Innholdsfortegnelse for 2/4/2021 i Finweek - English

the birthplace of capitalism – if one were to see this as the place where the first shares were issued – has used the coronavirus to start testing a new type of economy. I read that Amsterdam – and other places in the Netherlands too – has started implementing the so-called “doughnut” economic model. This idea, which is the brainchild of the British economist Kate Raworth, purports that humankind should fulfil its basic needs within the limitations set by the planet. These basic needs of people include a roof over your head, food on your table, access to healthcare and education, a political voice and a few more. These needs should therefore be met in, among others, a stable climate, fertile soil and a protective ozone layer (the planet’s limitations).…

to do something about South Africa’s huge youth unemployment problem, Scha van Niekerk and Ben Naude, directors at Uconomy, in 2015 decided to employ jobless school-leavers in their auditing firm’s back office. “We decided to target unskilled labour, reasoning that people with no experience were more eager and desperate to learn than graduates,” Van Niekerk says. Other major companies, of which Investec was the first, soon saw the success of the initiative and asked Uconomy to also source, train and employ jobless young people for them. Since then, the number of people going through Uconomy’s employment programme grew from its initial four to more than 4 500 people, while the types of jobs on offer expanded from basic clerical and customer services to include more than 120 other fields. The…

Naspers, together with its spin-off Prosus, has an 11.14% weighting on the JSE. Naspers has a 31.2% stake in Tencent through Prosus. It seems Tencent shares remain a hot pick in Hong Kong, as equity trades loaded up on more stock during the final week of January. The $926bnTencent was set for its biggest monthly gain yet – thanks to January call options that expired in the final week of the month. Tencent shares now trade at almost 39 times analysts’ estimated earnings for the next 12 months. Though the figure is high, it has dropped drastically from the 65 times multiple that was once reached at the height of China’s equity bubble in 2007. In addition to this, Tencent is also getting an extra boost from participating in Hong…

i wrote an article late last year about buying ahead of the news to catch the move when it happens; essentially buying the rumour and then selling the fact. This is a phrase often repeated on the market, and I want to dig more into the concept and also when to actually sell. I first encountered this concept in the late 1990s with a stock called Mouldmed. There was lots of talk that they had an exciting new product coming to market and the stock was flying higher. I did not buy, but rather waited for the announcement and I only bought when the news was officially announced. Then I watched as the share gave back about 50% of its value after the news. I was distraught, but I did…

PICK N PAY Turnarounds take time Pick n Pay has announced Richard Brasher will be leaving as CEO in April after eight years. I have to admit that I got this turnaround wrong and was overly critical in the initial years when I was seeing little evidence of anything improving. I was watching for the operating margin to start moving higher and it eventually did as he slowly got their central distribution working, launched a loyalty programme and improved stores’ look and feel. The lesson for me here is simple: a turnaround, especially from a real mess, takes time. A lot of time. Another important lesson is that the share price increase over the eight years was only 12.5% in total (excluding dividends). That said, only Spar returned more over…

two important revenue collection opportunities for the South African Revenue Service (Sars) lie with its voluntary disclosure programme (VDP) and an enabling environment for critical small businesses. However, in both cases prohibitive legislation, the subjective interpretation of provisions and a lack of proper skills and resources are jeopardising collections. In a welcome move Sars last year embarked on an extensive overhaul of the VDP. This year it will be conducting a study to determine the effectiveness of the current tax legislations, policies and incentives affecting small, micro and medium enterprises (SMMEs). Sars has established a new SMME unit for taxpayers, traders and travellers that aims to make it easier for them to comply with their tax obligations. Many will argue that theCovid-19 pandemic has highlighted the completely inadequate and inept…

private banking is about more than just wielding a glossy black card. While retail banking is a one-size-fits-all solution, private banking clients’ needs tend to be of a complex nature. A case in point is access to a broader range of foreign exchange services to either invest internationally, make payments overseas, receive money from abroad or accessing foreign currency to travel. Above all, at the core of private banking lies wealth management. If you are in the process of accumulating a substantial amount of wealth or are already in possession thereof, private banking is centred towards protecting, consolidating and in some instances transferring that wealth, either via bequeathal or philanthropy. Most banks now even have an in-house philanthropy office dedicated to helping clients give in a sustainable way. And, of…

finance is not the same as it was a few years ago. Whereas The Wolf of Wall Street epitomised the traits of the successful trader in the 20th century, today things look very different. Computer scientists in sweatpants – quants – design and implement complex mathematical and statistical models that more efficiently price securities, reduce risk and generate profits. One of these relatively new statistical applications is machine learning. A 2020 paper in the Review of Financial Studies by Shihao Gu, Bryan Kelly and Dacheng Xiu uses the Sharpe ratio, a measure of the risk-adjusted return of a financial portfolio, to show the benefits of machine learning: “A portfolio strategy that times the S&P 500 with neural network forecasts enjoys an annualized out-of-sample Sharpe ratio of 0.77 versus the 0.51…

david Brown’s association with Zimbabwe’s mining sector dates to his six years as CEO of Impala Platinum (Implats), which ended in 2012. During that time, he met with then president Robert Mugabe to end a dispute between the government and Implats regarding certain mineral rights. Brown is now back in the country as non-executive chairman of Great Dyke Investments (GDI), a company backed by private Russian interests that is hoping to raise $550m for a platinum group metals (PGM) mine, Darwendale. His day job, however, is with another entity, an emergent gold miner, Kuvimba Mining House, a rather grandiloquent-sounding company that has the support of Zimbabwean President Emmerson Mnangagwa. Mnangagwa’s hope is that companies like Kuvimba can breathe life back into the country’s crisis-hit economy. Mnangagwa hasn’t many economic levers…

prosus’ share price tested an all-time high at 185 095c/share in November 2020 after investing $1.3bn in new areas of growth in education to beef up its portfolio. It also announced a share buyback programme to help close the valuation gap between its underlying assets and its shares. Outlook: Prosus had been trading in a bull channel since May 2020. In the last week of January it traded through its all-time high at 185 095c/share and is teetering on the upper slope of its channel where it formed a new high at 196 985c/share. On the charts: With the three-week relative strength index (3W RSI) in overbought territory, expect a near-term pullback soon. If support should hold firmly at 179 055c/share, then the bulls would remain in charge. Otherwise, sellers…

during this past holiday season, I read through the financial reports of most of the largest investment companies regarding forecasts for the new year. I had to suppress the urge to call this column “Forecasts for 2020 – part 2”, as by the look of things, we seem to be in for more of the same. The sobering fact is that Covid-19 is still very much a part of our lives and will most likely continue to dominate headlines in 2021, and for this reason you should adjust your investment expectations accordingly. Most of the large investment companies agree on a number of opinions and forecasts, and I’d like to discuss a few of them. Weaker dollar The prevailing theme across all of the reports, is the opinion that the…

the global financial crisis of 2008/2009 is mostly remembered for the collapse of banks and their share prices. But often forgotten is that it also brought an end to the surge in commodity prices and mining company shares. The first decade of the century saw commodity prices across the board rallying with platinum peaking at around $2 000 per ounce and oil hitting $150 a barrel. Locally, the FTSE/JSE Resources 10 (Resi 10) Index’s all-time high was in May 2008 at just under 78 000 index points while it is now hovering at around 64 000. In the 12 years since that high the mining companies have got themselves into great shape. They’ve paid down debt, been cautious on new projects, shut loss-making or marginal operations and avoided large deals.…

While some of the logistics companies listed on the JSE may be well-run and profitable, their relatively small market capitalisations and low trading volumes render them uninvestible for many fund managers who track the sector. With many retail investors both intimidated by the sector’s direct links to economic growth and occasionally complex business models, most players simply languish at uninspiring valuations. Cheap, almost certainly, but with few chances to undergo a rerating. The best-case scenario, says Lazarus Shigwedha from Ninety One, is that South Africa’s economy regains buoyancy, commodity prices lift, volumes increase, and capacity is taken up. This concoction would lay the groundwork for logistics players to pass inflationary increases on to clients. “We’re a long way from that, however.” Running the rule over some of the sector’s participants,…

When finweek spoke to David Hufton, joint CEO of Sygnia Asset Management, he was at home “on one of the very rare occasions”. South Africa had just marked 300 days under national lockdown to help curb the spread of the coronavirus and Hufton had been in the office for virtually every single one of those days. He formed part of the firm’s skeleton crew that manned the ship after Sygnia was classified as an essential financial services provider when the lockdown was instituted. Also, during this time, Sygnia’s board appointed Hufton to the joint CEO role with immediate effect, conveying a message of confidence in him and his co-CEO, Magda Wierzycka, that “the joint CEOs will steer Sygnia through these turbulent times and beyond”. He was previously the deputy CEO…

Ant war This issue’s isiZulu word is intuthwane. It means “ant”. The plural is izintuthwane. The plural is key because you never see just one intuthwane. It’s always a whole horde of them. Relax, I know the proper collective noun for a group of izintuthwane is a colony. I call them a horde because they behave like one – a menacing horde, with weapons on their faces. The root word in inthuthwane is thutha – move something from one place to another, including moving house. This makes sense because izinthuthwane are always moving stuff, always lifting, carrying away, dropping off, returning then repeating the process, over and over. No wonder they are so skinny. Anyway, I feel bad when I kill izintuthwane (I still do it) because they are simply…

“I will fire you on the spot.” – US President Joe Biden’s tenure as head of state began with a stern warning to 1 000 presidential appointees who will help him steer the federal bureaucracy. In an video conference Biden said he will fire them “on the spot” if he hears that they have shown “disrespect” to people in their professional conduct. He kicked off his administration with sweeping orders on immigration (reversing several hard-line immigration policies put in place by former president Donald Trump), Covid-19 (a requirement to wear masks and social distance in federal buildings), racial justice and climate change (rejoining the Paris Agreement). “WE BELIEVE THERE IS ROOM FOR FURTHER EASING.” – Mamello Matikinca-Ngwenya, chief economist at FNB, said while the South African Reserve Bank may have…

it is characteristic of Chris Griffith, the incoming CEO of Gold Fields, that he takes up duties at the gold company the day after his 12-month “gardening leave” expires, which is end-March. When Gold Fields last year announced the impending departure of Nick Holland, on the basis the CEO of 13 years would turn the mandatory age of retirement in 2021 of 63, the plan was for “a handover” period, possibly of up to six months. Now, however, Holland has agreed to leave earlier than planned. There doesn’t appear to be any objection to this, it’s just typical of Griffith that he would immediately want to imprint his own ideas on Gold Fields – even though Holland has had executive duties there for nearly two decades. Griffith was previously CEO…

I last wrote about Exxaro in August 2019 suggesting it as a buy. The stock has risen by about 25% since then while dividends have added almost 20% in additional returns. In a world of exciting new energy stocks such as Tesla and a longer-term move towards green renewable energy, Exxaro does not look like a worthy investment considering its business is mostly coal. But demand remains in place and it’ll be decades before coal is in serious decline from a demand perspective. The stock trades on a historic price-to-earnings (P/E) multiple of around six times and a dividend yield of almost 8%. This is the case even after earnings declined and dividends were cut in the last results to end-June 2020. The P/E and dividend yield both suggest the…

joe Biden became the 46th president of the United States on 20 January, and he took the reins during a time of national discomfort in the face of four crises: the Covid-19 pandemic, the economic downturn, climate change and racial inequality. He promised immediate action, and signed a number of executive orders on his first day in office. But what does this “blue (Democratic) wave” mean for the stock market? President Biden has promised to govern as a centrist, which is a political policy that strikes a balance between social equality and a degree of social hierarchy while opposing political change that will lead to society shifting to either the left or right. To me it sounds like six of one versus half a dozen of the other. Biden wants…

investors could not have hoped for a better start to 2021 amid the grim reality of a surging global second wave of the coronavirus pandemic. Rocketing equity markets are discounting a future in which economies will eventually return to some form of normalcy, brought on by greater fiscal stimulus and a successful vaccines rollout to curb the further spread of the virus. These options are yet to happen, begging the question whether the benchmark Dow Jones is not overly optimistic as it continues to consolidate at the 30 000 level, hitting levels above 31 000 in the first week of trading after climbing 7% in 2020. Or the S&P 500 rising by 16% last year – and both overshadowed by the 43% rise in the tech-heavy Nasdaq. The FTSE/JSE All…

optimism that the global economy would quickly rebound in 2021 as mass vaccination programmes quash Covid-19, has begun to fade in the face of resurgences of the virus around the world and concern that the vaccines intended to protect against illness will be less effective against rapidly spreading mutations of the virus. Economists have begun to warn of significant downside risk to projections made just weeks ago, as countries hit by more severe second waves of infections reimpose restrictions on activity and evidence emerges that the coronavirus will remain a global threat for years to come. “The biggest risks to our more upbeat forecasts for this year relate to the evolution of the pandemic and our efforts to fight it,” said Neil Shearing, group chief economist at Capital Economics, a…