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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

    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

    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

    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

    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

    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

    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

    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

    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

    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

    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

    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

    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

    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

    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

    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

    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

    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

    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