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

Top Rated

    A 30 year track record comes to an end

    Despite the fact that the MSCI World index in USD terms is up around 5% for the year, there are many very experienced global fund managers that have had difficulty in generating positive returns. Included here are some global hedge fund managers, who until now have had excellent long term track records.

    One such fund manager is Stanley Druckenmiller, who started his fund, Duquesne Capital Management in 1980 and has generated average returns in the region of 30% per annum since 1986. A couple of months ago the fund was down around 5%, but by the end of October was trading flat for the year. Since inception the fund never had a losing year.

    A contributing factor to the fund closing was the large size of the fund, where it becomes more and more difficult to generate large positive excess returns. Just prior to closing down and returning funds to investors, the fund was around $12 billion.

    For about 12 of these years that he managed his own fund, he overlapped by also managing George Soros’s Quantum fund from 1988 to 2000 as that funds investment strategist.

    It was during his tenure that the Quantum Fund made a $1 billion profit on the devaluation of the British pound in 1992. The fund put a large trade on the likelihood that the Bank of England would be forced to devalue the pound, on the basis that the Bank did not have sufficient reserves to prop up its currency and it could not afford to raise rates. The pound was forced out of the Exchange Rate Mechanism (ERM), the precursor to the single European currency, resulting in a massive windfall for the Soros fund.

    While this 30 year old fund management business has now closed, former colleagues announced this month that they will be starting a new fund next year - Point State Capital with start-up fund of $5 billion, including $1 billion from Druckenmiller.

    The performance from Druckenmiller compares very well to the quoted returns generated by Warren Buffett with his Berkshire Hathaway company, which reported a compounded change in book value from 1965 of 20,3%, also with many of the higher returns generated in the former years, when the investment company was far smaller than its current market value of $197 billion.

    An investor looking to place funds with an investment manager will always want to see some track record. There however is often a degree of trade off between good performance into the future and a long historical track record. Two reasons for this could include superior initial performance attracting more capital, making it more difficult to replicate the superior performance and changes in the motivation of the founding fund managers once a degree of material success is achieved.

    Investors looking to select a fund manager will often want to have some track record, but still have the advantage of a relatively small size on their side.

    Have a look at www.seedinvestments.co.za

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za
    021 9144966

    Permalink2010-11-29, 16:54:12, by ian Email , Leave a comment

    Conflict in Asia, euro zone debt worries see markets slide

    Local markets

    Tuesday at noon saw the JSE All Share down 0.79%, tracking international equities and as losses in resource shares weighed on the local bourse.

    The rand was trading at R7.03 to the US dollar at midday, weakening further as investors’ risk appetite declined on debt worries in Europe.

    Gold cost $ 1 364.09 an ounce, edging down 0.18% though still sought out as a safe haven in light of renewed concern over Ireland's political situation.

    International markets

    On US markets, closes were mixed as the Dow Jones lost 0.22% yesterday while the Nasdaq gained 0.37%. Losses in bank shares pressured Wall Street, but tech stocks were given a boost after SanDisk Corporation and Amkor Technology Incorporated were upgraded.

    The Nikkei was closed today for a public holiday in Japan.

    Asian markets fell this morning, after news of artillery fire between North and South Korea made investors nervous. China’s Shanghai index fell 1.94% while Hong Kong’s Hang Seng tumbled 2.67%.

    Britain’s FTSE 100 had slipped 0.58% by noon Johannesburg time, as losses in banks weighed on the index after renewed concern about the eurozone debt situation.

    Share price news

    Wesizwe Platinum Limited (share code: WEZ) had risen 2.58% to sell at R1.99 a share at midday, after investors sold 470 775 shares in 27 deals.

    In the packaging sector, Nampak (NPK) gained 2.20% after 137 deals traded 363 584 shares, which saw the share price rise to R20.44.

    Octodec Investments Limited (OCT) in the real estate sector had slipped 3.26% to R17.80 a share, after 92 865 shares were traded in 9 deals by midday.

    After 475 deals, investors had exchanged 288 350 shares in Exxaro Resources Limited (EXX), whose share price fell 2.17% to R130.99.

    Permalink2010-11-23, 12:29:21, by Natalie Email , Leave a comment

    Irish bailout

    Over the weekend, Ireland formally applied for aid from the European Union and the International Monetary Fund (IMF). The bailout details in general terms are that the EU will back Ireland’s filing for loans of roughly EUR90 billion.

    This is the second domino in the Euro zone after Greece and according to reports is probably not the last. The bailout so far for Greece was 110 billion Euros.

    Unlike Greece where the debt was public debt, in the case of Ireland, the sheer size of bank loans, became a threat to stability, as foreign depositors withdrew, causing a run.

    Finance Minister, Lenihan was reported as saying, “Clearly because of the size of their loan books, the huge risks they took, they became a threat not only to the state but to the entire euro region. The banks will be downsized to the real needs of the Irish economy, to Irish consumers and Irish businesses. That has to be the primary focus of Irish banks.”

    The 2 biggest banks will need at least 5 billion Euros immediately.

    EU/IMF will likely seek strict conditions on its loan including tax increase and spending cuts.

    There may be a possible increase in the VAT rate, which is already at 21%.

    The EU could also put pressure on Ireland to increase its corporate tax rate from a low level of 12,5%.

    The bailout may assist the euro in the shorter term, but there is still debate as to whether it will work for Ireland itself in the medium term. Looking at the earlier example of Greece, which received a EUR110 billion bailout in May, the idea should be that by now bond risk premiums, which spiked up should be at far lower levels.

    But this chart below shows that risk premium spreads of Greece bonds against German bonds (the Euro benchmark) are still at very much the same level as in May – i.e. +-9% premium, which is a clear indication that investors are pricing in risk, making it extremely difficult for these countries to raise their own debt in order to repay the bailout packages.


    Source: Ecowin, Standard Bank

    The risk premium on Ireland’s 10 year bonds over that of Germany widened to 6,5%, but was down at just over 5%.

    The problems in Euro zone countries like Greece, Ireland, Spain and Portugal, will continue to weigh down on the euro. At the same time the US Federal Reserve is weakening its currency with the $600 billion easing program.

    Both these major developments favour both developed and emerging currencies outside of the dollar and the euro, but this does not necessarily hold true for global companies domiciled in the US and Eurozone.

    Regards

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

    Permalink2010-11-22, 17:32:54, by ian Email , Leave a comment

    Global markets up after Ireland applies for bailout

    Local markets

    At midday on Monday, gains in resource shares led the JSE All Share up by 0.59%, after markets responded positively to Ireland’s request for bailout money, and the US dollar weakened.

    The rand was trading at R6.97 to the US dollar as currency markets took into account news of Ireland’s bailout application.

    Brent crude oil had risen 2.01% to $84.67 a barrel at noon, as the dollar weakened after Ireland’s bailout news.

    International markets

    On US markets on Friday, the Dow Jones closed 0.20% higher and the Nasdaq gained 0.15% after solid results from Marvell Technologies buoyed tech shares.

    In Japan, the Nikkei average climbed 0.93% to reach its highest close in five months this morning, as investor anxiety over the yen's strength faded, encouraging foreign buying of Japanese shares.

    China's Shanghai index fell 0.15% after losses in banking shares that came on monetary tightening concerns outweighed gains in sectors such as IT.

    Britain’s FTSE 100 was 0.31% higher at midday, thanks to gains in bank and commodity shares after news of Ireland’s bailout deal.

    Share price news

    Erbacon Investment Holdings Limited (share code: ERB) rose to R1.55 a share, a gain of 24% after 185 253 shares were traded in 6 deals.

    After 546 deals exchanged 780 573 shares, Telkom SA Limited (TKG) rose 2.73% to sell at R36.89 a share at midday.

    In the computer services sector, Paracon Holdings Limited (PCN) fell 2.29% to R1.71 a share, after investors sold 2 258 900 shares in 5 deals.

    African Bank Investments Limited (ABL) fell to R36.52 a share at noon, as investors exchanged 591 137 shares in 507 deals, resulting in a share price loss of 1.93%.

    Permalink2010-11-22, 12:26:54, by Natalie Email , Leave a comment

    Global markets up after Ireland applies for bailout

    Local markets

    At midday on Monday, gains in resource shares led the JSE All Share up by 0.59%, after markets responded positively to Ireland’s request for bailout money, and the US dollar weakened.

    The rand was trading at R6.97 to the US dollar as currency markets took into account news of Ireland’s bailout application.

    Brent crude oil had risen 2.01% to $84.67 a barrel at noon, as the dollar weakened after Ireland’s bailout news.

    International markets

    On US markets on Friday, the Dow Jones closed 0.20% higher and the Nasdaq gained 0.15% after solid results from Marvell Technologies buoyed tech shares.

    In Japan, the Nikkei average climbed 0.93% to reach its highest close in five months this morning, as investor anxiety over the yen's strength faded, encouraging foreign buying of Japanese shares.

    China's Shanghai index fell 0.15% after losses in banking shares that came on monetary tightening concerns outweighed gains in sectors such as IT.

    Britain’s FTSE 100 was 0.31% higher at midday, thanks to gains in bank and commodity shares after news of Ireland’s bailout deal.

    Share price news

    Erbacon Investment Holdings Limited (share code: ERB) rose to R1.55 a share, a gain of 24% after 185 253 shares were traded in 6 deals.

    After 546 deals exchanged 780 573 shares, Telkom SA Limited (TKG) rose 2.73% to sell at R36.89 a share at midday.

    In the computer services sector, Paracon Holdings Limited (PCN) fell 2.29% to R1.71 a share, after investors sold 2 258 900 shares in 5 deals.

    African Bank Investments Limited (ABL) fell to R36.52 a share at noon, as investors exchanged 591 137 shares in 507 deals, resulting in a share price loss of 1.93%.

    Permalink2010-11-22, 12:26:41, by Natalie Email , Leave a comment

    Start of most powerful seasonal effect

    Monday 22nd November marks the beginning of the most statistically significant seasonal effect of the year that runs through to 10th January 2011. This period includes the very powerful "Santa Clause Rally" from 14th-23rd December. As you can see from the below picture, apart from December and the "Easter Rally" in April, seasonality is very much a tale of two halves.

    The 1st half of January delivers the strongest seasonal performance whilst the 2nd half of December the 2nd strongest. The four distinct strong seasonal periods from November 23rd to January 10th are depicted below:

    The 2nd half of November and the first half of December both carry a warning though - although they are strong performing periods, their statistical significance (shown by the Sharpe ratios) is on the low side, since the standard deviation of returns is too wide.

    The conclusion is that for the seasonal effect with the highest statistical significance you should focus on the period of 14th December through to 10th January. Every year we play it with an ALSI futures contract just for fun. The current ALSI-Dec10 expires on 15th December so your'e best climbing into the ALSI-Mar11 contract on the 16th December.

    Permalink2010-11-19, 16:24:48, by dwaine Email , Leave a comment

    Losses in basic materials, gold miners lead JSE down

    Local markets

    The JSE All Share had fallen 0.38% by noon on Friday, as losses in basic materials and gold mining shares led the local bourse downwards.

    The rand had edged up to R6.95 to the US dollar, recovering after weakening slightly following yesterday’s rate cut announcement.

    Brent crude oil had risen 1.74% to sell at $85.46 a barrel, as investor confidence improved somewhat after a better outlook for Ireland's debt crisis.

    International markets

    Yesterday US markets were mixed as the Dow Jones closed 1.59% lower, and the Nasdaq gained 1.80%, though reactions to the possible resolution of Ireland's banking crisis were generally positive.

    Japan’s Nikkei index edged up 0.09% this morning, closing above 10,000 points for a second session, after international hedge fund inflows and a weaker yen.

    China's Shanghai index rose 0.81% to continue the recent rally into its third day, led by technology stocks. Gains were limited by worries over possible further monetary tightening.

    Britain's FTSE 100 had slipped 0.57% by noon, retreating after yesterday’s solid gains, as investors await news of resolution of the Irish debt situation.

    Share price news

    First Uranium Corporation (share code: FUM) rose 7.69% to R7.70 a share, after 15 000 shares were traded in 2 deals.

    After 3 deals exchanged 19 200 shares by midday, Business Connexion Group Limited (BCX) climbed 3.91% to sell at R6.65 a share.

    MR Price Group Limited (MPC) fell 1.92% after investors traded 755 799 shares in 1 064 deals, sending the share price down to R63.47.

    In the paper sector, Mondi PLC (MNP) lost 1.61% as shares fell to R55.07 each after 232 517 shares were sold in 205 deals this morning.

    Permalink2010-11-19, 12:26:37, by Natalie Email , Leave a comment

    Interest rates drop by a further 0,5%

    The Reserve Bank dropped their key repo rate today by a further 0,5% at their monetary policy committee (MPC) meeting. This had already been priced in by the markets and so was effectively discounted.

    A number of factors led the local Reserve Bank to reduce rates to this 30 year low. These included:

    • Year on year inflation rate at 3,2% is at the bottom end of the target band of 3% - 6%.

    • Producer price inflation peaked at 9,4% in June 2010 but in September came down to 6,8%.

    • The expectation for inflation for the full year is now at 4,3%, remaining at this level for 2011 and increasing to 4,8% in 2012. This represents a slight downward shift from previous expectations.

    • The market expectation of inflation can be calculated using nominal and inflation linked bonds. According to the Reserve Bank this has declined significantly to around 5%.

    • Recent resumption of quantitative easing in the US, against deflationary fears indicates that monetary policy in the US is likely to remain expansionary for some time. This is having spill over effects on emerging market economies.

    • Domestic GDP expectations remains subdued and below trend growth. The forecast that the Reserve Bank is making is for GDP growth at 2,8% for 2010, 3,3% and 3,6% in 2011 and 2012 respectively.

    • The main risks to inflation outlook emanate from cost push factors, including wage trend and administered prices, with food and petrol also identified as possible longer term risks.

    The result of all these factors according to the MPC was that “The Monetary Policy Committee has taken cognisance of the improved longer term inflation outlook and assesses the risks to this outlook to be fairly evenly balanced. The domestic economic recovery remains fragile, and the adverse global developments make the growth outlook more uncertain. The MPC believes that while monetary policy cannot determine the long term growth path of the economy, it can impact on cyclical deviations of output from potential output. The view of the MPC is that there is room for further stimulus, given the weakness in the supply side of the economy.”

    This allowed the bank to drop interest rates by 0,5% but they have tried to emphasise that this is likely to be it, saying that the scope for further downward movement is seen as limited.

    The rand remained fairly steady, unlike the last rate cut, where it immediately strengthened. It was last trading at R6,99/dollar.

    Seminar in Cape Town

    We would like to invite you to attend our bi-annual seminar, hosted by Seed Investment Consultants and SDK Chartered Accountants (SA). The following topics are included: a current market outlook, a look at tax efficient investment vehicles, and the SARS voluntary disclosure program.

    Date: 25 November 2010
    Time: 5:30pm for 6:00pm
    Venue: Southern Sun Newlands, Main Road, Newlands

    Please email Myrna at Myrna@seedinvestments.co.za for more details.

    Kind regards

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

    Permalink2010-11-18, 17:12:39, by ian Email , Leave a comment

    JSE follows Asian markets upwards at midday

    Local markets

    At noon on Thursday, the JSE All Share had risen 1.08% as industrial stocks led across-the-board gains.

    The rand was trading at R6.97 to the US dollar, firming slightly before news of the central bank's interest rate decision at 1pm this afternoon.

    Gold had risen 1.62% to sell at $1 357.40 at midday, after the dollar rally took a breather after positive inflation news from the US.

    International markets

    US markets closed down yesterday, after the Dow Jones fell 1.59% and the Nasdaq dropped 1.75% as losses in financial stocks weighed in light-volume trade.

    In Japan, the Nikkei average climbed 2.06% this morning, closing above the 10,000 mark for the first time since end of June, as a weaker yen boosted financial shares.

    In Hong Kong, the Hang Seng rose 1.82% following gains in China and as investors bought up bargains in the financial and resource sectors.

    Britain’s FTSE 100 had risen 1.25% by midday SA time, as gains in commodity and bank shares lifted the index.

    Share price news

    Merafe Resources Limited (share code: MRF) had lifted 5.10% to R1.65 a share, after 4 815 267 shares were traded in 168 deals this morning.

    In the brewers sector, SABMiller PLC (SAB) had risen 3.56% to trade at R239.22 a share, after 1 644 950 shares were sold in 1 023 deals. SABMiller released their interim results this morning, reporting a group revenue increase of 7% for the six months ending 30 September 2010.

    Firstrand Limited (FSR) had lost 1.17% by noon, after 1 370 deals traded 10 078 723 shares, sending the share price down to R21.94.

    Falling 1.15% to R41.96 a share was Capital Shopping Centres Group PLC (CSO), after investors exchanged 305 423 shares in 202 deals.

    Permalink2010-11-18, 12:12:47, by Natalie Email , Leave a comment

    A brief summary of global economies

    Before we start today’s report, we’d like to invite you to attend our bi-annual seminar, hosted by Seed Investment Consultants and SDK Chartered Accountants (SA). The following topics are included: a current market outlook, a look at tax efficient investment vehicles, and the SARS voluntary disclosure program.

    Date: 25 November 2010
    Time: 5:30pm for 6:00pm
    Venue: Southern Sun Newlands, Main Road, Newlands

    Please email Myrna at Myrna@seedinvestments.co.za for more details.

    Two years back, the global economy plunged into a very sharp recession following the Lehman Brothers failure in September 2008. Taking a top down view across global economy, I have provided a summary of some highlights across the globe.

    As an aside, I noticed that with the recent auction of Lehman artwork and assorted items was the commemorative plaque from the opening of Lehman's Canary Wharf office in 2004. This was sold for £28 750 – way above the original estimate of £1,000 to £1,500.

    Industrial production across the 30 economies that comprise the Organisation for economic Cooperation and Development (OECD) plunged just short of 20% year on year. In the time following this massive decline, there has been a sharp uptick, which was definitely assisted by massive monetary easing. However in terms of global industrial production across the 30 OECD countries, this is still 10 percent below its prerecession peak.

    The chart above from Wells Fargo Securities reflect the sharp downturn and subsequent uptick in the global economy.

    Some pointers across various economies.

    • Core inflation in the US is below 1% for the first time since the early 1960’s. This is one factor that justifies the monetary easing

    • Most major central banks will maintain an accommodative interest rate policy – i.e. lower rates for longer

    • Some central banks have started hiking interest rates. Included here is Australia and Canada.

    • Unemployment rate in the US is running at 9,6%.

    • The economic recovery has been uneven across the 16 countries that comprise the Euro zone, with the likes of Germany strong, but Ireland continuing to contract.

    • The UK economy remains weak with the VAT increase in January 2011 likely to negatively impact consumer spending in 2011.

    • Australia avoided an official recession. The reserve Bank was one of the first to start hiking interest rates from September 2009.

    • Singapore’s GDP growth came in at 10,3% for the 3rd quarter year on year, dropping from the 19,6% in the second quarter. The GDP for the full year is expected at around 14,5%

    • Chinese GDP rebounded in 2010, but has more recently slowed due to government tightening of loan growth. Quarter 3 year on year GDP came in at 9,6%.

    While global economics are important, we continue to place a higher emphasis on the valuations of various asset classes as a better predictor of future returns. If you are in Cape Town, please join us at a seminar, where we will expand on this in more detail. See details above.

    Kind regards

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

    Permalink2010-11-17, 17:24:47, by ian Email , Leave a comment

    Ireland, China worries see global markets fall

    Local markets

    At midday on Wednesday, the JSE All Share had fallen 0.26% as the stronger dollar took its toll on gold mining and resources shares.

    The rand was exchanging at R7.03 to the US dollar, weakening further as Irish debt concerns saw investors becoming more risk averse.

    Brent crude oil had fallen 0.24% to $83.80 a barrel, after rumours that China will continue to take measures to slow their economy, and Irish debt worries added to negative sentiment.

    International markets

    Yesterday the Dow Jones fell 1.59% and the Nasdaq tumbled 1.75% as investors worried about the possibility of more European bailouts and tighter inflation controls in China.

    In Japan, the Nikkei index closed 0.15% higher this morning, as investors bought bargains in exporter shares as the yen softened against the dollar.

    Hong Kong’s Hang Seng index dived 2.02% on anxiety that China is likely to
    Raise interest rates to try to halt accelerating inflation.

    In Britain, the FTSE 100 had edged down 0.09% as worries over Ireland’s debt problems and China’s possible inflationary measures made investors cautious.

    Share price news

    Merafe Resources Limited (share code: MRF) climbed 2.56% in share price to sell at R1.60 a share at midday, after 140 deals traded 5 756 983 shares.

    Shares in Stefanutti Stocks holdings Limited (SSK) in the construction sector rose to R11.50 a share, enjoying an increase of 2.77% after 46 deals exchanged 1 060 912 shares.

    Syfrets and Commercial Union Property Fund (SYC) in the real estate sector lost 3.43% in share price as shares traded at R22.50 at noon, after 337 592 shares were sold in 35 deals. Syfrets released their unaudited, condensed interim financial statements this morning.

    Gold One International Limited (GDO) fell to R2.48 a share, a loss of 2.75% after investors exchanged 316 199 shares in 32 deals.

    Permalink2010-11-17, 12:31:14, by Natalie Email , Leave a comment

    A stronger US dollar sees global commodity shares weaken

    Local markets

    The JSE had fallen 0.93% by midday on Tuesday, as losses in resources and basic materials weighed on the local bourse.

    The rand was trading at R6.99 to the US dollar, weakening fractionally but remaining range bound before Thursday’s rate announcement.

    Gold cost $1 362.54 an ounce at noon, edging up 0.18% as investors continued to keep an eye on developments in the European debt saga.

    International markets

    Yesterday on US markets, the Dow Jones clung on to a 0.08% gain while the Nasdaq fell 0.17% as investors worries that the Federal Reserve may reduce its efforts to stimulate the economy.

    Japan’s Nikkei index had lost 0.31% by its close this morning, after investors took profits on concern for the future of corporate profits and the effect of stricter credit controls in China.

    China’s Shanghai index fell 3.98% as losses in property developers came on further credit tightening, and coal and metal shares slid on concerns over price controls.

    England’s FTSE 100 had fallen 1.19% by noon SA time, as losses in banks and commodity shares came on anxiety over Ireland’s debt situation.

    Share price news

    Petmin Limited (share code: PET) in the metals and minerals sector rose 3.28% to R3.15 a share at midday, after investors exchanged 330 038 shares in 29 deals.

    In the electrical equipment sector, Delta EMD Limited (DTA) gained 2.50% after 182 044 shares were traded in 10 deals, sending the share price up to R10.25.

    After 258 936 shares were sold in 37 deals, Litha Healthcare Group Limited (LHG) fell to R2.18, a loss of 5.22% by noon.

    Metorex Limited (MTX) had fallen 3.31% to R4.67 a share, after 305 deals traded 3 366 303 shares.

    Permalink2010-11-16, 12:35:01, by Natalie Email , Leave a comment

    Global merger and acquisition activity

    This last weekend saw BHP Billiton call off its unsolicited $39 billion bid for Canadian Potash Corporation, the world’s largest fertilizer maker, after the Canadian’s effectively blocked it.

    This would have been the world’s biggest deal this year, had they manage to clinch it – but it was not to be. This left the company with no option at this stage, but to start to give back some of its excess cash to shareholders, in the form of share buybacks. The price gained 1,28% to R269 today.

    In many respects the unlocking of values in global equities, relies on strong merger and acquisition activity.


    Source: PriceWaterhouseCoopers

    The chart above reflects global Merger and acquisition activity from 1999. Peaking in 2007, just prior to the financial crash, it fell substantially in 2009, but has probably bottomed out.

    Many asset managers make use of prices paid by these “off market” deals to value listed companies. At the same time a completed private equity deals provide both an underpin as well as a pricing barometer for valuing listed equities.

    Some of the points from a recent Price Waterhouse Coopers report were:

    • In emerging economies the M&A markets are strong
    • Outside emerging markets, there is still some caution due to a possible double dip recession.
    • While there has been an improvement in activity levels, completion of deals remains tough.

    A poll today in an online news service announced that 2011 could see a big pick up in M&A activity to a possible $3 trillion. This is still off the peak of 2007’s $4,2 trillion.

    Anecdotal evidence from fund managers also indicates that there is a pick up in M&A activity. This is all positive for global asset prices.

    Kind regards

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

    Permalink2010-11-15, 17:24:47, by ian Email , Leave a comment

    JSE recovers 0.12%, investors continue to eye G20

    Local markets

    Monday at 12.30pm saw the JSE All Share up 0.12%, as steady gains in industrial and resource shares offset losses in gold mining and financial shares.

    The rand exchanged at R6.99 to the US dollar, weakening slightly following movements of the euro.

    Oil was selling at $86.57 a barrel at 12:30, edging up 0.06% as investors mulled over the possibility of Chinese interest rate hikes and worried about European debt problems.

    International markets

    On Friday, the Dow Jones fell 0.80% and the Nasdaq lost 1.46% as investors took profits ahead of the possible raising of interest rates in China.

    The Nikkei average rose 1.06% this morning, as shares were boosted by a weaker yen and better-than-expected growth data.

    The Hang Seng closed 0.81% lower, as investors in the Hong Kong index acted cautiously ahead of potential rate increases on the mainland.

    The FTSE 100 had slipped 0.16% by 12.30pm, after losses in bank and commodity shares and Europe’s debt problems concerned investors.

    Share price news

    In the platinum sector, Wesizwe Platinum Limited (share code: WEZ) sailed up to R1.90 a share at 12.30pm, a gain of 2.70% after 250 975 shares were exchanged in 27 deals.

    Medi-Clininc Corporation Limited (share code: MDC) gained 1.97% after 137 deals exchanged 916 861 shares, sending the price up to R29.00.

    In the auto parts sector, Dorbyl Limited (share code: DLV) fell to R3.20 a share, a loss of 32.35% after 21 sales totaling 140 397 shares.

    Shares in Fountainhead Property Trust (share code: FPT) lost 4.71% this morning as 46 deals sent the share price down to R6.67, a fall of 4.71%.

    Permalink2010-11-15, 13:01:09, by Natalie Email , Leave a comment

    Heady Heights

    We march on toward the levels of the 2008 pre-crash peak. The chart below shows how after a short period of funds outflow(we were expecting a mild correction, but it was more like a pause), funds-flow returned to positive liquidity, boosting the market even higher.

    Many of the myriad of traditional indicators are screaming an overbought market,including market-breadth. Here's one of them below, depicting the percentage of JSE shares trading above their 50-day simple moving average. It is not so much the reaching of 70 we need to be concerned about, but when this indicator drops below 70 that the correction is usually finally upon us. You can read about this interesting view of the market HERE.

    Here is another intersting and reliable fellow, called the Absolute Breadth Index. It was created by Norman G. Fosback. This simple yet powerful market breadth indicator is often dubbed the "Going Nowhere" indicator. It looks at the absolute value of the difference between advancing shares and declining shares. It does not matter whether advances exceed declines or vice-versa as this indicator is only interested in the amount of net (up or down) market activity going on. The idea is that as this indicator drops to record lows it depicts an undecided market or a market rolling over as shares change hands for zero changes in price (quite often a sign of when the smart money is offloading shares to the dumb money)It is thus useful (and reasonably accurate) to identify the market-topping process.

    Markets can remain overbought for some time, especially now when global structural forces such as currency depreciation, massive liquidy and foreign inflows keep headed our way for our perceived "commodity market" safety. Keep enjoying the ride, but make sure you have a chair to sit on when the music eventually stops.

    We will be taking a view on these breadth indicators, and many others, when discussing the state of the equity market in our training course on Saturday 20th November at the Sharenet offices in Cape Town. There are still a few seats left.

    Dwaine van Vuuren

    Permalink2010-11-12, 17:16:16, by dwaine Email , Leave a comment

    Debt worries, lower commodity prices see global markets fall

    Local markets

    At 1pm on Friday, losses in resource and gold mining shares had left the JSE All Share down by 0.27%, in line with weaker global markets.

    The rand was trading at R6.93 to the US dollar, weaker as the rand tracked euro movement and was affected by lower commodity prices.

    Oil cost $86.98 a barrel, falling 1.16% from the previous session’s high as investor risk aversion increased on concern over Ireland’s debt.

    International markets

    Yesterday on US markets, a poor outlook from Cisco saw Wall Street take a hit, with the Dow Jones closing 0.65% lower and the Nasdaq finishing down 0.90%.

    In Japan, the Nikkei average lost 1.39% by its close this morning, as investors continued to take profits as commodity prices tumbled.

    China's Shanghai index dived 5.16%, its greatest percentage loss since May, after losses in financial and resource shares on the possibility of further monetary tightening.

    Britain's FTSE 100 had fallen 0.24% just before 1pm, after Ireland's debt worries as well as concerns that China's economy may be overheated. Losses were led by financial and commodity shares.

    Share price news

    In the clothing and footwear sector, Compagnie Fin Richemont (share code: CFR) rose 4.10% to sell at R38.05 a share at 1pm, after 58 020 759 shares were traded in 1 123 deals.

    Sacoil Holdings Limited (SCL) rose 4.28% to R1.95 a share, after investors exchanged 2 077 911 shares in 96 deals.

    After 135 deals of 2 104 087 shares, Metorex Limited (MTX) in the metals and minerals sector slid 2.61% to trade at R4.85 a share.

    Pan African Resources PLC (PAN) tumbled 1.60% to R1.23 a share, after 82 deals saw the sale of 996 031 shares this morning.

    Permalink2010-11-12, 13:07:27, by Natalie Email , Leave a comment

    Mixed global markets as investors eye G20 meeting

    Local markets

    Thursday noon saw the JSE All Share up 0.20%, thanks to solid gains in the gold mining and basic materials sector after bargain hunting.

    The rand was trading at R6.88 to the US dollar at 12:00, staying within a range and following euro-dollar movement, as investors eye the G20 summit that begins today in Seoul, South Korea.

    Gold cost $1 412.65 an ounce, rising 0.81% due to physical demand and as investors closely watched the G20 summit for currency signals.

    International markets

    Yesterday, the Dow Jones edged up 0.09% while the Nasdaq rose 0.62%, as investors sought bargains such as bank shares and betted on a continuation of the overall rally.

    Japan’s Nikkei average rose 0.31% this morning, supported by a weaker yen, though further gains were limited by profit taking and technical selling.

    China’s Shanghai index climbed 1.04% while Hong Kong’s Hang Seng rose 0.82% as banking and resource shares gained.

    Britain’s FTSE 100 had fallen 0.14% by midday as investors were cautious as the G20 meeting begins today, eroding earlier gains from mining shares.

    Share price news

    Anglogold Ashanti Limited (share code: ANG) had risen by 3.38% at midday to sell at R361.70 a share. Investors traded 451 667 shares in 1 270 deals after Ashanti revealed a new gold discovery, Tropicana in Australia.

    After 573 149 shares were exchanged in 1 083 deals, The Spar Group Limited (SPP) rose 2.28% to R99.21 a share at noon.

    Losing ground was African Bank Investments Limited (ABL), whose shares had fallen 2.17% to R36 after 1 295 026 shares were sold in 847 deals.

    RMB Holdings Limited (RMH) saw the trade of 486 613 shares in 677 deals this morning, leading to a loss of 1.84% as the share price slid to R36.81 at midday.

    Permalink2010-11-11, 12:45:35, by Natalie Email , Leave a comment

    Basic materials, resources weigh on JSE

    Local markets

    At midday on Wednesday, the JSE All Share had slipped 0.37% after losses in basic materials and resource shares weighed on the local bourse.

    The rand was selling at R6.84 to the US dollar at noon, taking a lead from this morning’s broad-based dollar movement.

    Brent crude oil was selling at $88.16 a barrel, up 0.18% after news of a fall in oil stockpiles in the US offset the effect of a stronger dollar.

    International markets

    Yesterday, losses in bank and metal shares saw US markets fall, with the Dow Jones slipping 0.53% and the Nasdaq losing 0.66% by end of day.

    In Japan, the Nikkei index rose 1.40% to a four-month closing high at its close this morning, after gains in financial shares came on news that major Asian banks may be spared from new global rules.

    In China, the Shanghai index fell 0.63% after investors became concerned about more monetary policy tightening by Beijing. Property developers shares also fell on fears that interest rates may be raised after the release of October inflation data.

    Britain’s FTSE 100 had slipped 0.35% by midday SA time, after losses in commodity shares due to profit taking followed the recent rally.

    Share price news

    Merafe Resources Limited (share code: MRF) rose 2.80% to R1.47 a share at noon, after 9 655 043 shares were sold in 169 deals.

    Blue Label Telecoms Limited (BLU) gained 2.32% after 42 deals exchanged 1 565 736 shares, sending the price up to R7.05.

    After 1 907 335 shares were traded in 1 263 deals, BHP Billiton PLC (BIL) fell to R264.80 a share, a loss of 2.75%.

    Losing 2.45% by midday was Telkom SA Limited (TKG), whose shares fell to R35.80 after investors exchanged 374 550 shares in 355 deals.

    Permalink2010-11-10, 12:28:55, by Natalie Email , Leave a comment

    Basic materials, resources weigh on JSE

    Local markets

    At midday on Wednesday, the JSE All Share had slipped 0.37% after losses in basic materials and resource shares weighed on the local bourse.

    The rand was selling at R6.84 to the US dollar at noon, taking a lead from this morning’s broad-based dollar movement.

    Brent crude oil was selling at $88.16 a barrel, up 0.18% after news of a fall in oil stockpiles in the US offset the effect of a stronger dollar.

    International markets

    Yesterday, losses in bank and metal shares saw US markets fall, with the Dow Jones slipping 0.53% and the Nasdaq losing 0.66% by end of day.

    In Japan, the Nikkei index rose 1.40% to a four-month closing high at its close this morning, after gains in financial shares came on news that major Asian banks may be spared from new global rules.

    In China, the Shanghai index fell 0.63% after investors became concerned about more monetary policy tightening by Beijing. Property developers shares also fell on fears that interest rates may be raised after the release of October inflation data.

    Britain’s FTSE 100 had slipped 0.35% by midday SA time, after losses in commodity shares due to profit taking followed the recent rally.

    Share price news

    Merafe Resources Limited (share code: MRF) rose 2.80% to R1.47 a share at noon, after 9 655 043 shares were sold in 169 deals.

    Blue Label Telecoms Limited (BLU) gained 2.32% after 42 deals exchanged 1 565 736 shares, sending the price up to R7.05.

    After 1 907 335 shares were traded in 1 263 deals, BHP Billiton PLC (BIL) fell to R264.80 a share, a loss of 2.75%.

    Losing 2.45% by midday was Telkom SA Limited (TKG), whose shares fell to R35.80 after investors exchanged 374 550 shares in 355 deals.

    Permalink2010-11-10, 12:26:51, by Natalie Email , Leave a comment

    Money supply is boosting asset prices

    Before we start today’s report, we’d like to invite you to attend our bi-annual seminar, hosted by Seed Investment Consultants and SDK Chartered Accountants (SA). The following topics are included: a current market outlook, a look at tax efficient investment vehicles, and the SARS voluntary disclosure program.

    Date: 25 November 2010
    Time: 5:30pm for 6:00pm
    Venue: Southern Sun Newlands, Main Road, Newlands

    Please email Myrna at myrna@seedinvestments.co.za for more details.

    With the announcement coming from the US Federal Reserve last week that they would print a further $600 billion in order to acquire longer tern Treasury securities, alternative options such as gold are trading at new highs in dollar terms.

    The new injection of US billions is in addition to bringing interest rates to nearly 0% and purchasing more than a $ trillion dollars of Treasury Securities and US backed mortgage securities.

    The dual mandate of the US Federal Reserve is to promote a high level of employment and low, stable inflation.

    Writing in the Washington Post on the 4 November, chairman of the US Federal Reserve, Ben Bernanke said that “….lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending."

    One asset, gold, priced in depreciating US dollars, has continued to reflect the weakening purchasing power of US dollars. It moved to a new high of $1422/oz today.

    Gold is a safe haven asset and in times of uncertainty, ultra low interest rates, demand has continued to push the price up.

    The last real bull run was in the 1970’s when gold started the decade at around $35/oz and peaked at over $850 in early 1980. Most of the price appreciation occurred in the last 2 years of this bull market as the price moved up sharply from $200 at the beginning of 1979 to the $850/oz just over a year later.

    The chart below superimposes that rally with the current price starting in 2001, producing one view of the possible further upside for the yellow metal.

    Source: Sarasin, Ned Davis September 2010

    Other commodity prices are also trading very strongly up. These include sugar at 30 year highs, silver at 30 year highs, palladium at 9 year highs, coffee at 13 year highs, copper near a record, tin at new highs.

    Until now local investors have had the firm performance in US dollar terms negated by the firm rand. This also holds true for gold shares. However these moved up firmly today, with Goldfields and AngloGold trading at new 12 month highs.

    So far there mere announcement of the further increase in the supply of money is having some desired effect – it looks set to continue, but its not all going to be plain sailing.

    Kind regards

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

    Permalink2010-11-09, 16:44:58, by ian Email , Leave a comment

    JSE up at midday as gold miners soar

    Local markets

    On Tuesday at 12:00, gains in gold miners and basic materials shares supported a 0.67% rise in the JSE All Share.

    The rand was exchanging at R6.82 as investors were cautious of investing in emerging market currencies due to concerns about European debt and the global economic recovery.

    Gold cost $1 413.65 an ounce at noon, rising 0.35% to continue its rally after inflation and euro zone debt concern raised the appeal of precious metals.

    International markets

    Yesterday, the Dow Jones fell 0.33% while the Nasdaq edged up 0.04%, as losses in financial stocks and a stronger dollar pressured US markets.

    Japan’s Nikkei average lost 0.39% by its close this morning, as investors took profits after a four-session rally.

    Hong Kong’s Hang Seng slid 1.02% after property shares corrected on a share placement by Sino Land.

    In Britain, the FTSE 100 had risen 0.61% as solid results from Vodafone and Barclays boosted investor sentiment.

    Share price news

    After just two deals, Country Bird Holdings Limited (CBH) rose 6.90% to R3.10 a share after investors traded 1 751 200 shares this morning.

    In the metals and minerals sector, Royal Bafokeng Platinum Limited (RBP) climbed to R69.35 a share, a 6.86% gain after 1 236 912 shares were sold in 568 deals by midday.

    Pretoria Port Cement (PPC) fell 2.62% to R33.40 a share, after 505 deals traded 648 464 shares.

    Losing 1.91% by noon was London Finance and Investment Group PLC (LNF) as shares fell to R2.05 each after a single trade exchanged 120 000 shares.

    Permalink2010-11-09, 12:28:18, by Natalie Email , Leave a comment

    Losses in gold miners weigh on JSE

    Local markets

    On Monday at midday, the JSE All Share had fallen 0.34%, with losses in gold mining and basic material shares leading the downward slide.

    The rand was exchanging at R6.84 to the US dollar at noon, weakening slightly as dollar gained against the euro.

    Gold cost $1 391.45 an ounce at 12:00, slipping 0.30% after a rebound in the US dollar weighed on prices.

    International markets

    On Friday, sentiment continued to improve after a Republican win in the elections and news of the US Federal Reserve’s plan to supply cheap money. The Dow Jones rose 0.08% while the Nasdaq inched up 0.06%.

    In Japan, the Nikkei average rose 1.11% to reach its highest close in three months this morning, as investors bought more shares on good news from the US.

    In Germany, the DAX had fallen 0.23% by midday, while France’s CAC40 had lost 0.34% as European markets retreated after earlier gains in financial shares.

    Britain’s FTSE 100 had slid 0.26%, ending a recent rally as losses in mining shares weighed on the index.

    Share price news

    Amongst the top movers up at midday was Pan African Resources PLC (share code: PAN) whose shares rose 4.46% to R1.17 after investors traded 1 957 118 shares in 102 deals by midday.

    In the hospital management sector, Litha Healthcare Group Limited (LHG) climbed to R2.49 a share, a gain of 3.32% after 208 153 shares were exchanged in 14 deals.

    Falling 5.28% to sell at R3.41 a share was Cadiz Holdings Limited (CDZ) in the investment banks sector, after 114 deals sold 1 953 415 shares. Cadiz released their interim results this morning, announcing that diluted HEPS had fallen 29.7% for the six months ended 30 September 2010.

    After a volume of 638 883 shares was traded in 1 630 deals, Naspers Limited (NPN) slid 2.03% to R358.02 a share at noon.

    Permalink2010-11-08, 12:39:25, by Natalie Email , Leave a comment

    Is this a secular bull market?

    Whenever we look at the market from a macro level, we always refer to some of our long-term investment quantitative timing models, one of which is the SuperModel Investment Timing system, to gauge if we are in a secular bull or bear or to see how favourable equities are.


    This particular model tells us the bull is still alive and well, but not kicking as much as it was 6 months ago.

    But even within these long-term bullish periods, market entry risk can vary considerably. There are many ways to guage this entry risk, with the oldest being the observed market P/E ratio. This is currently around 17.4 (depending when you read this) which is certainly at the top-end of the historic scale

    There is of course a high correlation between market P/E and subsequent 5 year returns and the below chart would imply a current expected return (at a P/E of 17.5) of 37.5% over 5 years, or 6.57% per annum compound, versus the average return of 11.8% p.a at the average P/E of 14.5 times.

    The correlation over a 12-month horizon is a lot looser, as shown below, but nonetheless implies a expected 12-month return of 7.34%:

    Our local market is of course subject to global structural forces as evidenced by the unprecedented foreign inflows into emerging market bonds and equities which is likely to accelerate with the recent approx $800Bn treasury purchase programme announced by the FOMC. Many SA economists think this phenomenon may persists for 2-3 years to come. As evidenced by the post Walmart/Massmart aquisition and subsequent gains in the JSE retail sector, what we may consider fully priced, some foreigners may view as cheap and drive prices up even further.

    Assuming this phenomenon continues to drive up asset purchases, it is not unfeasible to evenutually witness frothy 19x P/E ratios, which at the current JSE earnings-per-share of R1,780 would imply further upside to 33,820 for the JSE or 7.95%.

    Statistically speaking though, structural inflows and QE aside, current P/E's bring with them a lot more market risk and share selection now becomes even more important. If you are joining us for our inaugural course on mechanical market timing and share selection strategies on 20th November, we will be using live data in our JSE Share Watchlist program to demonstrate exactly what types of shares you should be looking at and how to time your purchases to lower your entry risks.

    Dwaine van Vuuren

    Permalink2010-11-05, 17:00:00, by dwaine Email , Leave a comment

    JSE slips as investors consolidate gains

    Local markets

    Friday midday saw the JSE All Share down 0.30% as investors consolidated recent gains with losses almost across the board excluding the gold mining sector, which had gained 2.50%.

    The rand was trading at R6.81 to the US dollar, relatively stable in spite of news that the central bank would be dramatically increasing foreign reserves.

    Brent crude oil cost $87.35 a barrel at noon, rising 0.40% after US Federal Reserve stimulus measures encouraged greater appetite for risk amongst investors and pressured the US dollar.

    International markets

    The Dow Jones closed 1.96% higher and the Nasdaq rose 1.46% on US markets yesterday, as investors continued to be positive a day following the Federal Reserve’s plan to stimulate economic recovery.

    In Japan, the Nikkei average gained 2.86% on rallies in commodity shares after the Federal Reserve's plans to buy more debt raised risk appetite amongst global investors.

    France’s CAC40 had lost 0.14% around noon SA time, as European investors took profits from six-month highs and energy shares fell on lower oil prices.

    Britain’s FTSE 100 was 0.20% down at noon, retreating from yesterday’s two-year record highs after banking shares lost ground.

    Share price news

    In the oil sector, Sacoil Holdings Limited (share code: SCL) rose 4.32% to R1.69 after investors sold 1 122 341 shares in 77 deals.

    Metair Investments (MTA) in the auto parts sector climbed 4.26% after 94 deals traded 1 556 117 shares, to sell at R11.99 at midday.

    After investors exchanged 178 693 shares in 241 deals, shares in Mondi PLC (MNP) fell to R56.20 each, a loss of 2.26%.

    In the containers and packaging sector, Nampak (NPK) fell 2.06% to R19.54 a share, after 195 262 shares were traded in 54 deals.

    Permalink2010-11-05, 12:25:44, by Natalie Email , Leave a comment

    Rates adjustment for 2011

    Dear Client

    Every year, the JSE reviews their pricing and as of 1 January 2011, they will be instituting an increase. Due to these and other rising costs, Sharenet wishes to announce that with effect from 1 January 2011 all our rates will be increasing by 9%.

    At Sharenet, we continually strive to maintain excellence in our service and to enhance our product offerings, adding more data and features where we can. 2010 was particularly exciting as we unveiled our SharenetCFDs offering to a great reception and we are on the verge of launching a complimentary trading and investing research subscription package through our new partners, PowerStocks Research.

    We welcome any and all suggestions which could help us improve our service to our clients and encourage you to send these through to support@sharenet.co.za

    Thank you for your continued support and business.

    The Sharenet team

    Permalink2010-11-05, 12:16:27, by admin Email , Leave a comment

    Broadening the Mandate

    Before we start today’s report, we’d like to invite you to attend our bi-annual seminar, hosted by Seed Investment Consultants and SDK Chartered Accountants (SA). The following topics are included: a current market outlook, a look at tax efficient investment vehicles, and the SARS voluntary disclosure program.

    Date: 25 November 2010
    Time: 5:30pm for 6:00pm
    Venue: Southern Sun Newlands, Main Road, Newlands

    Please email Myrna at myrna@seedinvestments.co.za for more details.

    When investing your hard earned capital with a manager it is important that you decide on an appropriate mandate, with agreed upon mandate limits, with your investment manager. It is key to ensure that you know what your goal is and what tools you’re giving your manager to achieve that goal.

    The most important part is setting the goal, but almost as important is agreeing on the tools to be used. Just as a builder needs to know whether he can use steel supports in the construction of an office block (as opposed to only being allowed to use bricks) so a manager needs to be informed of what types of instruments and strategies he’s allowed to use in the management of your portfolio.

    While it important not to restrain your manager to such a degree that he’s unable to express his views fully, you also need to ensure that he doesn’t have carte blanche, as this could lead to an outcome far different from your agreed upon goals. Getting the balance isn’t an exact science, but some sort of middle ground is typically the best.

    The chart below shows the performance of the ALSI over a six and a half year period (green line). On this chart is the performance of two portfolios (real data – net of fees) in red and blue. The second chart shows the drawdowns of these two portfolios over the same period (from high points).

    If you were posed with the question of which portfolio you wanted to invest into, it would seem to be a no brainer. While the ‘blue’ portfolio has been able to outperform the market with far lower volatility (which is a GOOD result), the ‘red’ portfolio has given you nearly double the return with a lower volatility and drawdown experience.

    Surprisingly to the casual observer both of these portfolios are managed by the same manager! The ‘red’ portfolio is his hedge fund, and the ‘blue’ on is his unit trust. The biggest reason for the difference in returns is his ability to more fully express his investment views in the hedge fund. Here he can take bigger positions in the shares he likes and take short (negative) positions in shares that he doesn’t like, while in the unit trust he has more limitations as a result of the increased regulations in this product.

    Another reason that the hedge would outperform is that it is only priced monthly. The manager therefore doesn’t have to worry about cash flows into and out of the fund on a daily basis (that he has with the unit trust).

    Clearly if the manager wasn’t as skilful as he is, then the extra freedom given in the hedge fund would result in worse returns. It isn’t a given that if you give your manager more freedom, he’ll perform better for you.

    Importantly each investor needs to determine for themselves (and potentially with an advisor) what kind of tools to give to the managers of their investments. There will always be a middle ground between giving the manager carte blanche and shackling them completely.

    Take care,

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

    Follow us on Facebook by clicking here.

    Permalink2010-11-04, 18:06:36, by Mike Email , Leave a comment

    Positive sentiment boosts markets after US stimulus plan

    Local markets

    At noon on Thursday, the JSE All Share had risen 1.15% led by strong gains in resource shares, and following gains on international markets after investors approved of the US Federal Reserve's latest stimulus package.

    The rand was trading at R6.81 to the US dollar at midday, strengthening after stimulus measures in the US boosted confidence and spurred investors to invest in riskier emerging market assets.

    Oil rose 2.35% to sell at $87 a barrel, achieving new six-month highs as the dollar weakened on news that the US Federal Reserve planned to purchase debt and increase money supply.

    International markets

    Yesterday, US markets were volatile as investors reacted to the Federal Reserve detailed a plan to salvage economic recovery. The Dow Jones closed 0.24% higher and the Nasdaq gained 0.27%.

    The Japanese Nikkei index climbed 2.17% at its close this morning, as investors engaged in short-covering on news of the Fed’s monetary easing and solid economic data from the US.

    Hong Kong’s Hang Seng finished 1.62% higher as investor confidence rose on the back of stimulus news from the US.

    In Britain, the FTSE 100 had gained 1.77% by noon, reaching its highest level in two years as the bourse responded to US stimulus news and tracked gains on US and Asian markets.

    Share price news

    Amongst the top gainers at midday was BHP Billiton (share code: BIL), whose shares rose 4.60% to R263.60 after investors traded 4 096 269 shares in 2 953 deals.

    Auto part manufacturer Metair Investments (MTA) gained 3.51% after 292 276 shares were exchanged in 31 deals, sending the share price up to Rx at 12:00.

    MTN Group Limited (MTN) fell 1.58% to R127.67 a share, after 1 585 deals traded 1 873 581 shares.

    Also losing ground was Naspers Limited (NPN) in the broadcasting contractors sector. Shares slipped 1.21% to R368 after investors sold 837 943 shares in 1 848 deals.

    Permalink2010-11-04, 12:28:20, by Natalie Email , Leave a comment

    Global markets, JSE up ahead of Federal Reserve meeting

    Local markets

    At midday on Wednesday, gains in industrial shares had led the JSE All Share up by 0.43%, though trading volumes were low ahead of the US Federal Reserve meeting later today.

    The rand was exchanging slightly higher at R6.87 to the US dollar, following in the footsteps of a firmer euro and anticipating substantial monetary easing to come out of this afternoon’s US Federal Reserve meeting.

    Gold cost $1359.25 an ounce, edging up 0.14% though investors remained cautious before hearing the details of monetary easing in the US.

    International markets

    On US markets yesterday, the Dow Jones rose 0.58% and the Nasdaq gained 1.14% as investors expected a Republican win in the midterm election, believed to promote a more business-friendly environment.

    In Japan, the Nikkei closed 0.06% higher this morning, thanks to solid earnings by electronics makers and other exporter shares.

    Hong Kong’s Hang Seng gained 2.00%, led by rising bank and oil shares, to reach the index’s highest close in 28 months.

    Britain’s FTSE 100 had recovered 0.08% by midday, after earlier losses came on pessimistic earnings news, and falling miners offset gains in financial shares.

    Share price news

    After 13 deals exchanged 178 869 shares, Rolfes Technology Holdings (RLF) rose to R1.52 a share, a gain of 4.83%.

    Pan African Resource PLC (PAN) gained 2.86% as shares rose to R1.08 at noon, after investors traded 374 952 shares in 39 deals.

    Coal of Africa Limited (CZA) fell 13.73% to R8.23 after 448 116 shares were sold in 117 deals.

    Investors traded 101806 shares in Freeworld Coatings Limited (FWD) in 20 deals by noon, sending the share price down 2.17% to R9.

    Permalink2010-11-03, 12:37:48, by Natalie Email , Leave a comment

    The local unit trust industry

    The quarterly unit trust statistics of fund sizes and flows provides insight into the thinking of SA investors. The unit trust industry started in 1965 in South Africa with just 2 funds.

    By 1980 it had grown to almost R700 million and 12 funds. The September 1987 quarter (just prior to the market crash of October 1987) saw a sharp increase in the net inflows. After the crash net inflows dropped by 80%.

    At the end of 1999 total assets in local funds had grown to R112 billion across 260 funds.

    By the end of September 2010, total investments across local unit trusts were R879 billion across 937 funds – 60% of these are classified as retail funds and 40% institutional.

    Of the net quarterly inflows of R28,8 billion, 99% was allocated to domestic funds (as opposed to worldwide and foreign). Allocations to foreign funds is therefore down drastically from 9% at the end of 2009.

    Drilling into this further, 71% of these net inflows were allocated to fixed income funds, 25% to asset allocation funds and 4% to real estate funds.

    This allocation to fixed income is up sharply from 2009 when 42% was allocated to local fixed income funds.

    Of the R28,6 in net inflows for the quarter to local funds, just R32 million (0,1%) was allocated to local equity funds. R3,6 billion was allocated to prudential variable equity funds, R7,3 billion to fixed income varied specialist and R13,2 billion to money market funds.

    Looking at just the domestic funds, over time money market allocations have grown to be the biggest component with 32% of total funds, asset allocation funds with 24%, equity funds at 22%, fixed income funds at 18% and real estate 3%.

    With local investors allocating a large portion of new monies to fixed interest and money market funds, and proportionally very little to local equities, it is clearly not this money pushing up local equity prices. We do know that foreigners have been big buyers of local fixed income and equities in 2010, slowing a bit over the last month.

    Tomorrow sees the US Federal Reserve make an announcement on further printing of USD. Initial expectations are that there will be a planned $500 billion.

    The local JSE ended down 28 points to 30609.

    Kind regards

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

    Permalink2010-11-02, 17:20:57, by ian Email , Leave a comment

    JSE down on profit taking at midday

    Local markets

    The JSE All Share had fallen 0.26% by midday on Tuesday on profit taking, with gold miners leading losses as the sector slid 0.91%.

    The rand had strengthened slightly to R6.93 against the US dollar at noon, but is expected to remain range bound before the US Federal Reserve policy meeting.

    Brent crude oil was 0.60% up at noon, selling at $84.50 a barrel though investors were cautious before the monetary easing that is likely to result from the US Federal Reserve meeting.

    International markets

    The Dow Jones up fractionally by 0.06% while the Nasdaq dipped 0.10% on US markets yesterday. Investors were reluctant to take positions before today’s elections and a Federal Reserve announcement on Wednesday.

    Japan’s Nikkei average finished 0.06% higher this morning, weighed on by a firmer yen and apprehension before the US Federal Reserve policy meeting.

    Hong Kong’s Hang Seng inched up 0.08% this morning, taking a lead from flat finishes on US markets.

    Britain’s FTSE 100 had risen 0.75% by noon SA time, as oil shares rose on the back of solid results from BP and BG.

    Share price news

    Netcare Limited (NTC) rose 1.94% to R15.25 a share, as investors sold 458 885 shares in 195 deals.

    Discovery Holdings Limited (DSY) gained 1.77% as shares rose to R40.19 each, as 442 693 shares were exchanged in 339 deals this morning.

    Losing 3.59% at midday was Eastern Platinum Limited (EPS), whose shares fell to R12.34 after 37 deals traded 249 476 shares.

    Paper producer Mondi Limited (MND) fell to R57.82 a share after investors exchanged 337 797 shares in 588 deals, a loss of 1.33%.

    Permalink2010-11-02, 12:55:50, by Natalie Email , Leave a comment

    Global markets mixed, look to US Fed’s policy meeting for direction

    Local markets

    At midday on Monday, the JSE All Share had risen 0.32% as gains in mining shares supported the upward movement. Trade was light however, as investors acted cautiously before tomorrow’s meeting of the US Federal Reserve.

    The rand strengthened to sell at R6.95 to the US dollar, though analysts expect the local currency to remain range bound as it awaits direction from the euro.

    Gold was selling 0.40% higher at $1362.90 a fine ounce at noon, after increased buying in Asia and a weaker dollar, and as investors set themselves up before US Federal Reserve’s asset buying programme.

    International markets

    On Friday, the Dow Jones edged up 0.04% while the Nasdaq ended flat at 0.0% change, though ending a good month on hopes that the Federal Reserve’s monetary easing will increase liquidity in the market.

    Japan’s Nikkei average fell 0.52% at its close this morning, after Honda Motor’s earnings did not meet expectations, and a strong yen weighed on sentiment.

    China’s Shanghai index climbed 2.52% as gains in commodity stocks came on news of strong manufacturing data.

    Britain's FTSE 100 had risen 0.78% by midday, following gains in Asia after China’s surprisingly strong manufacturing data. Investors looked ahead to events likely to determine market direction for the near future, such as the US Federal Reserve’s policy meeting on Tuesday.

    Share price news

    In the oil sector, Sacoil Holdings Limited (share code: SCL) rose 5.30% after 29 deals traded 145 334 shares, which sent the share price up to R1.59 at midday.

    Imperial Holdings Limited (IPL) in the shipping and ports sector climbed 1.94% to R116.47 after investors traded 480 777 shares in 534 deals.

    After 8 deals, retailer Verimark Holdings Limited (VMK) fell 1.72% to R1.18 a share as investors sold 100 089 shares by noon.

    Investment company Hosken Consolidated Investments Limited (HCI) lost 3.61% after 35 305 shares were exchanged in 23 deals, sending the share price sliding to R80.00.

    Permalink2010-11-01, 12:35:15, by Natalie Email , Leave a comment