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    Daily Equity Report Thursday 31 December 2009

    2009/12/31 18:04:24
    The JSE closed up 0.7% at 27666 with value traded at R 2.92 billion. Advances led declines 189 to 66 with 61 shares unchanged out of 316 active. Mining closed up 0.67% at 33998, while Industrials were up 0.72% at 25987 and financials ended the day up 0.7% at 19326.

    The best performing sectors of the day were FTSE/JSE SHARIAH ALL up 42.4% at 2918, FTSE/JSE RAFI 40 up 23.3% at 5753 and Equity Investment Instruments Index up 2.4% at 1787, while the worst were FTSE/JSE All Africa ex SA 30 with S A Rand values down 44.2% at 54, FTSE/JSE All Africa ex SA 30 with US$ values down 31.2% at 59 and FTSE/JSE All Africa 40 Index with S A Rand values down 22% at 68.

    There were 9 new 12 month highs today, including Iliad which closed up 8.9% at 980, Capitec up 3.8% at 7887 and Rmbh up 2.5% at 2960.

    Of the major stocks Naspersn gained 2.08% at 30000, Mtn ended up 1.8% at 11790, Anglo was up 0.31% at 31949, Gfields ended up 1.53% at 9798, Stanbank was up 0.39% at 10200.

    Best performers of the day were Afro-c up 19.33% at 179 , Iliad up 8.89% at 980 , while the major losers were Diamondcp down 14.29% at 120 and Witsgold down 10.06% at 7600

    The Dow was down 0.3% at 10515.26 and the S&P 500 off 0.2% at 1124.01 a few moments ago.

    Gold was up 0.4% at $ 1097.15/oz

    The rand was last trading at R 7.37 to the dollar, R 11.85 to the pound and R 10.56 to the Euro.

    Permalink2009-12-31, 18:07:27, by admin Email , Leave a comment

    Daily Equity Report Wednesday 30 December 2009

    The JSE closed down 0.65% at 27475 with value traded at R 3.91 billion. Declines led advances 165 to 125 with 70 shares unchanged out of 360 active. Mining closed off 0.85% at 33771, while Industrials were down 0.54% at 25802 and financials ended the day off 0.29% at 19193.

    The best performing sectors of the day were FTSE/JSE SHARIAH ALL up 41.2% at 2895, FTSE/JSE RAFI 40 up 22.4% at 5712 and Development Capital up 5.3% at 273, while the worst were FTSE/JSE All Africa ex SA 30 with S A Rand values down 44.3% at 54, FTSE/JSE All Africa ex SA 30 with US$ values down 31.6% at 58 and FTSE/JSE All Africa 40 Index with S A Rand values down 22.2% at 68.

    There were 7 new 12 month highs today, including Kap which closed up 4.2% at 250, Bcx up 1.1% at 560 and Clientele up 0.8% at 755.

    Of the major stocks Naspersn gained 1.17% at 29390, Billiton ended down 0.84% at 23650, Anglo was off 1.39% at 31850, Gfields was off 0.62% at 9650, Sasol moved down 1.33% at 29600.

    Biggest gainers of the day where Fairvest up 19.57% at 110 , Fiuranium up 18.75% at 1900 , some of the losing shares included Afro-c down 18.92% at 150 and Bjm down 9.33% at 340

    The Dow was unchanged 0% at 10546.25 and the S&P 500 down 0.1% at 1125.10 a few moments ago.

    Gold was off 0.6% at $ 1090.55/oz

    The rand was last trading at R 7.37 to the dollar, R 11.82 to the pound and R 10.57 to the Euro.

    Permalink2009-12-30, 18:35:03, by admin Email , Leave a comment

    Weaker resources weigh on JSE

    Local markets

    At noon on the last Wednesday of 2009, the JSE All Share was down 0.92% with losses across the board, with the exception of the gold mining sector. The local bourse was weighed on by weaker basic materials and oil and gas stocks.

    The rand had strengthened to R7.39 to the US dollar at midday. Analysts expect the minimal number of traders to ignore the local trade data to be released this afternoon, which otherwise might have had an effect on the rand.

    Brent crude oil cost $77.28 a barrel at 12:00, gaining 1.68% as investors continued to hope for economic recovery despite a stronger dollar.

    International markets

    Yesterday, the Dow Jones edged up 0.24% and the Nasdaq held on to a 0.12% rise, as disappointment at October’s flat house prices was more than offset by rising consumer confidence in December.

    In Japan, the Nikkei slid 0.86% this morning, retreating after hitting a four-month high when exporter stocks were boosted by a weaker yen.

    In Hong Kong, the Hang Seng closed 0.01% lower, as losses in Chinese bank and insurance stocks just managed to overtake gains in energy stocks and others that came after investor confidence improved.

    Britain’s FTSE 100 had inched 0.24% lower by noon, consolidating after yesterday’s record gains.

    Share price news

    Fairvest Property Holdings Limited (share code: FVT) rose to R1.10 at 12:00, an increase in share price of 19.57% after two deals exchanged 764 shares. First Uranium Corporation (share code: FUM) gained 18.75% to sell at R19 a share, after two deals traded 10 000 shares.

    Hosken Consolidated Investments (share code: HCI) fell to R68.50 a share at noon, after eight deals saw the exchange of 36 000 shares, resulting in a loss of 4.85%.
    In the restaurants and pubs sector, Spur Corporation Limited (share code: SUR) dropped 3.58% to trade at R10.51 a share, after five deals exchanged 15 490 shares.

    Permalink2009-12-30, 12:22:27, by Natalie Email , Leave a comment

    Daily Equity Report Tuesday 29 December 2009

    The JSE closed down 0.84% at 27655 with value traded at R 4.41 billion. Declines led advances 160 to 139 with 63 shares unchanged out of 362 active. Mining closed down 1.14% at 34061, while Industrials were off 0.63% at 25943 and financials ended the day down 0.82% at 19249.

    The best performing sectors of the day were FTSE/JSE SHARIAH ALL up 42.7% at 2925, FTSE/JSE RAFI 40 up 23.2% at 5750 and FTSE/JSE AFRICA ALTX 15 up 2.9% at 331, while the worst were FTSE/JSE All Africa ex SA 30 with S A Rand values down 44.3% at 54, FTSE/JSE All Africa ex SA 30 with US$ values down 31.3% at 59 and Development Capital down 22.5% at 259.

    There were 19 new 12 month highs today, including Bowcalf which closed up 11.7% at 670, Brimston up 8% at 810 and Kap up 4.3% at 240.

    Of the major stocks Anglo was off 1.08% at 32298, Mtn was down 1.01% at 11800, Naspersn moved down 2.83% at 29050, Billiton was off 0.33% at 23850, Sasol moved down 0.25% at 30000.

    Some of the top gainers included Anooraq up 13.22% at 685 , Bowcalf up 11.67% at 670 , while the major losers were Fortressb down 8.84% at 165 and Metrofile down 7.14% at 130

    The Dow was up 0.5% at 10573.91 and the S&P 500 up 0.3% at 1129.52 a few moments ago.

    Gold was off 0.5% at $ 1102.22/oz

    The rand was last trading at R 7.38 to the dollar, R 11.76 to the pound and R 10.64 to the Euro.

    Permalink2009-12-29, 17:47:35, by admin Email , Leave a comment

    Global markets flat as investors slowly return

    Local markets

    At noon on Tuesday, the JSE All Share had dipped 0.25%, with slight losses across the board except for the oil and gas index, which managed to remain in the black.

    The rand was stronger against the US dollar, trading quietly at R7.41 by 12:00 while the greenback remained within a range.

    Gold was selling at $1104 an ounce, sliding 0.27% by midday in thin trade as investors started to trickle back from the holidays.

    International markets

    On US markets, the Dow Jones rose 0.26% and the Nasdaq lifted by 0.24% yesterday, as retailers gained on news that consumer spending had improved, which offset losses in airline shares after security concerns.

    The Nikkei average closed flat at 0.04% up, though reaching its highest level in four months. Rising oil and metal prices boosted Japanese trading company shares.

    The Hang Seng inched up 0.09%, overcoming earlier losses as gains in Hong Kong property stocks dominated the session’s thin trade.

    The FTSE 100 had edged up 0.43% by noon SA time, reaching levels as were seen before the Lehman Brothers’ collapse last year.

    Share price news

    Brimstone Investment Corporation Limited (share code: BRT) gained 8% by midday to trade at R8.10 a share, after one deal of 1 000 shares. Electrical equipment company South Ocean Holdings Limited (share code: SOH) rose to R1.50 a share, an increase in share price of 7.14% after five deals exchanged 32 863 shares.

    Losing ground was Fortress Income Fund Limited (share code: FFB ) whose shares fell 8.84% to trade at R1.65, after one deal of 150 shares. In the business support services sector, Metrofile Holdings Limited (share code: MFL) sank to R1.30 a share, a loss of 7.14% after a single deal of 263 shares.

    Permalink2009-12-29, 12:14:27, by Natalie Email , Leave a comment

    Daily Equity Report Monday 28 December 2009

    2009/12/28 20:08:24
    The JSE closed up 1.12% at 27889 with value traded at R 2.91 billion. Advances led declines 193 to 113 with 74 shares unchanged out of 380 active. Mining closed up 1.1% at 34454, while Industrials were up 1.23% at 26109 and financials ended the day up 0.64% at 19408.

    The best performing sectors of the day were FTSE/JSE SHARIAH ALL up 43.9% at 2949, FTSE/JSE RAFI 40 up 24.1% at 5793 and Mobile Telecommunications up 2.3% at 191, while the worst were FTSE/JSE All Africa ex SA 30 with S A Rand values down 43.7% at 54, FTSE/JSE All Africa ex SA 30 with US$ values down 31.6% at 58 and FTSE/JSE All Africa 40 Index with S A Rand values down 21.1% at 69.

    There were 13 new 12 month highs today, including Metorex which closed up 5% at 485, Arm up 4.7% at 17700 and Tigbrands up 4.3% at 17449 while there were 1 new lows of which Fiuranium topped the list, down 13.5% at 1600.

    Of the major stocks Naspersn was down 0.68% at 29895, Sasol gained 2.3% at 30076, Mtn was up 2.41% at 11920, Arcmittal ended up 1.9% at 10037, Stanbank gained 0.24% at 10300.

    Some of the top gainers included Granprade up 8.05% at 255 , Clientele up 7% at 749 , while the major losers were Fiuranium down 13.51% at 1600 and Bowcalf off 9.09% at 600

    The Dow was up 0.1% at 10534.30 and the S&P 500 up 0.1% at 1127.34 a few moments ago.

    Gold was off 0.1% at $ 1107.95/oz

    The rand was last trading at R 7.48 to the dollar, R 11.95 to the pound and R 10.77 to the Euro.

    Permalink2009-12-28, 20:09:25, by admin Email , Leave a comment

    Trade quiet after Christmas weekend

    Local markets

    At midday on Monday, gains in the oil & gas and basic materials sectors led the JSE All Share upwards slightly by 0.55%, following movements on Asian markets.

    The rand was selling at R7.52 to the US dollar at 12:00, weakening fractionally after the dollar strengthened after the Christmas holiday. Liquidity continued to be thin.

    Oil cost $75.86 a barrel, rising 1.15% as the US gave signs of economic recovery, including plunging oil inventories.

    International markets

    US markets were closed on Friday for Christmas day.

    In Japan, the Nikkei average gained 1.33% this morning, after exporter stocks rose and department store Takashimaya Co. Ltd. received a boost after news that it would retain its profit forecast for the year.

    In Hong Kong, the Hang Seng lost 0.17% as property stocks took a knock after the government land auction did not perform as well as anticipated.

    In Britain, the FTSE 100 was closed for a bank holiday.

    Share price news

    In the lead at midday was South Ocean Holdings Limited (share code: SOH) in the electrical equipment company, whose shares sold for R1.50 each, a gain of 7.14% after two deals exchanged 4 000 shares. In the forestry sector, York Timber Holdings Limited (share code: YRK) rose to R2.81 a share after one deal of 79 shares, boosting the share price by 6.04%.

    Village Main Reef Gold Mining Company Limited (share code: VIL) fell to R1.01 a share at noon, a drop of 8.18% after one deal of 250 shares. Metals and minerals firm Petmin Limited (share code: PET) dipped 5.13% after five deals saw the exchange of 10 946 shares, causing the share price to drop to R1.85.

    Permalink2009-12-28, 13:00:45, by Natalie Email , Leave a comment

    Daily Equity Report Thursday 24 December 2009

    2009/12/24 19:03:32
    The JSE closed off 0.1% at 27580 with value traded at R 1.85 billion. Advances led declines 117 to 108 with 84 shares unchanged out of 309 active. Mining closed up 0.09% at 34080, while Industrials were off 0.39% at 25793 and financials ended the day up 0.28% at 19284.

    The best performing sectors of the day were FTSE/JSE SHARIAH ALL up 42.1% at 2912, FTSE/JSE RAFI 40 up 22.9% at 5735 and Industrial Engineering Index up 1.4% at 35390, while the worst were FTSE/JSE All Africa ex SA 30 with S A Rand values down 42.8% at 55, FTSE/JSE All Africa ex SA 30 with US$ values down 30.9% at 59 and FTSE/JSE All Africa 40 Index with S A Rand values down 20.8% at 69.

    There were 8 new 12 month highs today, including Mixtel which closed up 9% at 109, Metorex up 4.8% at 462 and Kumbaio up 1.6% at 29975.

    Of the major stocks Gfields gained 0.48% at 10135, Stanbank was up 0.76% at 10275, Anglo lost 0.56% at 32319, Anggold gained 0.49% at 30900, Bats moved down 1.59% at 24258.

    Some of the top gainers included Mixtel up 9% at 109 , Comair up 8.87% at 270 , some of the losing shares included Village off 10.57% at 110 and Granprade off 9.23% at 236

    The Dow was up 0.4% at 10508.84 and the S&P 500 up 0.4% at 1125.19 a few moments ago.

    Gold was up 1.5% at $ 1104.40/oz

    The rand was last trading at R 7.51 to the dollar, R 11.94 to the pound and R 10.78 to the Euro.

    Permalink2009-12-24, 19:04:55, by admin Email , Leave a comment

    Daily Equity Report Tuesday 23 December 2009

    2009/12/23 20:18:01
    The JSE closed off 0.05% at 27608 with value traded at R 4.29 billion. Advances led declines 186 to 114 with 87 shares unchanged out of 387 active. Mining closed off 0.27% at 34050, while Industrials were up 0.21% at 25894 and financials ended the day off 0.5% at 19230.

    The best performing sectors of the day were FTSE/JSE SHARIAH ALL up 42.2% at 2914, FTSE/JSE RAFI 40 up 23% at 5741 and Fixed Line Telecommunications Index up 3.7% at 1110, while the worst were FTSE/JSE All Africa ex SA 30 with S A Rand values down 41.9% at 56, FTSE/JSE All Africa ex SA 30 with US$ values down 30.8% at 59 and FTSE/JSE All Africa 40 Index with S A Rand values down 20% at 70.

    There were 11 new 12 month highs today, including Eoh which closed up 7.8% at 992, Metorex up 6% at 441 and Brimst-n up 4% at 759.

    Of the major stocks Anglo moved down 1.07% at 32500, Mtn was up 1.25% at 11720, Implats gained 1.06% at 20000, Anggold was unchanged at 30749, Sasol gained 1.37% at 29600.

    Biggest gainers of the day where Bjm up 15.38% at 375 , Eoh up 7.83% at 992 , while the major losers were Nuworld off 8.11% at 1700 and Bell down 5.61% at 925

    The Dow was unchanged 0% at 10466.36 and the S&P 500 up 0.2% at 1120.17 a few moments ago.

    Gold was up 0.8% at $ 1092.55/oz

    The rand was last trading at R 7.60 to the dollar, R 12.12 to the pound and R 10.92 to the Euro.

    Permalink2009-12-23, 20:20:06, by admin Email , Leave a comment

    Positive US housing sector stats boost global markets

    Local markets

    In the run up before the Christmas holidays, the JSE All Share had risen 0.28% by midday on Wednesday, led upwards by small gains almost across the board.

    The rand was selling at R7.74 to the US dollar at noon, slightly weaker as the dollar steadied and gold prices rose.

    Brent crude oil cost $73.05 a barrel, climbing by 2.89% in line with a stronger US dollar.

    International markets

    On US markets yesterday, the Dow Jones inched up 0.49% while the Nasdaq rose 0.67%, after a lift in home sales figures showed a stabilization in housing, and increased investor confidence in economic recovery.

    The Japanese Nikkei average was closed this morning for a public holiday.

    In Hong Kong, the Hang Seng closed 1.12% higher, overcoming earlier losses when property stocks received a boost from the expectation of positive results in next week’s land auction.

    In the UK, the FTSE 100 had gained 0.84% by noon SA time, taking direction from positive US markets after optimistic housing sector news. Banking and commodity shares led the UK bourse upwards.

    Share price news

    EOH Limited (share code: EOH) in the computer services sector rose to R9.90 a share at midday, an increase in share price of 7.61% after two deals totaling 4 500 shares. Coal company Hwange Colliery Company Limited (share code: HWA) gained 6.45% to sell at R3.30 a share, after one deal of 10 shares.

    Losing more ground today was Comair Limited (share code: COM), which fell to R2.25, a loss of 6.25% after one deal of 10 000 shares. Metals and minerals firm Petmin Limited (share code: PET) slid 6.19% to trade at R1.82 a share, after two deals exchanged 11 100 shares.

    Permalink2009-12-23, 12:36:15, by Natalie Email , Leave a comment

    Daily Equity Report Tuesday 22 December 2009

    2009/12/22 18:51:10
    The JSE closed up 0.46% at 27622 with value traded at R 6.10 billion. Advances led declines 190 to 128 with 104 shares unchanged out of 422 active. Mining closed up 0.24% at 34143, while Industrials were up 0.63% at 25841 and financials ended the day up 0.44% at 19327.

    The best performing sectors of the day were FTSE/JSE SHARIAH ALL up 42% at 2911, FTSE/JSE RAFI 40 up 23.4% at 5757 and Fixed Line Telecommunications Index up 3.4% at 1071, while the worst were FTSE/JSE All Africa ex SA 30 with S A Rand values down 40.8% at 57, FTSE/JSE All Africa ex SA 30 with US$ values down 30.6% at 59 and FTSE/JSE All Africa 40 Index with S A Rand values down 19.1% at 70.

    There were 14 new 12 month highs today, including Pnr-foods which closed up 3.8% at 3850, Metorex up 2.7% at 416 and Metrofile up 2.2% at 140.

    Of the major stocks Mtn ended up 2.43% at 11575, Implats ended up 1.36% at 19790, Anglo moved up 0.61% at 32850, Sasol gained 0.86% at 29200, Billiton lost 0.57% at 23469.

    Biggest gainers of the day where Hwange up 24% at 310 , Hci up 9.09% at 7200 , while the major losers were Amecor off 8% at 115 and Ucs off 6.53% at 186

    The Dow was up 0.3% at 10445.58 and the S&P 500 up 0.3% at 1117.25 a few moments ago.

    Gold was down 1% at $ 1080.23/oz

    The rand was last trading at R 7.72 to the dollar, R 12.32 to the pound and R 11.03 to the Euro.

    Permalink2009-12-22, 18:52:46, by admin Email , Leave a comment

    JSE follows Asian markets up

    Local markets

    Tuesday at noon saw the JSE All Share up 0.64% as shares gained across the board in line with positive closes on Asian markets.

    The rand was trading at R7.69 to the US dollar, steadying after strength in the American currency as trade continued to be thin.

    Oil cost $72.46 a barrel, retreating 0.74% after earlier gains as investors grew cautious ahead of the release of US crude inventory data and the OPEC meeting today in Luanda, Angola.

    International markets

    Yesterday, the Dow Jones rose 0.82% and the Nasdaq climbed 1.17% after the US Senate allowed a healthcare reform bill to advance, and two firms enjoyed a brokerage upgrade after their profit futures looked promising.

    The Nikkei reached its highest close in three months this morning, gaining 1.91% after exporters were boosted by a weaker yen, and news that Isuzu might develop new diesel engines for General Motors.

    The Hang Seng secured a 0.69% gain after banking stocks led Hong Kong shares upwards, bring the last five days of losses to an end.

    In the UK, the FTSE 100 had edged up 0.63% as rising oil prices gave support to energy shares, and investors awaited third quarter GDP figures with confidence.

    Share price news

    Illovo Sugar Limited (share code: ILV) was the top mover upwards at midday, rising 4.10% to sell at R31.23 at noon, after 49 deals traded 47 986 shares. Gold miner Simmer and Jack Mines Limited (share code: SIM) rose to R1.54, an increase of 4.05% after 148 deals exchanged 1 659 273 shares.

    Electronic equipment firm Amecor (share code: AER) fell to R1.15, a slide of 8% after one deal of 120 shares. Comair Limited (share code: COM) lost 6.52% as shares tumbled to R2.15 each, after a single deal of 1 000 shares.

    Permalink2009-12-22, 12:28:38, by Natalie Email , Leave a comment

    Daily Equity Report Monday 21 December 2009

    2009/12/21 19:40:18
    The JSE closed up 0.55% at 27495 with value traded at R 7.54 billion. Advances led declines 199 to 131 with 69 shares unchanged out of 399 active. Mining closed up 0.73% at 34062, while Industrials were up 0.15% at 25678 and financials ended the day up 0.65% at 19243.

    The best performing sectors of the day were FTSE/JSE SHARIAH ALL up 41.3% at 2896, FTSE/JSE RAFI 40 up 22.8% at 5729 and FTSE/JSE AFRICA REAL ESTATE INVESTMENTS TRUST INDEX up 2.6% at 623, while the worst were FTSE/JSE All Africa ex SA 30 with S A Rand values down 40.9% at 57, FTSE/JSE All Africa ex SA 30 with US$ values down 30.7% at 59 and FTSE/JSE All Africa 40 Index with S A Rand values down 19.3% at 70.

    There were 9 new 12 month highs today, including Bowcalf which closed up 10% at 660, Winhold up 5.7% at 148 and Northam up 4.4% at 4700 while there were 1 new lows of which Simmers topped the list, down 7.5% at 148.

    Of the major stocks Mtn was off 1.53% at 11300, Anglo ended up 1.43% at 32650, Billiton was up 1.08% at 23603, Stanbank was off 0.49% at 10150, Implats ended down 0.64% at 19524.

    Biggest gainers of the day where Bowcalf up 10% at 660 , Drdgold up 9.57% at 515 , some of the losing shares included Lonafric down 10.71% at 125 and Ips down 8.11% at 170

    The Dow was up 1.2% at 10448.15 and the S&P 500 up 1.3% at 1116.86 a few moments ago.

    Gold was off 1.3% at $ 1095.57/oz

    The rand was last trading at R 7.74 to the dollar, R 12.41 to the pound and R 11.08 to the Euro.

    Permalink2009-12-21, 19:43:38, by admin Email , Leave a comment

    Trade flat as JSE seeks direction from US markets

    Local markets

    At midday on Monday, the oil and gas sector had gained 1.90%, helping the JSE All Share edge up 0.22% by noon in a flat morning’s trade.

    The rand had slipped to R7.64 to the US dollar at 12:00, amidst thin trade. Analysts expect the local currency to weaken slightly further in today’s session.

    Brent crude cost $73.28 a barrel, rising 1.78% as investors awaited news from this week’s OPEC meeting, in which production levels are expected to be kept the same.

    International markets

    On Friday, the Dow Jones finished 0.2% up as the stronger dollar limited equity gains, while the Nasdaq rose 1.45% after good quarterly results from Oracle and Research In Motion.

    This morning, the Nikkei closed 0.41% up after a weaker yen boosted exporter stocks, and tech stocks climbed following gains in US rivals last week.

    The Hang Seng fell 1.08%, as Hong Kong stocks extended losses to a fifth consecutive day after banking shares continued to lose ground due to their exposure to Dubai’s debt.

    The FTSE 100 had inched up 0.62% by noon, as banking shares recovered from Friday’s losses and oil stocks gained.

    Share price news

    Containers and packaging firm Bowler Metcalf Limited (share code: BCF) rose to R6.60 a share at midday, a gain of 10% after one deal of 650 shares. Construction firm ELB Group Limited (share code: ELR) gained 9.09% after four deals exchanged 2 500 shares, boosting the share price to R12.

    Lonrho Africa PLC (share code: LAF) fell to R1.25, a loss of 10.71% after two deals traded 2 990 shares. IPSA Group Limited (share code: IPS) lost 8.11% as shares slid to R1.70 each at noon, after 4 deals saw the exchange of 10 102 shares.

    Permalink2009-12-21, 12:19:23, by Natalie Email , Leave a comment

    Final Report for 2009

    2009 is fast coming to a close and this will be Seed Investment’s final newsletter for the year. The year started off where 2008 had ended, i.e. still reeling from the final quarter of 2008, but then turned after the first quarter and will end on a reasonable level.

    Towards the end of February the 10 year compounded returns of the US’s S&P500 turned negative for the first time since the 1930’s. I.e over a 10 year period investors had lost money in absolute and also in real terms had they invested purely in the general US market as measured by the S&P500.

    The crisis that started in the US and Europe affected global markets in an environment that was highly correlated.

    By the end of February, the Financial Mail carried the headline, “Global economic crisis: Can SA Escape the Worst of it?”

    However there was a general feeling that while the business and economic environment was exceptionally tough and SA was not immune to what was happening on the global scene, the SA economy and most companies, would fare better than their global counterparts.”

    In the global scene:
    A report in a February Newsweek noted that the 3 major policy mistakes that turned the 1929 Wall Street Crash into the Great Depression, were “A tight monetary policy; a restrictive fiscal stance; and a wave of protectionism…”

    In the latter part of 2008 and all throughout 2009 global central bankers, led by the US Federal Reserve did all in their power to avoid the major ones made decades back. It did help that the head of the Fed, Ben Bernanke was a specialist in what went wrong back in the early 1930’s in the US.

    The bull market that arose from the end of the first quarter of 2009 to the end of the year took many by surprise as to its extent. A quite from Warren Buffet from his annual letter to shareholders said this,

    “The [US] economy will be in shambles throughout 2009 - and, for that matter, probably well beyond. Though the path has not been smooth, our economic system has worked extraordinarily well over time... and it will continue to do so"

    But the continuation of ultra low interest rates resulted in investors starting to seek out opportunities that would pay higher returns. The winners were

    1. emerging market equities and their currencies
    2. commodities
    3. gold

    The commodity index gained 27% for the year to date and some 36% from its low in March.

    The MSCI Emerging market index raced up from a March low to the current position gaining 105%.

    Gold in dollar terms moved up from $881 to a high of around $1215 before coming back to a current $1100

    The contrary position to the weak dollar, strong commodity prices and firmer emerging markets was a strong rand. It started the year at around R9,36 to the dollar and R14,28 to the pound. This exchange rate has improved to a value of R7,56/ dollar and R12,20/pound

    The firm rand took the shine off all offshore returns, leading many investors to question the viability of offshore investments.

    Some of the winners on the JSE for the year to date included:

    • Capitec up from R29 to R76 – 162%
    • Aspen up from R33 to R74 – 124%
    • Naspers up from R168 to R299 – 78%
    • Old Mutual up from R7,70 to R12,80 – 66%
    • Didata up from R5,80 to R9 – 55%

    From the lows in March the gains have been very impressive. Some of the large winners over this time period have been Old Mutual up 152%, Datatec up 141%, Anglo American up 109%, Imperial up 98%, and Investec up 95%.

    All in all the year ended on a good note. The last 2 years have given investors plenty of volatility. But this is what financial and investment markets are about. It is a matter of navigating the best course possible, avoiding the blowouts and making bigger allocations to sectors where the risk / reward payoff is in your favour.

    Into the last few months of 2009 it looks like investors are looking for the reality to catch up with the gains. i.e. for the economy and company profitability to start to come through to support the gains made in prices. We are likely to see this thinking continue for the next few months.

    Just like the fundamentals need a time to catch up to prices, so most of us need a time to consolidate.

    We would like to take this opportunity to thank all our clients for their loyalty and support throughout 2009.

    We do wish you and your family a safe and blessed Christmas and look forward to meeting up again in the New Year.

    Sincerely

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-18, 16:32:44, by ian Email , Leave a comment

    JSE flat after mixed morning’s trade

    Local markets

    At midday on Friday, the JSE All Share had edged 0.02% down after a mixed morning’s trade for the sectors, taking direction from weaker US markets.

    The rand was trading at R7.51 to the US dollar, strengthening fractionally as investors took their positions ahead of the Christmas holiday, but analysts predict that the rand will remain range bound for the rest of the session.

    Oil cost $72.94 a barrel at 12:00, up 2.73% after reports that Opec could leave production levels unchanged at its meeting next week.

    International markets


    Yesterday, the Dow Jones fell 1.27% and the Nasdaq slipped 1.22% as risk appetite declined after the dollar strengthened, and transportation shares and financial services stocks dipped after profit and earnings forecasts for bellwethers were glum.

    The Nikkei average edged down 0.21% this morning, led by losses in banking stocks which came after news that stricter capital rules would be enforced.

    The Shanghai index lost 2.05% and the Hang Seng slipped 0.8%, led by losses in banks and property stocks which came after proposals for stricter banking regulation and the buying of government land.

    The FTSE 100 was 0.21% up at noon, recovering after yesterday’s dramatic falls, led by energy and mining shares, which offset losses in banks.

    Share price news

    Soft goods retailer African and Overseas Enterprises Limited (share code: AOVP) rose to R7.30 after two deals of 1 400 shares, a boost of 6.57% in share price. Hosken Consolidated Investments Limited (share code: HCI) rose 6.43% to trade at R69.50 after four deals totaling 5 300 shares at noon.

    Wesizwe Platinum Limited (share code: WEZ) fell to R1.98 a share at midday, a loss of 7.91% after 20 deals exchanged 227 542 shares. Argent Industrial Limited (share code: ART) lost 6.49% after 970 493 shares were exchanged in 12 deals, sending the share price sliding to R8.65.

    Permalink2009-12-18, 12:39:24, by Natalie Email , Leave a comment

    November Inflation

    The inflation figures for November came out on Tuesday just before the public holiday, and the overall CPI remained within it target range (of 3 – 6%) for the second month in a row. It came in at 5.8% for the 12 months ending 30 November 2009 after remaining flat for the second month in a row.

    Last month we had a look at the various components in the CPI calculation and how they had changed over the prior 2 years. This month we will have a brief look at the overall CPI level for various groups, and briefly discuss why they are different from one another.

    As can be seen above the inflation rate for the highest spenders is higher than that for the lowest spenders, which is a dramatic change from a year ago. Items like food and transport are a bigger percentage in low income earners’ basket of goods, and so when these items’ inflation rate is higher than the overall inflation rate you will typically find that this group will have higher inflation and vice versa. At the moment low food (4%) and transport (-0.6%) inflation contribute to their lower overall inflation rate.

    Conversely when the inflation rate for items like health and education is higher than the overall inflation rate then we’ll typically see higher inflation for the bigger spenders. Higher spenders will typically use more private medical and education facilities than others which increases the weighting of these items in their baskets. High health inflation also contributes to higher inflation for pensioners. Pensioners are typically not as healthy as non pensioners and they will therefore spend a greater proportion of their income on health than non pensioners.

    The difference between the inflation rate in rural and urban areas can also largely be explained by the income effect; urban dwellers are generally more wealthy (and therefore spend more) than their rural counterparts.

    The inflation rate will vary from province to province as a result of a mixture of the above factors as well as the cost of getting goods to that province. Mpumalanga and Limpopo were used in the above example as they are the provinces with the highest and lowest inflation rates respectively.

    This is my last Daily Equity Report for the year, so I’d like to take the opportunity to wish you all a safe and festive break (if you’re fortunate enough to get one) at the end of the year and that 2010 brings all that you wish for and more.

    Take care,

    Mike Browne
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-17, 16:02:19, by Mike Email , Leave a comment

    Gains in oil and gas stocks help lift JSE

    Local markets

    Thursday midday saw the JSE All Share up 0.36%, with gains in the oil and gas sector leading the upward climb after yesterday’s public holiday.

    The rand was trading at R7.47 to the US dollar at noon, weakening fractionally in line with the euro, as the dollar strengthened.

    Oil cost $72.92 a barrel at 12:00, recovering 1.28% as the unexpectedly large drop in US oil inventories began to offset losses due to dollar strength against the euro.

    International markets

    On US markets, the Dow Jones finished 0.1% down while the Nasdaq rose 0.27% yesterday, after the Federal Reserve assured investors that it will leave interest rates low to encourage economic recovery.

    The Japanese Nikkei index slipped 0.13% this morning, down from a seven-week high reached earlier in the session as investors booked profits from the banking sector rally.

    The Hang Seng closed 1.22% lower after losses in Hong Kong banking stocks, which came on the back of worries that there will be more fund outflows.

    The FTSE 100 had dipped 0.48% by midday SA time, as investors acted cautiously in the midst of falling copper prices, which dented mining stocks, and banking stocks also took a hit.

    Share price news

    DRD Gold Limited (share code: DRD) rose 9.13% to sell at R4.54 at 12:00, after 130 deals exchanged 656 824 shares. Investment company Hosken Consolidated Investments Limited (share code: HCI) gained 7.36% to trade at R69.25 at noon.

    Illiad Africa Limited (share code: ILA) in the builders merchants sector fell to R8.15, a loss of 6.32%. Oil company Oando PLC (share code: OAO) lost 6.25% after one deal of 908 shares, to sell at R6 a share at noon.

    Permalink2009-12-17, 12:27:07, by Natalie Email , Leave a comment

    Tall Buildings

    Yesterday we looked at the Goldman Sachs looking to pay out record bonuses, just a year after the 2008 financial collapse. Governments are looking to curtail this growth phase. They may succeed in this instance, but one of the attributes in man’s design is creativity and growth and he will look to enhance his position year on year.

    This does not however mean that growth does not come with the inevitable setback from time to time.

    In Dubai the Burj Dubai building is the epitome of the heights – quite literally – that man will go to surpass what he achieved yesterday.

    Dubai has been on a growth spurt second probably only to parts of China in recent years. At the end of November we saw a jitter in the financial world as Dubai state owned, Dubai World with reported liabilities of $59 billion dollars announced that it planned to suspend debt repayments for up to 6 months.

    The effect on the Dubai stock market was sharp and immediate, but yesterday we heard that Abu Dhabi has come to the rescue to the tune of $10 billion.

    The Burj Dubai, which started in January 2004, is due to be officially completed in January 2010 and will be the tallest man made structure ever.

    At around 818 metres it is:

    • The tallest building in the world
    • Tallest free standing structure in the world
    • Highest number of stories in the world at 162
    • World’s highest elevator installation with the fastest speed of 64km/h

    However until completion in early 2010 it will not be officially recognised as the world’s tallest building.

    According to Wikipedia, the total budget for the project is around $4,1 billion.

    Some other facts about the building:

    • The record was set in May 2007 for the vertical concrete pumping on any building at 452 metres.

    • The building will have 56 double decker elevators

    The exterior cladding consists of 142 000m2 of reflective glazing, designed to withstand Dubai’s extreme temperatures. Because of the height it is estimated that the top of the building will be 6 degrees cooler than at its base.

    The first 37 floors will house an Armani hotel, floors 45 to 108 will have 700 private apartments and most of the remaining floors will be corporate offices and suites.

    The building is expected to hold up to 35 000 people at any one time.


    Picture of the uncompleted Burj Dubai

    Time will only tell whether the completion of this building marks the end of a particular construction boom, or whether it’s just another building in the ordinary course of events.

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-15, 18:39:18, by ian Email , Leave a comment

    Lack of international direction sees JSE flat

    Local markets

    Just past midday at 12:08, the JSE All Share was 0.13% down after opening flat in subdued trade. The local bourse floundered in the absence of international direction, pressured by losses in the oil and gas sector.

    The rand was trading at R7.47, weakening slightly against the US dollar amidst local news of more non-farm job losses in the third quarter.

    Gold was selling at $1117.37, slipping 0.5% after initially holding steady on improved risk appetite after news of Dubai's debt bailout.

    International markets

    The Dow Jones inched up 0.28% and the Nasdaq lifted 0.99% yesterday after Abu Dhabi came to Dubai’s rescue. US stocks were also boosted by news of a potential takeover deal by Exxon Mobil Corp.

    The Nikkei lost 0.22% this morning as Japanese exporter shares were damaged by a strong yen, and investors traded warily before a Federal Reserve meeting.

    The Shanghai index fell 0.86% and the Hang Seng lost 1.23% after further slides in banking and property stocks, which came after fears that China could implement measures to cool activity in the financial sector.

    Britain’s FTSE 100 was 0.35% down as banks declined on investor caution ahead of UK and US data.

    Share price news

    In the mining sector, Sephaku Holdings Limited (share code: SEP) rose to R4 after one deal of 750 shares, a gain of 6.67%. In the real estate investment trust sector, Fortress Income Fund Limited gained 6.25% to trade at R1.70 a share, after two deals exchanged 50 000 shares.

    Telemaster Holdings Limited (share code: TLM) fell to R1.74 after one deal of 4 000 shares lost the company share price 5.95%. In the gold mining sector, Simmer and Jack Mines Limited (share code: SIM) lost 4.97% to sell at R1.72 just after midday.

    Permalink2009-12-15, 12:55:08, by Natalie Email , Leave a comment

    Bank bonuses

    Goldman Sachs Group is an investment banking, investment management and financial services company that was founded in 1869 in the US. It has been in the news recently because of the controversy surrounding the payment of massive bonuses to staff – just one year after global banks came under so much pressure for their part in the 2008 global financial crisis.

    Typical of many global investment banking operations, these global investment banks, set aside a portion of profits to pay staff large year end bonuses. But now just one year after receiving bailouts, these same banks are reporting record profits and looking to pay out record bonuses.

    In the case of Goldman Sachs, it set aside nearly $17 billion for such bonuses to pay its staff of over 31 000 employees. At this payout level, the arithmetic average payout is over $500 000 per employee (naturally skewed to senior managers), which would be the highest figure in the firm’s history of 140 year.

    But under pressure this year, it reported last week that 30 of its senior executives will forego cash bonuses and instead receive restricted shares that cannot be sold for five years.

    Goldman is one of the world’s largest providers of mergers and acquisitions advice and underwriting services. It also engages in proprietary trading and private equity deals.

    Goldman Sachs was until 1999 a private partnership. In that year however it listed as a public company in the US, by offering a small portion of the company’s shares to the public.

    Goldman was one of the few banks to profit from the 2007 subprime mortgage collapse because they managed to bet on a collapse of this market and like hedge funds, short mortgage related securities and benefit as prices collapsed.

    It did however receive a $10 billion preferred stock investment from the US Treasury as part of the Troubled Asset Relief Program, which has subsequently been repaid.

    Governments are clamping down on bonuses, both to raise much needed funding, but also political points. In the UK last week we saw Chancellor of the Exchequer, Alistair Darling plan to levy a 50% tax on bank bonuses. This will affect Goldman Sachs’ UK operation.

    It is reported that UK banks were preparing to set aside as much as 6 billion pounds in bonuses in 2009, which is 50% more than in 2008, but with the new taxes this is likely to be reduced. It was reported on Bloomberg today that to provide a bonus of 59 000 after tax, the cost will be 162 500 pounds, compared with 112 800.

    For the general public, such tax impositions on “those nasty highly paid bankers” may be seen as rightful dues, but anytime a government starts to distort the playing fields, the results tend to be unintended consequences.

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-14, 18:28:57, by ian Email , Leave a comment

    Bank bonuses

    Goldman Sachs Group is an investment banking, investment management and financial services company that was founded in 1869 in the US. It has been in the news recently because of the controversy surrounding the payment of massive bonuses to staff – just one year after global banks came under so much pressure for their part in the 2008 global financial crisis.

    Typical of many global investment banking operations, these global investment banks, set aside a portion of profits to pay staff large year end bonuses. But now just one year after receiving bailouts, these same banks are reporting record profits and looking to pay out record bonuses.

    In the case of Goldman Sachs, it set aside nearly $17 billion for such bonuses to pay its staff of over 31 000 employees. At this payout level, the arithmetic average payout is over $500 000 per employee (naturally skewed to senior managers), which would be the highest figure in the firm’s history of 140 year.

    But under pressure this year, it reported last week that 30 of its senior executives will forego cash bonuses and instead receive restricted shares that cannot be sold for five years.

    Goldman is one of the world’s largest providers of mergers and acquisitions advice and underwriting services. It also engages in proprietary trading and private equity deals.

    Goldman Sachs was until 1999 a private partnership. In that year however it listed as a public company in the US, by offering a small portion of the company’s shares to the public.

    Goldman was one of the few banks to profit from the 2007 subprime mortgage collapse because they managed to bet on a collapse of this market and like hedge funds, short mortgage related securities and benefit as prices collapsed.

    It did however receive a $10 billion preferred stock investment from the US Treasury as part of the Troubled Asset Relief Program, which has subsequently been repaid.

    Governments are clamping down on bonuses, both to raise much needed funding, but also political points. In the UK last week we saw Chancellor of the Exchequer, Alistair Darling plan to levy a 50% tax on bank bonuses. This will affect Goldman Sachs’ UK operation.

    It is reported that UK banks were preparing to set aside as much as 6 billion pounds in bonuses in 2009, which is 50% more than in 2008, but with the new taxes this is likely to be reduced. It was reported on Bloomberg today that to provide a bonus of 59 000 after tax, the cost will be 162 500 pounds, compared with 112 800.

    For the general public, such tax impositions on “those nasty highly paid bankers” may be seen as rightful dues, but anytime a government starts to distort the playing fields, the results tend to be unintended consequences.

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-14, 18:21:51, by ian Email , Leave a comment

    Abu Dhabi bails out Dubai for $10bn; JSE edges up

    Local markets

    The JSE All Share was 0.27% up at 12:00, with industrial stocks gaining while oil and gas and gold mining shares slipped. Investors took heart from news that Dubai had received a bailout of $10bn from Abu Dhabi.

    The rand was trading at R7.49 to the US dollar at noon, lifted by increasing risk appetite that saw the dollar dip and Asian shares rise.

    Oil cost $71.56 a barrel, managing to remain up 0.79% after earlier losses came on investor concerns over weak fuel demand and rising inventories.

    International markets

    On US markets on Friday, the Dow Jones edged up 0.63% though further gains were offset by strength in the U.S dollar. The Nasdaq slipped 0.03%, in response to a fall in shares of large cap technology companies.

    The Nikkei average slid 0.02%, though recovering slightly from earlier losses after news of Dubai’s bailout by Abu Dhabi, which soothed investor anxiety about global economic recovery.

    China’s Shanghai index rose 1.71% while Hong Kong’s Hang Seng gained 0.84%, led upwards by banking and energy stocks after the report of Dubai’s bailout.

    The FTSE was 1.09% higher at noon on gains from banks after the news from Dubai.

    Share price news

    CIC Holdings Limited (share code: CCI) rose to R1.35 a share at midday, an increase of 8% after one share was sold in one deal. 1Time Holdings Limited (share code: 1TM) gained 7.14% to sell at R1.05 a share, after 3 deals exchanged 14 148 shares.

    Diamondcorp PLC (share code: DMC) fell to R1.20, a drop of 28.57% after one deal of 10 000 shares. Ceramic Industries Limited (share code: CRM) in the building and construction materials sector declined 11.68% to trade at R100 at 12:00, after just one deal of 322 shares.

    Permalink2009-12-14, 12:30:11, by Natalie Email , Leave a comment

    How much life cover and disability cover do you need?

    Francois Hugo from True South Actuaries and Consultants published a research article in February 2008 in which he estimated that South Africans are underinsured by about R10 trillion. That is an enormous amount. He estimates that for average earners their life and disability underinsurance gap could be closed with premiums of between R1300 and R2300 per month. Premiums of this size may sound like quite a bit of money but it still remains one of the cheapest ways to increase the capital value of a family unit from one generation to the next.

    He further points out that people earning R8 200 per month should on average make provision for life cover of at least R2.1m whereas the average in South Africa is R1.3m.
    One reason why individuals don’t have enough life and disability cover is that they don’t have a “calculator” to tell them how much they need. Part of the problem is that very few people stop to think about how much their dependents will need to finance their existing lifestyle if they were to become disabled or worse pass away.

    Life cover:

    Life cover is basically for your dependents. The more dependents you have the more important it is to consider the issues surrounding life cover. The best way to get a handle on how much life cover you need is to role play the different scenarios. Here are some of the important ones to consider:

    • Based on the capital you have at the moment and how much capital your spouse requires to finance the same standard of living from retirement, what is your current shortfall? Therefore, if you have R2m of investable assets now that could be used by your spouse for retirement purposes, but based on an actuarial calculation you need R3m today, you have R1m shortfall to be covered by life cover.

    Point 1 above dealt with the amount of assets the spouse needs at retirement to finance an income “after” retirement. Let’s now look at what the spouse needs before retirement.

    • How much does your family need, if you passed away today, to finance their living expenses for the next 5 / 10 / 15 years? The number of years depends on the number of years it will take to see your youngest child through tertiary education or when your spouse can find a proper job to supplement lost income.

    This calculation could be something like: Your annual salary x number of years x Discount factor
    • How much debt do you have that you would like to clear on your death?

    • Do you want to put an additional amount aside for the funeral? This benefit is generally oversold and is less important for higher income earners compared to the above points.

    Points 1 – 3 are generally more important for the main breadwinner. Couples, where both work and where both salaries are relatively the same, could discuss the same points but in more depth.

    Disability cover:

    As life cover is generally for your family, disability cover is for both you and your family. Let’s look at some pointers to consider.

    • What percentage of your income do you need on a monthly basis up to retirement to sustain the current living standard? This could be 75% or 100% of your current salary. Remember that this income should also be used to save for retirement.

    • What size lump sum would you need to pay any potential additional medical expenses? You need to consider the current benefit structure of your medical scheme.

    • What size lump sum would you need to make alterations to your home or car?

    • Severe illness: What size lump sum would you need in case you contract a severe illness like cancer?

    These issues aren’t things one think about on a frequent basis but to role play and create scenarios does make it easier to get an understanding how much one family needs.

    Email us at info@seedinvestments.co.za if you like us to assist you with these calculations.

    Article written by: Vincent Heys (Actuary)

    Permalink2009-12-11, 16:14:08, by admin Email , Leave a comment

    JSE follows US, Asian markets up

    Local markets

    Friday midday saw the JSE All Share up 0.86%, led by gains in the basic materials sector. Investor confidence increased after positive closes on international markets.

    The rand was trading at R7.52 to the US dollar at noon. Analysts expect the local currency to continue trading within a range as markets quiet ahead of the end-of-year holidays.

    Oil was selling at $72.02 a barrel, up 0.4% as the commodity found support from Chinese industrial growth figures.

    International markets

    The Dow Jones edged up 0.67% and the Nasdaq lifted 0.33% yesterday, as investor sentiment was buoyed by improved unemployment statistics and a lower trade deficit for October.

    In Japan, the Nikkei climbed 2.48% this morning after the yen fell against the dollar, and positive US employment data was released, boosting exporter stocks.

    The Hang Seng closed 0.93% higher, halting the past five sessions of losses as property and bank stocks rose on the back of positive economic data for mainland China in November.

    The FTSE 100 had risen 1.06% as the UK index took direction from US and Asian markets, with mining and energy stocks finding support from optimistic Chinese industrial data.

    Share price news

    In the telecommunications equipment sector, Foneworx Holdings Limited (share code: FWX) had risen 10.64% to R1.04 a share at 12:00. Traders exchanged 10 000 shares in two deals. 1Time Holdings Limited (share code: 1TM) gained 5% to sell at R1.05, after 35 000 shares were sold in one deal.

    Media agency Avusa Limited (share code: AVU) fell to R17 a share at noon, a loss of 5.56% after one deal of 5 000 shares. Cipla Medpro SA Limited (share code: CMP) in the pharmaceuticals sector fell 4.8% to R4.76, as six deals saw the exchange of 16 068 shares.

    Permalink2009-12-11, 12:12:39, by Natalie Email , Leave a comment

    Corporate M and A

    Merger and Acquisition (M&A) activity is a sure sign that corporate executives are feeling fairly comfortable with how their operations are going and their outlook is also generally relatively rosy when engaging in M&A.

    From the moment that Lehman Brothers filed for bankruptcy, last year in September, corporate activity ground to a halt. There are many reasons for this, but key ones would include:
    • Lack of trust in counterparty’s credit worthiness
    • Poor growth outlook
    • Financing (a key ingredient in M&A) freezing up as banks shored up capital and lowered their outlook on prospects of deals that required financing.

    The reduction in liquidity saw asset prices spiralling down and the fall in asset prices begot more falls. Eventually asset prices bottomed out at the beginning of March as the mass monetary and fiscal stimuli implemented by governments worldwide started to have the desired effect.

    At this time most corporate executives were still wary of doing business, preferring instead to keep their eyes on their own operations.

    As asset prices have moved up sharply, growth estimates have been revised up as the outlook improves for markets and economies. This is the time when executives look to expand their operations. There are still many distressed companies out there that shrewd management will be able to acquire at distressed levels, but most of the really good deals have been snapped up. What executives will now be looking at, on the acquisition front, are companies that have above average growth prospects. They will be paying a higher price, but will justify this price with the future prospects.

    Reading on WSJ.com today there was a piece on the possible acquisition of Cadbury by Hershey. Hershey has a complicated structure where most of the voting rights (and hence control) are held by a philanthropic trust. In the past there have been major differences in opinion between the trustees of the trust and management as they have often had different objectives. Now it seems that they might be close to an agreement to challenge Kraft Food Inc.’s $16.5bn bid for Cadbury.

    Owners of Hershey’s stocks and bonds will be interested in a possible bid. The bid would most likely require the company to raise debt, and if their debt levels are raised too much it could get downgraded, which is followed by a fall in price as the yields rise. Another option is to raise more equity, but again investors need to be aware that if they don’t participate then their holding in the company will be diluted. A combination of the two might be needed as Hershey’s lacks the cash on its balance sheet to fund the whole deal.

    Firstly the trust and management need to decide whether they are going to bid or not, and then what their strategy will be. From there the ball moves into the regulators and Cadbury’s courts as they need to assess the merits of all offers before coming to a decision. There is no doubt that any deal will take a while to finalise.

    Take care,

    Mike Browne
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-10, 19:06:57, by ian Email , Leave a comment

    JSE flat, global markets mixed

    Local markets

    At midday on Thursday, the JSE All Share had lost 0.28% in a flat morning’s trade, with losses across the board with the exception of gold mining stocks, which had recovered 1.11%.

    The rand was trading at R7.55 to the US dollar, weakening slightly, though this may change depending on the reaction of investors to the third quarter current account data, released at 11:00.

    Gold was selling at $1125.90 an ounce, slipping 1.32% after investors took profits after its recent rally.

    International markets

    Yesterday, the Dow Jones edged up 0.5%, while the Nasdaq rose 0.49%. US stocks were boosted by a falling dollar and increasing risk appetite, which spurred gains in financial, tech and commodity stocks.

    The Nikkei fell 1.42%, retreating strongly after recent gains, as investor confidence was knocked by overseas debt problems and exporters took a hit from an appreciating yen.

    In China, the Shanghai index rose 0.45% after Beijing decided to further incentivize domestic demand, which encouraged buying of consumer sector stocks.

    The FTSE 100 had risen 0.29% after a slide in energy and food retail shares offset gains in gold mining stocks. The losses came after news of Spain’s rating outlook cut.

    Share price news

    Erbacon Investment Holdings Limited (share code: ERB ) rose to R1.80 a share at noon, a gain of 9.09% after 500 shares were exchanged in one deal. Keaton Energy Holdings Limited (share code: KEH) gained 6.09% to sell at R5.75 after a single deal bought 3 000 shares.

    In the farming and fishing sector, Afrocentric Investment Corporation Limited (share code: ACT) fell to R1.41 after two deals of 11 308 shares, a loss of 11.88%. KAP International Holdings (share code: KAP) lost 9.52% to sell at R1.90 at midday, after one sale of 780 shares.

    Permalink2009-12-10, 12:22:25, by Natalie Email , Leave a comment

    Some further points on offshore investing

    A common question posed is why should South African investors take funds offshore, when clearly the returns generated by local assets in rand terms over the last 12 months have been far superior. Our point would be to not invest going forward by using the rear view mirror to make an assessment of likely outcomes.

    As 2009 starts to come to an end, local asset prices have been very firm, while in rand terms global asset gains have been more than negated by the very strong rand.

    While one asset class tends to take the lead for a few years, over time there is more balance to the onshore / offshore asset allocation decision, as seen in the chart below. This chart has tracked 5 year rolling returns of data going back to 1940. The dark blue indicates periods of time when local equities outperformed, while light blue indicates outperformance of global equities.

    Winning Asset classes – using rolling 5 year returns

    Source: Coronation Fund Managers

    Naturally for local investors an offshore investment contains 2 main factors – firstly the return in foreign currency, and secondly the return in conversion of the foreign currency return to account for the exchange rate.

    In our mind, few can predict the direction and rate of change of one currency versus another over any relatively shorter period of time. The closest fundamental intrinsic value to a currency is its purchasing power parity and while this will hold true over longer periods of time, it’s not true over shorter periods.

    And so the more important decision for any investor is to ask the question, “What is the value that I am buying into if I invest locally or invest offshore?”

    Clearly a mistake that many investors made in the past was to assume an ongoing depreciation in the rand versus a global currency and be willing to export rands, without considering the value (or lack thereof) of the asset class being acquired.

    We highlighted this chart last week, but let’s consider now in light of a South African investor. In 2000 and 2001 investors were falling over each other in a rush to take money out of the country as the rand weakened.

    But what they should have been focusing on was not the apparent direction of the currency, but the value of the foreign assets that they were buying into.

    A relatively simple look at the prospective real returns that US blue chips were offering at the time on a 7 year forecast, would have indicated that they were expensive. GMO forecast that they were so expensive that US blue chip equities were likely to deliver a negative 2% per annum over the next 7 years. At the same time they predicted that emerging markets were potentially offering over 8% real return per annum.

    GMO 7 year prospective returns across selected asset classes


    Source: GMO

    The opposite is now ringing true – the same research conducted by well respected firm, GMO, indicates that US large cap shares have a higher prospective returns than emerging market shares.

    But over the last 12 months rand investors have far outperformed global investors and so there is a natural reluctance to buy into deeper value globally. This in itself is a strong confirmatory indication.

    Whether you are allocating funds only locally or only offshore or looking at a combination of markets and assets, the overriding consideration is the price paid relative to potential and expected return.

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-09, 16:35:00, by ian Email , Leave a comment

    Evidence of global economic recovery thin, markets fall

    Local markets

    Weighed down by losses in the gold mining sector, the JSE All Share had dipped 0.91% by midday, though oil and gas managed to cling on to flat trade while other sectors declined, taking direction from international markets.

    A US dollar cost local traders R7.57, as the rand strengthened slightly this morning after losing ground yesterday as risk appetite dimmed.

    Brent crude cost $75.64 a barrel, up 0.85%, boosted by a large fall in US oil inventories, as well as Saudi Arabia's assurance regarding the health of Gulf economies.

    International markets

    The Dow Jones fell 1% yesterday, while the Nasdaq slid 0.76% after a pessimistic outlook from 3M and poor sales for McDonald’s Corp. The stronger US dollar did not help matters, as investors sold out in favour of safe-haven assets to avail themselves of Dubai-debt risk.

    In Japan, the Nikkei average fell 1.34% this morning, as the yen lifted in response to Dubai and Greece’s debt problems, which weighed on exporters. A revised GDP figure indicated that Japan's recovery was slowing down.

    China’s Shangahi index gave up 1.73%, and Hong Kong’s Hang Seng lost 1.44% as investor confidence dwindled after more news of share issues and fundraising by banks.

    Britain’s FTSE 100 had slipped 0.45% by noon, as investors continued to be wary after yesterday’s sell-off, spurred by more Dubai debt worries and awaiting the UK pre-budget report.

    Share price news

    In the forestry sector, York Timber Holdings Limited (share code: YRK) rose to R3.10 a share at noon, a gain of 12.73% after 11 deals exchanged 23 937 shares.
    AMECOR (share code: AER) in the electronic equipment sector gained 8.33% to sell at R1.30 a share, after two deals traded 17 100 shares.

    Erbacon Investment Holdings Limited (share code: ERB ) lost 13.16% as shares fell to R1.65 after 5 000 shares were sold in one deal. After 308 deals totaling over 4.5 million shares, Merafe Resources Limited (share code: MRF) slid to R1.14 a share at midday, a loss of 7.32%.

    Permalink2009-12-09, 12:35:39, by Natalie Email , Leave a comment

    Government finances

    Unless governments can drastically curtail their expenditures, we are going to increasingly see government fiscal deficits becoming problematic. Over the last few days, we started to see elements of nervousness creep in to global markets because of concerns about some government finances.

    Bloomberg reported that Moody’s Investors Service said that deteriorating public finances in the US and UK may “test the Aaa boundaries.”

    Fitch downgraded Greece’s credit rating grade to BBB+. Greek shares and bonds fell on concerns that the government will struggle to meet obligations. Greece is now the lowest ranking country in the euro region, and is running a deficit measured against GDP of 12,7%.

    Tomorrow the UK Chancellor presents his pre budget. The UK’s public finances have been one of the worst in the developed world over the last 18 months, due in a large part to their massive bank bailouts.

    The fiscal deficit to GDP is running at around 12% to 13% of GDP, which is worse than the US and Japan and much worse than most European countries.

    Graph of fiscal deficits relative to GDP


    source: Ecowin

    At the same time that government has been issuing new debt, the Bank of England has been buying and the estimate is that the purchase by the BoE will be close to GBP200 billion – i.e. close to the total issuance. This is nothing less than printing new money and putting it into circulation.

    A Standard bank report notes this, “With the fiscal position so strained, the issue of a debt downgrade is never too far away.” But they believe that the UK has a “stay of execution” until after next year’s election.

    In terms of the rating for the UK, Standard and Poors shifted from neutral to negative in May, while Fitch and Moody’s still have a stable outlook. An outlook downgrade for the UK will naturally be negative for sterling and bonds.

    Governments that have been running efficient fiscal accounts are likely to be beneficiaries of downgrades. Locally the yield on the R157 was steady at 8,38%

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-08, 17:28:59, by ian Email , Leave a comment

    Commodities buoy markets again as the dollar loses momentum

    Local Markets

    Trade was fairly thin during the morning session today. An improvement in commodity prices saw commodity stocks gain some upward momentum. Each session seems to be dominated by the movement in resources nowadays but focus is now turned to US futures to get direction. By midday, the All Share had lost 0.17 %.

    The rand improved in early trade this morning, strengthened by a recovery in gold prices as the dollar dipped once again. The dollar fell again after Ben Bernanke managed to cool speculation of an early rise in interest rates. The resistance to losses on Wall St yesterday also removed impetus for the dollar movement. By midday, the dollar traded for R7.41.

    The gold price gained some ground this morning after a hitting a 2-week low the previous session. The dollar weakened after the US Central Bank cautioned that the economic recovery remains fragile. The dollar recovery on the unwinding of dollar shorts against the euro is set to boost the gold price. By noon, the gold price hovered at $1163.40 per troy ounce.

    International Markets

    Stocks in the US closed relatively flat on Tuesday after investors paused to assess prospects for a genuine US economic recovery and interest rate hikes following Ben Bernanke’s recent comments.

    Labour reports on Friday suggested that employers cut fewer jobs in November than expected but there are fears that the Central bank will raise interest rates prematurely in an ill-conceived effort to pull the economy out of recession. Investors have already begun to price in the higher rates and this is weighing down equities. By close, the Dow Jones was 0.01% up whilst the Nasdaq was 0.22% down.

    The benchmark Nikkei average slipped overnight to end a 6-session winning streak. Investors finally relented and a bout of profit-taking marred the session, also affected by the strengthened yen which dampened exporters’ gains. The equity market was barely impacted by the government announcement of a slightly increased stimulus package. By close this morning, Japan’s benchmark stock index was 0.27% down.

    Stocks in Hong Kong fell overnight as investors continued to worry about HSBC’s exposure to Dubai World. Other Chinese banks also fell after reports emerged that Beijing would not assist in boosting their capital. The benchmark Hang Seng finished 1.18% lower.

    Equities in London were weaker again this morning as signs of depressed spending on High St having a negative impact on retail stocks. At the peak of the festive shopping season, retailers are nervous about meeting sales forecasts as Tesco and other big market players lost ground this morning after reporting missed sales growth targets. Miners however continued to buoy the market as commodity prices improve daily. By midday, the FTSE 100 was 0.23% up.

    Share Price News

    Among the morning’s biggest winners, Sentula Mining Ltd of the Metals and Minerals sector fared well. It gained 2.53% to sell for R2.43 per share by midday. Also gaining voluminously was Esorfranki Ltd of the Other Construction sector. It gained 2.49% to sell for R3.70 by noon.

    Mondi Ltd of the Paper Sector lost significant ground this morning as investors shifted towards miners and resource-related stocks. It shed 7.25% in value to trade for R42.20 per share at noon. Also performing poorly was Nampak Ltd of the Containers and Packaging sector. At midday, it had lost 2.73% to sell for R15.32 per share.

    Permalink2009-12-08, 12:49:21, by Grant Leyland Email , Leave a comment

    Commodities buoy markets again as the dollar loses momentum

    Local Markets

    Trade was fairly thin during the morning session today. An improvement in commodity prices saw commodity stocks gain some upward momentum. Each session seems to be dominated by the movement in resources nowadays but focus is now turned to US futures to get direction. By midday, the All Share had lost 0.17 %.

    The rand improved in early trade this morning, strengthened by a recovery in gold prices as the dollar dipped once again. The dollar fell again after Ben Bernanke managed to cool speculation of an early rise in interest rates. The resistance to losses on Wall St yesterday also removed impetus for the dollar movement. By midday, the dollar traded for R7.41.

    The gold price gained some ground this morning after a hitting a 2-week low the previous session. The dollar weakened after the US Central Bank cautioned that the economic recovery remains fragile. The dollar recovery on the unwinding of dollar shorts against the euro is set to boost the gold price. By noon, the gold price hovered at $1163.40 per troy ounce.

    International Markets

    Stocks in the US closed relatively flat on Tuesday after investors paused to assess prospects for a genuine US economic recovery and interest rate hikes following Ben Bernanke’s recent comments.

    Labour reports on Friday suggested that employers cut fewer jobs in November than expected but there are fears that the Central bank will raise interest rates prematurely in an ill-conceived effort to pull the economy out of recession. Investors have already begun to price in the higher rates and this is weighing down equities. By close, the Dow Jones was 0.01% up whilst the Nasdaq was 0.22% down.

    The benchmark Nikkei average slipped overnight to end a 6-session winning streak. Investors finally relented and a bout of profit-taking marred the session, also affected by the strengthened yen which dampened exporters’ gains. The equity market was barely impacted by the government announcement of a slightly increased stimulus package. By close this morning, Japan’s benchmark stock index was 0.27% down.

    Stocks in Hong Kong fell overnight as investors continued to worry about HSBC’s exposure to Dubai World. Other Chinese banks also fell after reports emerged that Beijing would not assist in boosting their capital. The benchmark Hang Seng finished 1.18% lower.

    Equities in London were weaker again this morning as signs of depressed spending on High St having a negative impact on retail stocks. At the peak of the festive shopping season, retailers are nervous about meeting sales forecasts as Tesco and other big market players lost ground this morning after reporting missed sales growth targets. Miners however continued to buoy the market as commodity prices improve daily. By midday, the FTSE 100 was 0.23% up.

    Share Price News

    Among the morning’s biggest winners, Sentula Mining Ltd of the Metals and Minerals sector fared well. It gained 2.53% to sell for R2.43 per share by midday. Also gaining voluminously was Esorfranki Ltd of the Other Construction sector. It gained 2.49% to sell for R3.70 by noon.

    Mondi Ltd of the Paper Sector lost significant ground this morning as investors shifted towards miners and resource-related stocks. It shed 7.25% in value to trade for R42.20 per share at noon. Also performing poorly was Nampak Ltd of the Containers and Packaging sector. At midday, it had lost 2.73% to sell for R15.32 per share.

    Permalink2009-12-08, 12:46:56, by Natalie Email , Leave a comment

    Relative valuations

    Brian Kantor from Investec in a report last week, noted the when comparing the interest rate to the dividend yield and earnings yield of shares listed on the JSE, the conclusion is that it is not time to be scared out of equities.

    When looking at company earnings, the JSE data reflects that these have declined by around 30% in one year, which is more than at any time since the early 1960’s.The best one year peak was in March 1981 when year on year earnings were up 61% and dividends were up 81%.

    At the same time that earnings have declined, prices on the JSE have moved up sharply from March this year, so that the price to earnings ratio is now at 15,7 times. The long run average is much lower at around 11,75 times and since 1990 it’s been running at 13,9 times. But with earnings in a trough and where investors expect some reversion to a mean, there is some justification for the higher multiple.

    A further interesting relationship to look at is between the dividend yield and longer duration bond yields. It’s at these rates that future dividends are discounted and so an environment of high interest rates means that future dividends are worth less today and vice versa in an environment of lower interest rates, future dividends are worth more in present value terms.

    The difference between interest rates on long bonds and the current dividend gap gives an indication of how the market perceives earnings and dividends to grow. The wider the gap, the more demanding the current valuations and expectations and the more dividends need to grow for an investor to receive a similar yield to that provided by bonds.

    On the current criteria, current dividends would have to sustain a growth of 6% per annum to catch up to interest rates. When graphed back to 1970 this does not appear to be too demanding. When further adjusted for expected inflation at 6%, the current dividend yield gap of around 6% is equivalent to zero growth in real terms, making the valuations even less demanding.

    This argument effectively speaks to the alternatives that investors have. i.e. the lower interest rates go – especially when adjusted for inflation, the more attractive yields on listed shares become.

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-07, 20:59:29, by ian Email , Leave a comment

    Relative valuations

    Brian Kantor from Investec in a report last week, noted the when comparing the interest rate to the dividend yield and earnings yield of shares listed on the JSE, the conclusion is that it is not time to be scared out of equities.

    When looking at company earnings, the JSE data reflects that these have declined by around 30% in one year, which is more than at any time since the early 1960’s.The best one year peak was in March 1981 when year on year earnings were up 61% and dividends were up 81%.

    At the same time that earnings have declined, prices on the JSE have moved up sharply from March this year, so that the price to earnings ratio is now at 15,7 times. The long run average is much lower at around 11,75 times and since 1990 it’s been running at 13,9 times. But with earnings in a trough and where investors expect some reversion to a mean, there is some justification for the higher multiple.

    A further interesting relationship to look at is between the dividend yield and longer duration bond yields. It’s at these rates that future dividends are discounted and so an environment of high interest rates means that future dividends are worth less today and vice versa in an environment of lower interest rates, future dividends are worth more in present value terms.

    The difference between interest rates on long bonds and the current dividend gap gives an indication of how the market perceives earnings and dividends to grow. The wider the gap, the more demanding the current valuations and expectations and the more dividends need to grow for an investor to receive a similar yield to that provided by bonds.

    On the current criteria, current dividends would have to sustain a growth of 6% per annum to catch up to interest rates. When graphed back to 1970 this does not appear to be too demanding. When further adjusted for expected inflation at 6%, the current dividend yield gap of around 6% is equivalent to zero growth in real terms, making the valuations even less demanding.

    This argument effectively speaks to the alternatives that investors have. i.e. the lower interest rates go – especially when adjusted for inflation, the more attractive yields on listed shares become.

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-07, 18:10:00, by ian Email , Leave a comment

    Weaker commodity prices weigh on JSE

    Local markets

    At 12:00 on Monday, the JSE All Share had fallen 1.69%, led by a dive in gold mining and basic materials stocks. The sectors were weighed on by declining commodity prices after the US dollar strengthened.

    The US dollar cost R7.45 at midday, with the rand weakening as it tracked the direction of the euro-dollar exchange.

    Oil fell 0.1% to cost $76.92 a barrel, retreating again after a rebound earlier today which came after positive employment news from the US.

    International markets

    On Friday, the Dow Jones inched up 0.22% and the Nasdaq lifted 0.98% as US markets were buoyed by better-than-expected job statistics. Gains in industrial, technology, consumer and financial stocks led the upward moves.

    In Japan this morning, the Nikkei average closed 1.45% higher after exporters benefited from a strengthening US dollar, and positive US jobs data encouraged economic recovery hopes.

    In Hong Kong, the Hang Seng fell 0.77% after gold prices dropped, bringing about losses in commodity shares.

    In the UK, the FTSE 100 had lost 1% by noon, after bank stocks fell on windfall tax anxiety, and lower commodity prices pressured energy and mining stocks.

    Share price news

    In the mining sector, Sephaku Holdings Limited (share code: SEP) rose 7.14% to sell at R3.75 a share at midday, after just one deal of 2500 shares. Investment company Pallinghurst (share code: PGL) gained 3.26% after 15 deals exchanged 27 514 shares, lifting the share price to R4.75.

    KAP International Holdings (share code: KAP) in the diversified industrials sector lost 12.82% as shares fell to R1.70. Traders exchanged 17 000 shares in 11 deals, after an announcement this morning of the sale of a director’s shares in the company.
    Coronation Fund Managers Limited (share code: CML) slid to R8.25 a share, a loss of 8.23% after six deals traded 41 800 shares.

    Permalink2009-12-07, 12:17:40, by Natalie Email , Leave a comment

    Active manager outperformance

    An ongoing question that many investors pose is one which asks whether fund managers can consistently outperform an index. This question has been made more relevant in recent years, where investors have the ability to invest into an index tracker, which is designed to track a predefined index as closely as possible.

    The success of an index tracker is defined by the low deviation from the return of the relevant index, while the success of an active fund manager is defined by the outperformance versus the same benchmark.

    When it comes to active managers who are measured against a benchmark, but whose target is to outperform that same benchmark over time, it’s only natural and valid to question the ability of a manager where performance wanes relative to an index such as the JSE All Share index.

    If you are measuring the performance of your own portfolio or the performance of a fund versus the benchmark, you will notice that there will be days, weeks and months when the index outperforms and then vice versa, when the portfolio outperforms an index.

    Now you may be looking back over a 6 month period and question why a specific fund manager has underperformed the index.

    Its is important to question the reasons for both under and out performance but at the same time remember that during a period of underperformance a manager may not be doing anything wrong. For example at a time when the shares that make up an index race ahead to expensive levels, a value biased manager will be correct in avoiding these. The result is an inevitable underperformance against the index.

    A typical value biased asset manager will tend to have a one year performance relative to the JSE All Share index as reflected in the graph below. This performance happens to be for Coronation equity from June 1993.

    Source : Coronation

    At times they underperform and at times they have outperformed the index, but as long as there is more of the latter, investor will be better off.

    The most important aspect that will drive long term performance is to have an investment process that works and one which is followed methodically.

    The volatility in the graph above may appear unappealing, but over this extended period of time, the annual compounded outperformance was 3,5%. This translates an investment of R100 000 into R1,531 400 compared to the JSE over the same period of time, which would have grown to R942 700.

    The day to day and month to month fluctuations are less important than the medium and longer term outperformance.

    Have a fantastic weekend

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-04, 17:56:29, by ian Email , Leave a comment

    JSE down on profit taking

    Local markets

    The JSE had lost 0.59% by noon on Friday, led downwards by the gold mining sector, as investors took profits after commodity prices fell and US markets lost points yesterday.

    The rand was exchanging at R7.38 to the US dollar at 12:00. Trade was wary ahead of US employment statistics which are to be published later today.

    Gold came off record highs, falling 0.48% to sell at $1206.15 an ounce at midday, as investors booked profits after the precious metal’s recent rally.

    International markets

    The Dow Jones slid 0.83% while the Nasdaq lost 0.54% yesterday after it was announced that the US services sector declined last month. Financial stocks were particularly affected after Bank of America’s enormous equity offering raised dilution concerns among investors.

    The Nikkei rose 0.45% this morning to reach its highest weekly gain in more than twelve months, led by stronger exporter stocks.

    The Shanghai index climbed 1.61% while the Hang Seng lost 0.25%, as banks pulled up the Chinese index but weighed on Hong Kong shares, along with property stocks.

    The FTSE 100 had slipped 0.6% as the US employment report made investors cautious, leading to a slide in financial and energy shares.

    Share price news

    IPSA Group (share code: IPS) was the biggest mover upwards at midday on Friday, as the share price rose 11.11% to R2 after 11 deals traded 51 800 shares. Coronation Fund Managers Limited (share code: CML) rose 5.14% to sell at R9, after one deal of 1 800 shares.

    Freeworld Coatings Limited (share code: FWD) fell 5.17% to trade at R8.25 a share, after 16 deals moved 3 373 shares. Non-ferrous metal company Metmar Limited (share code: MML) lost 5% to sell at R3.80 a share at noon, after one deal of 31 shares.

    Permalink2009-12-04, 12:50:41, by Natalie Email , Leave a comment

    Daily Equity Report Thursday 3 December 2009

    2009/12/03 19:39:36
    The JSE closed off 0.42% at 27314 with value traded at R 12.69 billion. Declines led advances 180 to 158 with 104 shares unchanged out of 442 active. Mining closed down 0.49% at 34288, while Industrials were off 0.3% at 25227 and financials ended the day down 0.06% at 18979.

    The best performing sectors of the day were FTSE/JSE SHARIAH ALL up 42.8% at 2928, FTSE/JSE RAFI 40 up 22.3% at 5706 and Development Capital up 7% at 254, while the worst were FTSE/JSE All Africa ex SA 30 with S A Rand values down 44.1% at 54, FTSE/JSE All Africa ex SA 30 with US$ values down 30.6% at 59 and FTSE/JSE All Africa 40 Index with S A Rand values down 22.2% at 68.

    There were 11 new 12 month highs today, including Northam which closed up 3.9% at 4355, Winhold up 2.8% at 147 and Eastplats up 2.1% at 715 while there were 1 new lows of which Rex-true topped the list, down 25% at 750.

    Of the major stocks Anglo lost 1.71% at 32598, Sasol was down 2.2% at 28999, Billiton lost 0.13% at 23570, Implats moved up 1.38% at 18350, Mtn was off 1.71% at 11490.

    Some of the top gainers included Drdgold up 9.62% at 467 , Kgmedia up 7.69% at 1400 , while the major losers were Rex-true down 25% at 750 and Kap down 11.36% at 195

    The Dow was off 0.1% at 10440.52 and the S&P 500 down 0.1% at 1108.50 a few moments ago.

    Gold was off 0.1% at $ 1213.50/oz

    The rand was last trading at R 7.34 to the dollar, R 12.12 to the pound and R 11.06 to the Euro.

    Permalink2009-12-03, 19:41:54, by admin Email , Leave a comment

    Capital Protection

    One of Seed’s core investment beliefs is that of capital protection. It is essential to understand what we mean by capital protection to fully understand why it is important to us in the management of our clients’ investments.

    For Seed capital protection isn’t protecting the nominal value of an investment at all costs, as this is one of the surest ways to erode real wealth over most investment terms. Capital protection is the process whereby we attempt to identify key risks to a portfolio and diversify investments suitably for the individual client’s needs. We realise that there will be times where the capital value of an investment will fall below the price paid, but it is key that capital isn’t permanently wiped out.

    A case of capital destruction was the IT bubble bursting. As a case in point investors who bought Didata shares at over R60 at the turn of the century are still over 85% down from their purchase level (excluding the effects of inflation) despite being up over 165% over the past 5 years!

    When investments grow the growth compounds on the growth retained in the portfolio. As much as this is a powerful force on the upside, so it’s a powerful force on the downside. The larger your capital base the larger your rand return and conversely the smaller your capital base the smaller your rand return for a common percentage return.

    As you can see from the chart below when you lose capital in your portfolio the required return just to get back to your starting point is higher than the percentage you lost. For lower draw downs the difference isn’t too much, which is why it isn’t too detrimental to a portfolio to experience smallish draw downs. But as you can see the curve is exponential with a 33% drawdown requiring a 50% capital appreciation and a 50% drawdown requiring a 100% capital appreciation to get you back to your starting point. Much further than this we enter the territory of permanent capital destruction.

    A robust investment strategy and considered portfolio construction can go a long way to reducing the risk that your entire portfolio will experience permanent capital destruction, while a strategy the chases the best performers and concentrates exposures will increase the risk that the portfolio will experience capital destruction at some point in the future.

    As we come to the end of the year it is perhaps a good time to take a look at your affairs and decide whether you have a robust strategy in place, and whether your portfolio is exposed to capital destruction.

    Take care,

    Mike Browne
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-03, 19:16:10, by ian Email , Leave a comment

    JSE flat; lack of economic data leaves global markets mixed

    Local markets

    At noon on Thursday, the JSE All Share had edged up 0.19%, led upwards by gains in the oil and gas sector.

    The rand had strengthened to sell at R7.28 to the US dollar at 12:00, but remained range bound as it followed the movements of the euro.

    The oil price rose 1.51% to sell at $78.16 a barrel, hovering around the $78 mark as US crude oil inventory levels rose, indicating weak demand.

    International markets

    Yesterday, a 2% fall in crude oil futures took its toll on energy stocks on US markets, leading to a loss in the Dow Jones of 0.18%. Meanwhile, the Nasdaq gained 0.42% and the S&P 500 closed flat, up 0.03%.

    The Nikkei soared 3.84% this morning, reaching a 5-week closing high after gains in exporters came on the back of a weaker yen, and metal stocks rose on record gold prices.

    The Hang Seng index in Hong Kong rose 1.19% after banking and property shares gained on hopes for economic growth.

    In London, the FTSE 100 had lifted 0.71% by midday as mining and oil shares were boosted by higher commodity prices, and bank stocks improved on news that Bank of America is set to repay US government bailout funds.

    Share price news

    Shares in DRD Gold Limited (share code: DRD) rose to R4.69 at 12:00, a gain of 10.09% after 166 deals exchanged 671 141 shares. Sentula Mining Limited (share code: SNU) climbed 9.62% to sell at R2.28 at 12:00, after more than 76 deals.

    In the oil sector, Oando PLC (share code: OAO) fell to R5, a loss of 16.67% after 303 978 shares were traded in 6 deals. Rare Holdings Limited (share code: RAR) lost 6% to trade at R1.41 at noon, after one deal of 457 shares.

    Permalink2009-12-03, 12:37:46, by Natalie Email , Leave a comment

    Is there still value in global markets?

    The March to November rebound in prices is resulting in many nervous investors – afraid that this rally will not last. Their concerns are valid when considering that we have come through a very long period of time when developed market assets in particular did not provide investors with any real return. See chart below

    Sarasin noted that at March 2009 even if one had held UK equities since May 1996 – a period of 13 years – one would have lost money on a total return basis after the effects of inflation had been taken into account.

    We know that share prices over the longer term will be driven by dividends and profits, which will be generated by economic growth, but over shorter and medium time periods, sentiment causes prices to move significantly from fair value.

    The obvious conclusion from this analysis would naturally be, “does it make sense to subject capital to risk, when I can achieve a better return in cash or bonds?”

    The answer lies in assessing both the long run returns of the various asset classes and their valuations at the time of investing.

    Barclays Capital calculated the average annual total return for UK investors from 1900 to 2006 as follows:

    • Inflation 3,9%
    • Cash 5,0%
    • Bonds 5,2%
    • Equities 9,6%

    This spread of return is similar across most countries over extended periods of time.

    The additional long run advantage of an investment into equities over that of cash or bonds, means that investors should include them in their portfolio. But the risk is that investors can be subjected to 13 years of essentially no growth.

    Because an equity investment is a part ownership in a business, investors receive distributions of cash from the business over the years. All things being equal the profit held back by the company is used for reinvestment and thus enhancing the earnings power and future dividend paying ability.

    The value of an equity investment is really the present value of the future dividend payments. For the most part where companies are able to pass on inflationary pressures to their customers, they will be able to grow their profitability in real terms – i.e. protecting the dividend from inflation.

    This is not the case with most government bonds – which is in essence a loan at a predetermined and fixed interest rate and which does not protect against future inflation.

    In the aggregate we know that future dividend streams will be reasonably steady, but where investors become too exuberant they tend to bid up the current price for all future dividends. The result is while the company may end up producing the expected dividend flows, the higher starting price paid, results in a far lower total return.

    This is exactly what happened into the latter part of the 1990’s across developed market equities. Investors were prepared to pay up far too much for the future dividend streams, resulting in subsequent below average returns.

    It is not that the companies themselves or equity investing in particular was to were risky - merely that the starting values were too rich.

    Back in June 2000, US based asset manager, GMO had a prospective 7 year return for US equities at an annual negative 2%. At that time emerging equities appeared to be better value.

    GMO 7 year prospective returns across selected asset classes


    Source: GMO

    Their prediction of real returns across asset classes has been remarkably accurate. In June 2000 when equities looked very expensive, US bonds also appeared better value.

    This picture reversed completely at the end of February 2009 where large cap US shares were priced very attractively both compared to their long run average and indeed to other asset classes. Conversely developed market bonds do not appear to be attractive.

    While the 9 month market re-rating in 2009 has taken some shine off these prospective future returns, the valuations are still reasonably attractive. At the end of October, taking a forward 7 year view, investors should still be rewarded for an investment in global equities versus developed market bonds.

    Both long run returns and current valuations point to the fact that investors should continue to hold developed market global equities in their portfolio, which are in fact reflecting better value than emerging market equities.

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-02, 17:01:25, by ian Email , Leave a comment

    Gold price reaches record high, boosts global commodity stocks

    Local markets

    Thanks to an all-time high in the gold price, gains in commodity stocks led the JSE All Share up 0.42% by midday on Wednesday.

    The rand cost traders R7.30 to the US dollar at noon, boosted by the higher gold price and stronger international equities.

    Oil cost $78.63 a barrel, losing 1.71% after rising US inventories dampened hopes for a solid economic recovery.

    International markets

    On US markets yesterday, the Dow Jones climbed 1.23% to reach a 14-month closing high, while the Nasdaq lifted 1.46%. A weaker US dollar buoyed commodity shares, and news of positive economic data and Dubai’s debt restructuring plans improved sentiment.

    The Japanese Nikkei index rose 0.38% this morning to reach its highest level in two weeks, led upwards by metal stocks. The market was supported by a weaker yen and short covering by investors.

    China’s Shanghai index lifted 1.06% while Hong Kong’s Hang Seng inched up 0.8% as investors sought bargains after positive housing sales results from the US inspired confidence in economic recovery.

    The FTSE 100 had slipped 0.07% by midday as losses in banks overcame gains in mining and telecommunications stocks.

    Share price news

    Mining company Sephaku Holdings Limited (share code: SEP) gained 14.29% as shares rose to R4 at 12:00, after one deal of 1000 shares. Sephaku reported a change to their board of directors this morning. Oando PLC (share code: OAO) in the oil sector rose to R6 a share, an increase of 12.78% after two deals of 1 000 shares in total.

    Barnard Jacobs Mellet Holdings Limited (share code: BJM) in the investment bank sector fell to R3.19 a share at noon, a loss of 15.16% after 12 deals exchanged 118 700 shares. Ellies Holdings Limited (share code: ELI) lost 5.71% after one deal of 500 shares, sending the price down to R1.65 a share.

    Permalink2009-12-02, 12:33:52, by Natalie Email , Leave a comment

    Daily Equity Report Tuesday 01 December 2009

    The JSE closed up 1.42% at 27278 with value traded at R 10.62 billion. Advances led declines 237 to 117 with 71 shares unchanged out of 425 active. Mining closed up 2.19% at 33883, while Industrials were up 0.99% at 25395 and financials ended the day up 0.63% at 18944.

    The best performing sectors of the day were FTSE/JSE SHARIAH ALL up 43.2% at 2934, FTSE/JSE RAFI 40 up 22% at 5691 and COAL MINING up 6.5% at 22797, while the worst were FTSE/JSE All Africa ex SA 30 with S A Rand values down 45.2% at 53, FTSE/JSE All Africa ex SA 30 with US$ values down 31.8% at 58 and FTSE/JSE All Africa 40 Index with S A Rand values down 23.2% at 67.

    There were 7 new 12 month highs today, including Netcare which closed up 3.3% at 1250, Aspen up 2.9% at 7000 and Advtech up 1.9% at 525.

    Of the major stocks Anglo moved up 2.23% at 32612, Implats ended up 1.89% at 17499, Mtn was up 1.41% at 12048, Stanbank ended up 1.25% at 9700, Naspersn ended up 0.97% at 27999.

    Biggest gainers of the day where Telemastr up 19.88% at 199 , Itltile up 14.71% at 390 , while the major losers were Hwange off 17.65% at 350 and Sephaku down 13.58% at 350

    The Dow was up 1.5% at 10495.91 and the S&P 500 up 1.5% at 1111.71 a few moments ago.

    Gold was up 1.6% at $ 1198.20/oz

    The rand was last trading at R 7.28 to the dollar, R 12.10 to the pound and R 11.02 to the Euro.

    Permalink2009-12-01, 21:02:56, by admin Email , Leave a comment

    Currency volatility

    Markets around the world gained ground on the first day in December. Asian markets closed up strongly, with the Japanese Nikkei up 2,2% on news that the Bank of Japan unveiled a $115 billion plan to inject more liquidity into the economy.

    The Japanese yen has been rising and this is hampering Japanese exports. The yen is trading at 14 year highs against the dollar and is strong against others like the Chinese renminbi. A Standard Bank forex report expects that without Japan intervention, “we see dollar/yen sailing through the 1995 lows of around 80 against the dollar.”

    Locally exporters are also concerned about the strong rand, which gained 1% today to R7,33 to the dollar, R12,13/pound and R11,06/euro

    The JSE produces monthly trading statistics. These continue to reflect that foreigners have been net buyers of SA listed equities. For the year to date purchases have been in the order of R489 billion and sales R415 billion, giving a net inflow of R74 billion.

    This compares to 2008 where a net R53 billion was sold on the JSE by foreigners.

    Looking at the bond market, the net purchases by foreigners have been R21,7 billion, compared to net sales of R14,3 billion.

    This is R95,7 billion into the country in calendar 2009 compared to an outflow of R67,3 billion over the same period of 2008.

    For the year to 27 November the number of trades has increased to 19,1 million up 19,7% against the same period in 2008. However the value of these trades is down 16% to R2,5 trillion.

    Compared to the end of November 2008, the total market cap of shares listed on the JSE has moved up 31% from R4,4 trillion to R5,8 trillion.

    The Australian central bank raised their interest rate by a further 0,25% to 3,75%. This is the first time that the Australian Reserve Bank has hiked rates three times in a row. It meets again on February 2nd, and may even hike one more time.

    This bank is leading the rest of the world in pushing interest rates back up. Others are unlikely to follow too quickly.

    Gold rose to a new high in dollar terms to close to $1200/oz.

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144 966

    Permalink2009-12-01, 17:15:21, by ian Email , Leave a comment

    Gains in gold miners boost JSE

    Local markets

    The JSE All Share had risen 1.09% by noon on Tuesday, led upwards by gains in the gold mining sector. Stronger international markets supported the local bourse.

    The rand was trading at R7.33 to the US dollar, strengthening slightly as investor appetite for risk continued to increase.

    Gold was selling at $1194.95 an ounce at 12:00, rising 1.35% as it continued to find favour as a safe-haven asset, though slightly off last week’s record highs.

    International markets

    The Dow Jones finished 0.34% up yesterday, while the Nasdaq edged up 0.29% as investors continued to hope that the Dubai debt problem would have minimum impact.

    The Shanghai index climbed 1.25% this morning, as worries that Chinese banks would need fundraising began to dissipate, and investors consolidated. Carmakers and airline stocks were amongst the gainers.

    The Hang Seng rose 1.34%, as Hong Kong stocks continued yesterday’s rally with banking stocks leading the upward trend.

    The FTSE 100 had climbed 1.73% by midday as investors anxiety over the Dubai debt situation began to ease after yesterday’s dramatic falls.

    Share price news

    Keaton Energy Holdings Limited (share code: KEH) in the coal sector gained 11.11% to R6 at 12:00, after one deal of 500 shares. 1Time Holdings Limited (share code: 1TM) rose to R1.10 a share, an increase in share price of 3.77% after more than ten deals totaling 59 166 shares.

    Nu-world Holdings Limited (share code: NWL) in the household appliances sector fell to R18, a loss of 9.55% after one deal of 1 000 shares. New Europe Property Investments PLC (share code: NEP) slid to R27.50, losing 8.03% after three deals exchanged 7 855 shares.

    Permalink2009-12-01, 12:13:35, by Natalie Email , Leave a comment