some pressure on their traditional banking fees, are actively looking at other areas for revenue generation. One thing if you are an investor in banks, but not necessarily a client.

    One area where banks have been active, but becoming more so is the selling of investments to their clients. To me the idea that an investment should be “sold” is an anathema.

    Banks know that they have a good audience and so have come up with concepts such as cross selling, bancassurance, leveraging clients, capturing market share etc.

    Stripping away the marketing speak, their plan is simple. Banks have clients, the clients have money, the bank will try and sell investment products to the clients. The bank generates commission income adding to their bottom line.

    In most cases the unfortunate aspect to this process is that the bank representative will try and SELL a bank owned investment product, under the guise of investment advice.

    I have seen it too many times, and even today had two investors telling me that their portfolios were skewed because they had been SOLD investment products by banking representatives. They now realised that they needed independent investment advice and were unlikely to find it from their bank.

    So on this Friday just how did bank shares perform? Not bad at all. The JSE All Share index gained 0,25% but Banks put on 1,8%. Standard Bank up 1,1%, Absa up 0,68%, Firstrand up 3,1% and RMBH up 3,5%.

    Global markets are down, while the JSE ended up after 2 very weak days.

    Before being sold another investment product, make it one of your goals for 2007 to streamline your investments and have a proper plan put in place. Feel free to contact me – ian@exsequor.co.za

    Have a great weekend



    Permalink2007-01-05, 17:49:06, by ian Email , Leave a comment

    Risky Investment Decisions

    I read a very good article today that has the number one rule of investing as patience. Don’t rush to invest, take your time to consider all aspects and once invested be patient. Because of the very strong bull market in all asset classes, this virtue has needed absolutely no practising over the last 4 years.

    2007 may or may not be any different to the last 4 years. However experience tells us that asset prices have the ability to continue to move to extremes and persist for far longer than is rational.

    Obviously all investors just love the quick gain, but the impatient often leave far too much on the table as they sell out to bank the easy gains. Patient investors will see investments double and double again and not be too easily tempted to sell as markets zig and zag.

    An e-mail from a subscriber today asked me if he should be switching from a higher risk investment portfolio to a lower risk portfolio for his pension fund. I think that it’s the type of decision that many investors have on their minds. “Do I sell and bank profits now, or do I hold out.”

    My first question is – what is your objective. Investing for retirement means having a CLEAR plan to get to that point and then also for the years beyond that point. There is risk in converting all your assets to cash running up to and at retirement age.

    It also does appear that patience is going to be needed for investors on the JSE. The market raced up to a new high on the first day, but has tumbled on Wednesday and Thursday with the JSE All Share index falling 1,6% to 24200. Gold shares shed 3,6% and the heavyweight resources shares fell 2,7%.

    It’s going to be a very interesting year.

    Kind regards

    Ian de Lange

    Permalink2007-01-04, 17:45:15, by ian Email , Leave a comment