Indholdsfortegnelse for 6/11/2021 i Finweek - English

making a quick scan of this finweek edition, local investors have taken the offshore diversification of their investment portfolios to heart. And to no surprise – with less than 400 shares listed on South Africa’s stock exchanges, compared with a global universe of around 630 000 publicly listed companies. Benchmarks, such as the MSCI All Country World Index, tracks more than 3 000 stocks in 23 developed and 27 emerging markets. When one drills down into sectors or themes of investments, the choices listed on offshore markets become legion. Take healthcare for example: There are indices tracking these stocks by geography and market cap. The S&P Emerging BMI Healthcare (Sector) Index tracks 374 constituents in emerging markets and returned 17.6% in dollars during the first five months of the year.…

– Stephen Saad, CEO of Aspen, said the company plans to expand its manufacturing capabilities to improve access to vaccines in Africa, and is seeking assurances on technology transfers and assistance with licenses, during a seminar hosted by President Cyril Ramaphosa and French President Emmanuel Macron. Macron said that France was in favour of lifting hurdles to allow vaccine production on the continent and already has a partnership with SA’s Biovac Institute and would soon start a project with Aspen. Saad said he wants Africa “to lessen its reliance of being an importer of 99% of all its vaccines”.…

coming from a cybersecurity distribution background, Martin Potgieter and Stephen Osler launched Nclose in 2006 to fill the gap for value-added cybersecurity services. “At the time, there was a rapid increase in the number of world-class cybersecurity solutions on offer, but many customers didn’t know how to unlock the potential of these programmes; or the solutions were complete overkill, resulting in customers paying exorbitant amounts for add-ons they did not need,” explains Osler, Nclose’s business development director. Potgieter and Osler started out picking solutions they felt would be most relevant to South African enterprises, and then added value to these by not only matching products with the unique security needs of specific clients but also managing these products on clients’ behalf. “Many enterprises simply cannot afford to have a full-staffed…

south Africans can take advantage of the flexibility that working from anywhere brings. Therefore, the Western Cape government and Wesgro have launched a campaign in partnership with Airbnb to promote remote working domestically. Since the start of the Covid-19 pandemic, new Airbnb hosts in SA with only one listing have already collectively earned more than $3m (almost R50m). According to Airbnb data, domestic searches for longer-term stays increased by almost 50% year-on-year from 1 January to 25 February 2021 compared with the same period last year. Currently there isn’t a centralised platform that brings together deals focusing on working, staying and moving around Cape Town and the Western Cape, according to Monika Iuel, Wesgro’s chief marketing officer. Therefore Wesgro is planning to go live with a dedicated portal on its…

For the last four years or so my monthly debit order towards exchange traded funds (ETFs) has gone into the Ashburton Global 1200 Equity Fund of Funds ETF (ASHEQF*). I wanted a single global ETF with some direct emerging market exposure and this ETF did just that. The total expense ratio was on the higher side, but that was recently reduced to under 0.5% – making for happy unitholders. Over the years, many new global ETFs have been issued locally, but I have seen no real reason to switch my preferred ETF. That is until now. The new Core Shares Total World ETF (GLOBAL) is better in two important aspects. It has a little more direct emerging market exposure, 11% against Ashburton’s 7% and the total expense ratio is 0.2…

HOSPITAL GROUPS No sign of recovery Results from the local hospital groups were all bleak as elective surgeries, the main source of income, are still under pressure due to the pandemic. I have long not liked the hospital sector, owing to the risk of regulation due to price increases well ahead of inflation over the last decade, and I see no reason to change this view. All three listed hospital groups, namely Mediclinic, Life Healthcare and Netcare, are trading at multi-year lows with share prices back where they were ten years ago. But over that period all three have also had disastrous ventures offshore with Mediclinic the last to pull the plug. Mediclinic received an offer for its 29.9% stake in Spire Health at £2.40 per share. Mediclinic has agreed…

last month, Statistics SA announced that annual inflation had accelerated to 4.4% in April, up from 3.2% in March, which is slightly higher than the anticipated 4.3%. The last time the consumer price index (CPI) reached similar highs was prior to the Covid-19 lockdown in February 2020 when it reached 4.6% before dropping to 3% in April 2020 and 2.1% in May 2020. As expected, the South African Reserve Bank (SARB) elected to hold interest rates steady when they met in May given that the CPI figures remain below the mid-point of the inflation target (being 4.5%). Despite the slightly higher than expected inflation figure, the bond market barely blinked and the rand showed similarly little reaction. When assessing inflation data figures, it is important to remember that they are…

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covid-19 has affected the way we consume and invest in profound ways, but many would argue that it is the property market that has seen the biggest disruption. A new research paper, by Sitian Liu and Yichen Su, shows that the pandemic has led to a substantial shift in housing demand in the US, away from neighbourhoods with high population density. They also find that neighbourhoods with high home values before the pandemic see a greater drop in housing demand. Big cities lost; smaller cities gained. But it is not just demand that has shifted. On the supply side, Covid also gave rise to new innovations. Neighbourgood is a next generation South African developer and operator of modern homes and workspaces. Founded just after hard lockdown last year, Neighbourgood repurposes…

– US President Joe Biden directed the US intelligence community to redouble their efforts in investigating the origins of the Covid-19 pandemic and report back to him in 90 days. Biden said the US intelligence community has “coalesced around two likely scenarios” but has not reached a definitive conclusion on this question, in a statement released by The White House. The announcement comes after a US intelligence report found several researchers at China’s Wuhan Institute of Virology fell ill in November 2019 and had to be hospitalised.…

to buy back shares or pay shareholders in cash dividends? That is one of the happy brain teasers with which companies perennially wrestle. It is, though, especially relevant to the mining sector as the commodity cycle enters its high summer and cash is aplenty. About a fifth of total votes cast at Sibanye-Stillwater’s annual general meeting last month were against its special resolution to buy back up to 20% of the firm’s stock. That was not enough to block the resolution but it does raise the question whether buybacks are preferred. “The argument is that shares only get bought back when a company has the cash to do it, and when companies have spare cash, their share prices are normally at the top of the market,” said James Wellsted, spokesman…

when, in March, finweek asked Fairvest Property Holdings CEO Darren Wilder about a possible merger or acquisition, Wilder replied: “We would only look to merge with a good, clean business. Lots of shareholders approach us to manage other funds.” Not long after came the news that, following several approaches from Arrowhead Properties’ shareholders, Fairvest had concluded agreements with Arrowhead shareholders to acquire 50.1% of Arrowhead B shares through the issue of new Fairvest shares at a swap ratio of 1.85 Fairvest shares per Arrowhead B share. Fairvest received undertakings of support from 63.7% of its own shareholders to implement the swap agreements. Wilder says the move is an exciting opportunity to unlock sustainable value over time with the aim of creating a more liquid and well-rated real estate investment trust…

Software service group Adapt IT has had an appetite for acquisitive growth after reducing its net gearing – a measure of a company’s financial leverage, by dividing the total company debt by the total shareholders’ equity – from 69% a year earlier to 42%, exceeding the 50% level targeted by management. This, of course, attracted bidders, with Huge Group showing immense interest and even upping its offer to take over the technology firm for about R1.3bn. Adapt IT received two takeover offers, the first from listed telecoms firm Huge Group and the other from Canadian firm Volaris Group. On 28 May, Huge Group announced that its revised offer to Adapt IT means shareholders can expect a swap ratio of 1.37 Huge shares for each Adapt IT share, instead of the…

e-commerce has historically been dominated by large, “horizontal” companies. These companies operate across different retail categories (“horizontal”) rather than focusing on one particular category (“vertical”). The tendency for online retailing to gravitate towards a few large companies makes economic sense. It’s a business with high fixed costs and relatively low variable costs. Economies of scale are therefore critical for profitability. The importance of scale in e-commerce resulted in a handful of companies dominating the space. Amazon has dominated US e-commerce since the company’s inception. Similarly, Alibaba has been the largest online retailer in China for some time. MercadoLibre has led the industry in Latin America, whilst Sea has recently started becoming the leading player in Southeast Asia. The companies on graph 1 are not exhaustive, but it gives a sense…

the investment world consists of various asset classes. An asset class is a group of investments that exhibit the same characteristics and usually consist of cash, money-market instruments, bonds and interest-bearing assets, fixed property, shares, alternative investments, commodities, derivatives and cryptocurrencies. It is always advisable to implement the concept of diversification in order to balance your portfolio and to spread the risk. Every asset class has its own risk profile. The higher the risk of a specific investment, the higher the possible return. But many individual investors do not understand how to determine the relevant level of risk that their portfolios should bear. One should therefore ask yourself: What is the risk profile of the asset class into which I want to invest? No risk, low, medium, high or very…

In 2017, I discussed two expressions that applied so well to the stock market at the time. The first was that it does not help for you to only be on the right track, because if you stay there, you will still get hit by a train. During these last few months, we have experienced high tides on the stock exchange, which brings me to my second expression: a high tide lifts all boats. What these two expressions have in common, is that it is always great to be on the right track or in the proverbial boat when the tide is rising, but things tend to become a little more complicated when, like what happened in 2017, all boats do not float as well as they should. In short,…

there is admittedly a certain pressure around being the first of anything in life. As in the case of Helena Conradie, CEO of Satrix being at the helm of an investment management house that debuted South Africa’s very first exchange-traded fund (ETF) back in November 2000. There is the pressure to either stay at the top of the game or to maintain the status quo, that is, to remain in operation. Despite that, there is not an iota of remnants of such pressure on Conradie. She exudes nonchalance from decades of industry experience, fervour in the strong culture of innovation at the asset manager and some concern over investor education, most especially considering the Gamestop short squeeze and the pressure on short-sellers. Not quite there yet Having R130bn under management…

– South African Reserve Bank governor, Lesetja Kganyago, warned that though there have always been large dependencies between the financial sector and government, a few key developments, such as the rising level of public debt, have reinforced emerging financial stability risk. Speaking at the Financial Stability Forum, Kganyago warned that the upsurge in government debt is also weighing on the perceived creditworthiness of the financial sector, and that government’s borrowing requirements and spending patterns are putting upward pressure on domestic interest rates.…

kumba Iron Ore, a unit of Anglo American, is a supplier of iron ore to the global steel industry, engaged in the exploration, marketing, sale and shipping of iron ore. The company operates in South Africa, with mining operations including its Sishen and Kolomela mine, both located in the Northern Cape Province and Thabazimbi mine in Limpopo Province. Kumba owns Africa’s largest iron ore mine (Sishen) and with SA being a net exporter of steel – producing more steel than it consumes – Kumba exports iron ore to customers around the globe, including China, Japan, Korea and several European countries and the Middle East. Kumba listed on the JSE in November 2006 with a market capitalisation of R36bn; today its market cap is at R207bn. Share price history After testing…

people tend to take victory laps prematurely – both bulls and bears. From its most recent peak at $65 000 in April, Bitcoin’s precipitous fall to around $37 000, at the time of writing, represents a crumbling in the recent edifice of invulnerability among a newly-minted generation of crypto tycoons. (For the purposes of this piece, we will use Bitcoin and crypto synonymously). Is it a loss of faith in new age “market gods” like Elon Musk, on-off supporter then detractor of Bitcoin? There is also the curious case of the DogeCoin millionaire Glauber Contessoto, who famously continues to HODL after staking his entire net worth on the meme coin, garnering his own troop of followers through the land of “diamond hands”. Maybe it’s China cracking down on Bitcoin while…

one of the defenses of holding gold in the long term has been that it acts as a store of value – in essence it protects against inflation. There is an old market adage that claims an ounce of gold can always get you a decent suit from Savile Row in London. This may have been true at certain times over the last 100 years or so, but it is nonsense. Gold was above $800 an ounce in 1980 and then traded down to around $250 by the turn of the millennium 20 years later. Gold was above $800 an ounce in 1980 and then traded down to around $250 by the turn of the millennium 20 years later. Thus, there was no chance the price of a Savile Row…

a lot of people talk about the “smart money”. “Follow the smart money” they say, or “the smart money was buying while the market sold off”, and all sorts of things that basically allude to those who act against the conventional wisdom of the masses and end up making a lot of money in the process. The “smart money’, or “market wizards”, or some such fantastical title is given to these mysterious and unknown market participants that are somehow always right. Well, today we are going to be following some of the investors that we consider to be the “smart money”. Four billionaire investors. Bausch Health Companies (BHC) is the third largest position in the portfolio of John Paulson (famous for his bet against subprime mortgages). It is the second…

Ugesi This issue’s isiZulu word is ugesi. Ugesi is electricity. I recently had an ugesi saga at my home. Guess what happened? Yep, you have guessed it. Ridiculous question. Anyway, here is what happened. One morning, a young woman, my nine year-old daughter, came into my bedroom to tell me we didn’t have ugesi. She said it like I was an irresponsible father, who had no concern for his children being warm in winter or having a warm meal. I asked if it was load shedding, to which she answered, “Nope, it’s just our house, loser”. Okay, she didn’t actually say loser, but she was thinking it. That was my guess. Trying to feel less stupid (as she was making me feel), I guessed that we were out of prepaid…