Innholdsfortegnelse for 11/26/2021 i Finweek - English

eras come to an end. During the recent municipal elections, the ANC – dominant in post-apartheid politics – got less than half of South Africans’ vote. The death of former president FW de Klerk is also an end of an era – although his legacy is being bitterly disputed. For markets, November 2021 signals the end of easy monetary policy in the world’s largest economy, the US. That country’s central bank is starting to scale back monetary easing, which may in due course temper rampant asset price increases across the globe (beware, crypto fans). It also seems like the end of an era for low inflation as price increases across the world remain stubbornly higher due to a raft of contributing factors, including constrained shipping capacity, microchip shortages and the…

JSE REACHES HIGHEST LEVEL 70 000 The JSE closed at a new record high of 70 091 points in mid-November, following the Medium-Term Budget Policy Statement, among other factors. The statement depicted an encouraging fiscal outlook as a growth recovery, spike in commodity prices and an upwardly revised GDP projection contributed to the reduction of the country’s debt and narrowed the budget deficit. MINING OUTPUT DROPS -3.4% Data from Stats SA showed that annual mining production fell by 3.4% in September. Coal, platinum group metals and gold were the biggest drags, decreasing by 8.9%, 7.5% and 6.9% respectively. When compared to the second quarter, output shrank by 0.6%, implying that mining will likely make a negative contribution to third-quarter GDP. US INFLATION ROCKETS 6.2% US inflation soared to 6.2% in…

BUY SELL HOLD Back in May, I recommended construction firm Raubex as a buy – it has gained about 20% since then. The company released solid results for the six months through 31 August on 8 November. Revenue jumped 52% compared to the same period a year earlier and headline earnings per share (HEPS) came in at 137c after a 26.6c loss in the corresponding period. Raubex declared a dividend of 47c/share. Raubex’s order book is almost R5bn bigger at R16.5bn and should be able to grow further. The Afrimat Construction Index showed a modest move higher for the second quarter and the four-quarter average is also up. Construction is very cyclical and right now the cycle is upwards. Raubex comments in their results that they are seeing “high levels…

this year has provided several fortuitous and much-needed tailwinds for the local economy including a bounce in economic growth both globally and locally as economies around the world opened up after their Covid-19-induced slowdowns and releasing pent-up demand. Significant stimulus packages and infrastructure programmes globally have pushed resources prices higher, which has been good news for local commodity producers. Off the back of higher commodity prices, South Africa has realised record trade surpluses and generated unexpected tax revenue. Combined with extremely accommodative monetary policy, especially in the US from which the developed world tends to take its lead, the rand, too, has benefitted from these tailwinds, recovering from its peak Covid-19 weakness in 2020. Better-than-expected tax collections – albeit still lower than pre-pandemic levels – have served to further fuel…

PURPLE GROUP Exceptional growth potential Purple Group* (owners of EasyEquities) released much better results than I had expected. The company posted its financial results for the year ended 31 August on 10 November. Headline earnings per share (HEPS) jumped 190% while funded accounts rose to 737 000 – and they’re adding some 60 000 new accounts every month. EasyEquities generates R67 profit per account per year, but CEO Charles Savage said that older accounts make a lot more as investors grow in confidence and capital. Furthermore, of the 60 000 new accounts every month, past stats show us that around 40 000 will be funded. So, the next year should see 500 000 funded accounts added and average profit per account rising to, say, R75 a year. This takes 2022…

in the past, when people thought of Sasfin, they saw us as a trusted stockbroker. But since our establishment in 1890, we have focused on people. This, without any doubt, stems from the entrepreneurial spirit of Sasfin as a business – from Roland Sassoon initially, and now equally strong in his son Michael, our group CEO. Sasfin delights itself in being a fiercely competitive team internally as we seek to achieve the very best. Interestingly, Sasfin Asset Managers would like to argue that its trajectory has been the most impressive in the last three years. The asset management business started small, with a good track record in a handful of funds, but after careful selection and immigration of the finest names in the industry, they have been building out a…

there are few funds that manage to beat the market substantially over meaningful periods of time. The Coronation Top 20 is one such fund. Over its 21-year track record, the fund has turned the local equity market’s already impressive 15-bagger into a 27-bagger. A phenomenal result for long-term investors in the fund. What makes the Coronation Top 20 Fund unique? The Coronation Top 20 is an actively-managed portfolio of what we believe to be the best opportunities on the JSE. The fund is limited to investing in no more than 20 stocks at any given point in time compared to 50 to 60 stocks held by a typical actively-managed equity fund, and more than 140 stocks for passive funds tracking a broad SA equity index. This level of concentration means…

investing offshore is an important part of any long-term investment strategy, as it offers diversification beyond the opportunity set available via South African markets. South Africa is a relatively small, open economy with around 330 investable companies listed on the local exchange with a market capitalisation of just over $1tr. To put this into context, total global equity markets had a market capitalisation of just over $94tr in the same period. In essence, the SA market represents around 1% of global equity markets. In addition to the wide breadth of industries and companies available in global markets, the additional benefit is exposure to economic growth in foreign economies, which makes your portfolio less dependent on growth in the SA economy to drive overall returns. Investing offshore remains an important tool…

there’s been enduring appeal for the cultish, Italian-bred Fiat 500. And its classic looks, heritage and quirky charm have been retained in the third generation of this iconic city car. It looks much like the original diminutive car introduced 64 years ago, just a more premium version. Back in the 1960s, it was about affordable mobility. Today, advanced technology and polished styling have elevated this cool little cult car. The refreshed Fiat 500 comes with four new trim levels and new interiors; the entry-level Cult, technically proficient Connect, bold Sport, and the avant-garde Dolcevita tested by finweek. Its shape is like no other. Quintessential rounded shapes with the front arching backwards and the rear tilting forward all mimic the Fiat 500’s original design. A short, rounded front features elevated, circular…

If there’s one reason to get a dog This issue’s isiZulu word is izinja. Izinja is dogs. The singular is inja. I don’t have izinja or any other pets. I don’t have pets because I don’t want to take care of an animal. I would never, even though my kids want izinja. I get it. But I also know their poop will be my problem. Nope. People who have izinja have a tendency of playing tricks on them or dressing them up to look silly. I look at this and it unsettles me. That inja you make look stupid is a parent of four. What are his kids saying about him when they see how you treat him? What does his wife think of him? Oh, the indignity. “Who’s a…

before a global pandemic disrupted our lives, the most pressing worldwide question, from Davos forums to corporate boardrooms, from farmers to politicians, was simple: How do we stop climate change? And as we learn to live with the pandemic, fears about the future of our planet are likely to return. I spoke to two experts in the field of sustainability to ask them about what business leaders can do to mitigate the effects of a changing climate. Megan Sager is the founding director of the Sustainable Solutions consulting and advisory group. Willem Fourie is associate professor at the Albert Luthuli Leadership Institute at the University of Pretoria where he heads the South African Sustainable Development Goals Hub. Climate change, I suggest to them, is likely to introduce severe risks and…

THE GOOD Germany said at the COP26 climate talks in Glasgow they will give South Africa €700m to help with phasing out the use of coal. The aim is to mobilise $8.5bn with the World Bank and others to promote developing renewable energy sources in the country. THE BAD The total debt currently owed by students to South African tertiary institutions amounts to around R14bn and is set to escalate if not addressed. Schools are also at breaking point due to unpaid fees, according to a school survey by the TPN Credit Bureau. THE UGLY Out of the 26m registered voters, only 46% cast a vote in the 2021 municipal elections. Voter turnout was 58% in the last local government poll in 2016. Turnout declined notably in urban wards and…

BUY SELL HOLD Private healthcare group Mediclinic International’s profits more than tripled for the six months through 30 September, almost reaching pre-pandemic levels. Mediclinic, which is based in London and has hospitals in Southern Africa, Europe and the Middle East, reported HEPS of 8.8 pence from 6 pence in the earlier corresponding period. Thanks to an increased pace in vaccinations in Europe and the Middle East, demand for hospital procedures has returned to normal. Both those regions account for over 75% of Mediclinic’s revenues. How to trade it: Mediclinic traded through the resistance trendline of its three-year bear trend in August 2019. However, resistance encountered at 8 045c/share triggered a pullback to key support at 5 155c/share in March 2020. Mediclinic’s share price has since then been trading sideways between…

global markets appear unfazed by the US Federal Reserve’s decision to commence with reducing its asset purchases in November, in marked contrast to the taper tantrum of 2013, when markets retreated, and bond yields spiked. Big technological companies added billions in market value in October, while the yield on the US 10-year bond remained stable at around 1.55%. Big Tech shows little fear for any tightening by the Fed. The rest of the market has joined the party. The Dow Jones and S&P 500 indices are both at record highs, up 20% growth year-to-date, similar to the tech-heavy Nasdaq. Tesla was up by $500bn, crossing $1 000 per share for the first time in a further blow to shortsellers. Reputable analysts are now predicting Tesla will eventually hit $3 000…

it goes without saying that the current state of the world, both globally and domestically, is pretty troubled, but the good news is the mutual fund industry has fared exceptionally well during the past decade in spite of market turbulence, noise and even Covid-19. Most recently this has been on the back of impressive overall stock performances. Significant, for instance, is that the S&P 500 is up 30.6% on a year ago and up 26.2% this year alone. The JSE All Share Index, meanwhile, is up 32% on a year ago and 11% this year-to-date. The latter is not the entire market but comprises the largest 164 listed companies and is almost 100% of the market cap and liquidity of the market. Top performers among aggressive unit trusts over one…

since last year’s global market crash sparked by Covid-19, most financial markets have recovered strongly, including in South Africa. Many investors justifiably now question the return prospects going forward, and whether these gains can be sustained, especially considering the more recent weakening in global growth, and the prospects of monetary policy tightening in the months ahead. Although at M&G Investments (previously Prudential Investment Managers) we would never pretend to know the future, and many unexpected events will happen, what we can say from observing current asset valuations is that the outlook for real returns from both SA equities and bonds is still favourable. In fact, we think it’s possible for SA equities to generate close to double-digit real returns over the medium term, compensating investors for taking on the risks…

one of the oldest of its kind available to South African investors, the Orbis Global Equity Fund has been a favourite among them for a considerable period. Domiciled in Bermuda, it has notched up an annualised 11.4% return since inception in 1990 against a 7.8% benchmark. The investment house says that whilst medium-term numbers have been lacklustre, it’s optimistic about future returns. Fund Focus quizzed its management about several of its salient features. Why should an astute investor wish to invest in your fund? We consider it most suitable for those who have made the “asset allocation” decision to invest a predetermined amount in global equities. Furthermore, the fund seeks higher returns than the average of the world’s equity markets, without greater risk of loss. Who are the main players…

many have asked me about prospects for global equity funds during the next decade. Not an easy But as I have previously pointed out, rather more important is the quality of funds that you invest in rather than the singular performance of the overall market. And even if the market outlook alone is imperative in your reckoning, you’re unlikely to get a straight answer. The variations are many. For instance, London-based international finance house Schroders’ 10-year global equity forecast is an annualised 4.3%, with regional breakdowns showing the US 4.4%, Europe 2.8%, Japan 2.6% and emerging markets 6.7%. Schroders reckons, however, that market volatility will be similar to the past ten years. Bank of America’s head of equity research, Savita Subramanian, believes returns over the next ten years will be…

eskom’s CEO, André de Ruyter, is under attack, and it’s not just his fate which hangs in the balance. If he is removed and loadshedding stopped, the fragile electricity grid which he has battled so hard to protect may collapse, plunging the entire country into a catastrophic national blackout. Many South Africans have failed to realise that the state-owned utility’s ageing coal-fired plants, like a fleet of neglected old cars, will never perform as they did early in their lifetimes. The sad truth is that the country will have intermittent loadshedding for the next three years, probably longer. The energy availability factor of Eskom’s coal fleet — which measures the effectiveness of power plants — plunged to 57.42% in the week ended 6 November, from well above 65% during the…

it is almost unthinkable that in a country with one of the highest unemployment rates in the world, high staff turnover and the struggle to retain talent is now considered a “ticking time bomb” for companies. A recent salary and wage movement survey by the reward management platform Remchannel revealed that the leading reason employees left employment between April and October this year was due to resignation (60%). Annual staff turnover has increased by 16% across all sectors, says René Richter, MD of Remchannel. “This is quite disturbing,” she notes. “The real cost of higher staff turnover and accrued leave, which is registered on the company’s books as a debt, indicates a liquidity risk to corporate South Africa. The pattern of burnout, toxic workplace culture and a drop in productivity…

at the height of the electioneering season, politicians usually display the art of bamboozling voters to influence them to write down X next to the names of their political organisations on the ballot papers. On campaign trails, the over-promising and sweet-talking politicians mislead voters, sparing no one from die-hard fans, opposition supporters, to sceptics, and the notoriously undecided fence-sitters. Towards the tail-end of the recently-concluded local government elections, Fikile Mbalula, the ruling ANC’s head of elections, found himself on the wrong side of South Africans after he denied that his party boss, President Cyril Ramaphosa, had promised to build a million houses in Alexandra township, Johannesburg. Ramaphosa made the outlandish promise at a political rally in 2019 at the tiny, over-crowded township to whip up support for the ANC. Mbalula’s…

established and listed on the JSE in 1996, Netcare is the third-largest private hospital operator by market value in SA. It employs just over 21 000 people, with 51 hospitals, 10 605 registered beds and 422 theatres. On the charts Netcare has managed to retain firm support at 1 130c/share and has since December 2020 formed rising bottoms – a sign of growing investor interest. Though first-half core profits for 2021 were down, the company posted a recovery in its ebitda margin compared to the second half of 2020. Due to the second wave of Covid-19, the healthcare operator was forced to suspend elective surgery – resulting in total patient days falling to 13.6% from the previous period with a 13.7% decline in acute hospitals and 12.6% for mental hospitals.…

it took some time to figure out how to start this article. I must admit that it is not easy to write. I remember when I was but a young grasshopper with nothing but dreams in my head and passion in my heart. I remember how I used to buy finweek and read it from cover to cover to learn as much as I could from the articles. Articles written by wise and experienced contributors that would give perspectives and insights which in the beginning I did not even understand. As time went by and I kept reading, I learned a huge amount. finweek has been a great source of knowledge and inspiration to me for over a decade. Truth be told, when I was first given the opportunity to…

the Denker Sanlam Collective Investments (SCI) Balanced Fund has delivered top-quartile performance over multiple periods since inception. Such consistent performance across market cycles and macro developments is the ideal outcome for investors. But how does the Denker Capital team generate this performance? Combining superior stock picking and risk management The combination of specialist stock-picking skills and risk management across the Denker Capital team is the source of the fund’s performance. Over shorter time horizons, risk management may detract from performance – however, in the long run, idea generation, effective implementation, and risk management contribute to a solid long-term track record. The risk management philosophy is to proactively manage for unexpected curveballs in order to generate consistent returns. It is not being cautious, but rather about taking calculated risks because risk…

in fixed income, the potential for returns – in the form of coupon payments and capital gains – is captured by the bond yield (which is the coupon amount or price). A high yield signifies a high potential return. A high potential return generally comes with high risk, and therefore a higher yield would point to higher risk. Low return in itself can be a risk – but many investors seem to be ignoring this factor, opting for safety even if it means there is no yield. Because bond prices move inversely to yields, investors who buy bonds at abnormally low yields would be exposed to capital losses if those yields normalise. The lower the credit quality, the higher the yield Developed countries generally have better credit ratings (or lower…

when domestic-oriented (SA Inc) stocks started looking promising 18 months ago, many investors continued to sit on the side-lines. They were still replaying the negative SA Inc “movie” of the last five years leading up to Covid-19, when local was not so “lekker”. Investors made money by owning Naspers*, resources stocks and global industrials listed on our exchange, while steering clear of SA Inc companies. When the pandemic struck, the picture looked even bleaker for these stocks. Hard lockdowns meant that SA economic growth collapsed, and with it domestic-oriented stocks’ earnings prospects looked poor. During the early part of 2020, the earnings forecasts for SA Inc stocks were downgraded sharply by 40% to 50%. Analysts were predicting that some businesses’ earnings would be even lower than they were in 2019,…

A – ANC On 1 November, South Africans took to voting stations to cast their votes in the municipal elections. However, the result was not what either the ANC or the DA had hoped for, with 46% of the country having supported the ANC and 22% the DA. This is a sharp decrease from 54% and 27% respectively in 2016. B – BITCOIN Whether you love it or hate it, crypto assets seem to be here to stay. Not only did the most well-known of them all, Bitcoin, move from levels below $29 000 each to over $62 000 at the beginning of November, but we also witnessed the listing of the first bitcoin-linked exchange-traded fund (ETF). C – COVID-19 At the start of 2021, we hoped that by now…

Data by the US Bureau of Labor Statistics shows that 4m Americans quit their jobs in July 2021 with a peak in resignations in April. According to this data, there were 10.9m open positions at the end of July. Ian Cook and his team from Visier (a company specialising in people analytics and planning) conducted an analysis of more than 9m employee records from more than 4 000 companies. Their report, published in the Harvard Business Review, found the following trends: 1. Resignation rates are highest among mid-career employees. Employees between 30 and 45 years old had the greatest increase in resignation rates, with an average increase of more than 20% between 2020 and 2021. While turnover is typically highest among younger employees, Cook’s study found that over the last…