Innholdsfortegnelse for 11/26/2020 i Finweek - English

my husband and I are currently in the process of moving to a new house. Like many people who’ve been lucky enough to work from home during this pandemic, we have spent most of our time tucked away and have also had many hours to assess our finances and needs. Being able to own one’s own property is a privilege that I don’t want to diminish. But there are a lot of factors that – with the gift of hindsight – one really needs to consider before taking the leap. And, I will admit, there are frustrations that we have experienced that have, at times, made us regret taking on the responsibility of homeowners. In any event, we are downscaling considerably. And so, I have spent nights and weekends packing.…

I have been writing about how some small- and mid-cap stocks have been coming out with solid results and trading updates that heavily surprise to the upside. In some cases, this has seen share prices double on the news. The Ashburton MidCap ETF (JSE code ASHMID) is often referred to as an SA Inc ETF, as most of its constituents generate the bulk of their income, if not all, from the local economy. Now, make no mistake, things remain tough in South Africa, but that doesn’t mean there isn’t opportunity. This ETF lost half of its value during hard lockdown and has now regained 50% of those losses. On an historic price-to-earnings ratio of 16.5 times, it is fairly priced but, as improved earnings come through, there is plenty of…

management of inventories – the stock a business holds to sell in future – is a crucial art for most businesses. The exception being pure tech businesses that don’t sell hardware and financial services companies that generally have cash and use capital adequacy ratios as a sort of inventory measure. But traditional retailers, manufacturers and miners will have inventory on hand. In these days of global supply chains and just-in-time inventory holdings, it can be a competitive edge if they manage their inventory effectively. Tim Cook’s rise at Apple under Steve Jobs was in part due to his mastery of supply chains, producing tens of millions of iPhones in China from multiple parts suppliers scattered across Europe and Asia and then ensuring that each iPhone was at the right store…

can we trust the opinion polls of the US elections? In October 2016, Hillary Clinton was given a 91% chance of beating Donald Trump. Five days later, a news agency published a poll, which put her just a few points ahead of him. Excited about the polls, the Democrats approached the elections with a joyful feeling of inevitability. The collective incredulity when Clinton lost was confusing: how could the polls have been so wrong? With the recent elections, Joe Biden was leading Trump by double digits until the day of the elections. At the moment, it looks as if Biden won the US elections by some 4% to 5% (that is if Trump capitulates). This means that the polls were out by about 5% to 6%. After the 2016 ballot…

south Africa’s deteriorating finances have brought it to the brink of what economists describe as a fiscal cliff – the point at which a country is unable to borrow enough to cover its spending requirements and service its debt, either because it can’t find lenders or because credit has become unaffordable. Plunging over the edge looks increasingly likely, as SA’s plans to stabilise borrowing over the next three years depend almost entirely on freezing the bloated public sector wage bill, which will absorb half of the country’s tax revenues this year. So far there is no indication that labour unions, which were not consulted, will agree to the strategy outlined in October’s medium-term budget and break with their long-standing history of demanding wage increases well above inflation. Treasury’s plans to…

Chester Missing @chestermissing SABC says they’ll be calling their streaming service Netniks. James Breakwell @XplodingUnicorn In case you were on the fence about having kids, my three-year-old threw a tantrum because her tongue is pink. Elizabeth Windsor @Queen_UK President Trump on the phone. Bit frustrated as he’s doing a manual recount, but has run out of fingers and can’t see his toes. Max du Preez @MaxduPreez My wife: Did you take out the rubbish as I asked? Me: May I not answer that question lest I incriminate myself? #InTheDudu Jimmy Kimmel @jimmykimmel IfTrump refuses to leave the White House, they should rename it “Vietnam”. He’ll get out of it immediately. Mommy Laura @lmegordon You can’t hurt me. You’re not a picture of me that my husband took. Forrest B @ForrestBrung…

by the end of October, South Africa’s Covid-19 case fatality rate – confirmed deaths divided by the number of confirmed cases – was 2.7%. This rate, of course, masks large differences by age. Globally, the case fatality rate of those younger than 10 is 0%; for those above 80, it is above 10%. Put differently: compared to someone in their 20s, babies are 9 times less likely to die; a 75- to 84-year old is, however, 8 times more likely to end up in hospital and 220 times more likely to die. These large differences in mortality risk allow economists to investigate a central question to discipline: to what extent does risk affect our behaviour? The homo economicus of first-year textbooks, in which consumers rationally maximise utility, has over the…

after landing his first corporate job in the research and development team of Discovery in 2015, Dr Thomas Brennan became increasingly aware of the barriers preventing South Africans from investing their money to build wealth, rather than leaving it in the bank where it doesn’t grow as quickly, due to inflation. He saw numerous financial advisers, but none lived up to his expectations. “Being a programmer specialising in machine learning, I would use the data they gave me to develop simulations of how their suggested investments would perform, including the ongoing fees. Most did not even bother to respond when I sent these simulations to them via email,” Brennan says. He was also disillusioned by the high fee structures, minimum investment requirements and the cumbersome application process, requiring the signing…

“day one, if I win, I’m going to be on the phone with our Nato allies saying, ‘We’re back,’” US president-elect Joe Biden told Arizona TV in July. That really ought to be a group call that the whole world joins. For, with a few notable exceptions – like his fellow-populist, Jair Bolsanaro, president of Brazil, and no doubt his chum, Russian president Vladimir Putin – the globe is immeasurably relieved at what it hopes is the impending departure from the White House of Donald Trump – the aggressive and offensive unilateralist who turned his back on the world. That departure, however, is not quite assured yet, as Trump refuses to concede defeat, even as Biden has racked up 306 votes (at the time of writing) in the electoral college…

China’s internet sector lost about $290bn in value during the second week of November. This followed Beijing’s clampdown on internet giants, when it laid out antitrust rules for the first time to root out monopolistic practises among local tech lenders – marking the end of an era. This move comes as the EU and US are also seeking to curb the power of internet giants. The Chinese government wants to ban online platforms from colluding and sharing sensitive consumer data, the squeezing out of smaller rivals and subsidising services at below cost to eliminate competitors. According to analysts, Tencent will be better off, because its core business, from social advertising to video games, has truly little to do with the real economy and people’s livelihood, compared to e-commerce and financial…

GROWTHPOINT Book build success Growthpoint came late to the capital raising party, but the accelerated book build saw significant support, as R4.3bn was raised against the planned R4bn, according to an announcement on 12 November. The accompanying update was not pretty, but Growthpoint is now well capitalised and, even with distributions cut from 100% to 75%, it’s the best in the listed property sector. DIS-CHEM Expanding into primary healthcare Dis-Chem Group’s results for the six months through 31 August saw headline earnings per share (HEPS) rise 16.2%, compared with the same period a year earlier. What really stood out was the announcement that the dividend was cancelled due to “a number of potential strategic acquisitions”. Aside from the already announced purchase of Baby City, Dis-Chem has two other acquisition targets…

What a year 2020 has been so far. Most news this year was understandably negative, with words like Covid-19, pandemic, lockdown, market correction and economic recession everywhere. Locally, we also had a few bonus words thrown around, like junk status and foreigners as net sellers of local shares and bonds. The question I’d like to address in this issue, considering the fact that foreigners have been net sellers of South African shares for 16 months in a row as at the end of October 2020, is whether or not there are still any buyers of SA shares out there. The short answer is: definitely. In fact, recent news about local companies has been very positive, and that may very well lead to more good news. Let’s look at a few.…

“I WILL ONLY STEP ASIDE IF I AM ASKED BY THE BRANCHES WHO VOTED [FOR] ME.” − Following his first court appearance for 21 charges of alleged corruption and fraud, ANC secretary-general Ace Magashule addressed a crowd of supporters, saying he will not be stepping down from the position because he was elected by the party’s branches at a conference. Magashule launched a defence, citing a political witch hunt against him. He also made threats to his detractors that he knew people’s corrupt secrets and would not reveal them until the opportune moment. Magashule was released on bail of R200 000. “We respect the choice of the American people.” – Chinese foreign ministry spokesman Wang Wenbin congratulated US president-elect Joe Biden and vice president-elect Kamala Harris, making the country one…

the rehabilitation of the mining sector since the dark days of 2017 – when the industry had racked up a fifteenth straight year of underperformance – has been remarkable. It’s a recovery from overspend and subsequent chronic indebtedness no more clearly demonstrated than in gold. Gold mining firms falling under the radar of Canadian bank Scotiabank posted dividend increases averaging 70% since September. The average dividend yield for multi-asset senior and intermediate gold producers is now 2%, exceeding the S&P 500’s yield of 1.6%. The bank thinks that, at that yield, the gold producers would start to attract more generalist and income-focused investors. “In our view, the significant increases demonstrate to investors that gold producers have learned from mistakes of the past and are resolved to maintain capital discipline,” said…

South Africa’s largest distiller, Distell, has seen its share price gain 39% over the past 30 days as investors adjusted their sentiment towards alcohol-related producers. Distell had been trading sideways between 6 640c/share and 8 900c/share since March. It formed rising bottoms within the sideways pattern, after Distell announced in August that its full-year results showed resilient performance in Africa, despite the impact of Covid-19. Outlook: Although the group lost approximately100m litres in sales volumes and R4.3bn in revenue due to the lockdown, and dividends were temporarily suspended, the group positioned itself well fora recovery during the lockdown period. Rather than cutting jobs, salaries were reduced. The easing in agricultural export regulations under level 4 allowed Distell to process about R440m worth of open orders. The group is confident in…

it is once again time to start thinking about what some of the major market themes are going to be in the year ahead. In previous articles, we’ve highlighted some of the ETFs that we have been buying in the energy sector, which have mostly been centred around exposure to oil services, energy production and uranium. We believe that given the supply dynamic in the oil market, oil, natural gas and energy in general are going to be big themes in 2021. Therefore, in this article, we are going to take a closer look at the energy market, and one individual company that we think is going to benefit from a return in energy demand as the world comes out of the global Covid-19 slowdown. Let’s start with oil. As…

the 27th of November marks the 20th anniversary of the listing of the first exchange-traded fund (ETF) in South Africa – the Satrix 40 (STX40*). It listed at 774c and at the time of writing, it was trading at 5 267c. Dividends received over the 20 years amount to another 1 517c, giving a total return of some 776% over the two decades. Not yet a ten-bagger, but a great return for doing nothing (aside from buying at listing). When ETFs arrived in SA, they weren’t new globally, but they had not experienced widespread adoption. In fact, when Jack Bogle launched his first index mutual fund in 1975, the industry responded by calling it un-American as it threatened their profits from active funds. The first listed ETF was in New…