Indholdsfortegnelse for 6/25/2021 i Finweek - English

there is something to be said for momentum – social and economic. It is a concept that has special bearing on human behaviour and expectations. Where a trend has firmly become established and enough people have come to expect that it will continue, momentum will accelerate. And it will dissipate just as fast. There have been many examples of momentum that have played out recently. The buzz around cryptocurrencies – although I am still very sceptical about the rationale behind its existence – is one example. Momentum in the world of cryptocurrencies is like the tides of the oceans, although it may feel that more are being affected by spring tides than through the normal working of market cycles. There is also more fundamental and tangible momentum to save the…

– Gidon Novick, Kulula founder and now CEO of Takatso, a consortium formed by Harith General Partners, an investor in African infrastructure and airports, and airline management firm Global Aviation, expressed confidence in relaunching SAA into a driver for tourism and economic growth in South Africa. The consortium was announced as the long sought-after equity partner and will take a 51% stake in SAA, while the government retains 49%. Listing the airline in the future was cited as one of the proposed ways of addressing SAA’s future funding requirements.…

asset manager Ninety One struck a positive note for locally listed platinum group metal (PGM) stocks in a recent report, saying they were under-bought on the basis that the introduction of battery electric vehicles (BEVs) does not immediately spell the end of the internal combustion engine. Vehicles powered by internal combustion engines need PGMs in their autocatalysts whereas BEVs don’t. However, Ninety One’s portfolio managers, Unathi Loos and Daniel Sacks, think adoption of BEVs will be a gradual process. In addition, science is finding ways to accommodate PGMs in other ways, specifically, in hydrogen-powered fuel cells, which need PGMs to work. It all adds up to the prolonged relevance of PGMs that, coupled with the short-term inability of PGM miners to meet demand expansion, asks questions of the current ‘end-of-the-cycle’…

THUNGELA RESOURCES BUY SELL WAIT By Simon Brown Coal still a good bet Yes, coal is dirty and on the way out. But it remains the dominant source of electricity generation worldwide and this will be the case for many decades to come. Thungela has export permits through the Richards Bay Coal Terminal and ships high-quality thermal coal to India, Asia, South-East Asia, the Middle East and North Africa. The initial response to the company’s listing on 7 June was selling, since many shareholders who received Thungela’s shares because of holding Anglo American, did not want the stock. Anglo spun out its former local coal business in Thungela. Adding to that there will be a portion of potential investors who simply don’t want to hold a coal asset. But, Thungela’s…

while the South African economy is currently experiencing some welcome tailwinds and positive economic news, we urgently need to convert short-term momentum into a longer-term growth rate that is materially higher than what we’ve achieved over the last two decades. Growing domestic demand is one indicator of an economic recovery, so, it was a positive sign for the manufacturing sector that Absa’s Purchasing Managers’ Index recorded a small rise to 57.8 in May after dropping to 56.2 in April. It always improves sentiment when the rand is buoyant and equity markets see gains, especially for the JSE, which has on aggregate struggled for the better part of a decade. High commodity prices combined with a relatively low level of imports (in April imports declined 5% compared with the previous month)…

FAMOUS BRANDS Famous brands hanging on Famous Brands’** financial results for the year ended February and released on 31 May, were a horror show with the only glimmer of good news being that the UK venture, GBK, is over and won’t cost any more cash. The dividend will likely remain suspended for another two years as they pay down debt. Operating margins collapsed but will recover quickly as the fixed-cost nature of their businesses meant markedly reduced revenue due to hard lockdowns while fixed costs remained in place. Earlier this year I was concerned about the impact of a third wave of Covid-19 cases and that it could lead to new lockdowns, but the recent announcement from the president shows a soft touch. But lockdown fatigue means a lighter lockdown…

what goes up, must come down. Or a high valuation will always revert back to the mean. This market wisdom has been upended by effectively more than two decades of accommodative monetary policies by central banks, resulting in some companies, mainly Big Tech, continuing an upward trend into elevated market valuations. There are little indications that this may end soon – even with G7 countries recommending a global minimum corporate taxation level of 15% at a recent meeting – which must now be put to the G20. The worth of companies on stock markets are measured by their price-to-earnings (P/E) ratios, reflecting the share price at which they are trading, compared with the historical earnings the company reported. The higher the P/E, the more sought after the share. The long-term…

quality is a term and an investment approach that has been increasingly adopted by investors in recent years, given the proven long-term track record of this style of investing. However, wider adoption has also led to both inconsistency and impurity in the definition of “quality” being used. In particular, the lines have become blurred with growth investing, as growth has outperformed other styles in recent years. The Ninety One Global Franchise Fund reflects a purer and more consistent expression of quality that is focused solely on what we believe to be attractively valued best-of-breed “franchise” companies. They have the following key attributes: hard-to-replicate enduring competitive advantages; dominant market positions in stable, growing industries; low sensitivity to the economic and market cycle; healthy balance sheets and low capital intensity; and sustainable…

with just 30% of assets invested in US shares against 66% in the MSCI World Index, the Orbis Global Equity Fund’s current underweight position to the US market is the largest in its history. As always, our portfolio positioning is driven by bottom-up decisions about individual businesses. In recent years, the stock picking environment in the US has been characterised by rising aggregate valuations, surging liquidity, dwindling concern for risk and increasing speculation. Yet, despite stiff valuation headwinds at the broader market level, some of our highest-conviction ideas have come from the US market, where we continue to own several businesses that we believe offer attractive long-term risk-adjusted returns. We have uncovered shares of businesses that are cyclical, but also competitively advantaged. XPO, a transportation and logistics company with operations…

a 27% lift in Remgro’s share price since January is an indication that patient but potentially frustrated Remgro shareholders have seen the company turn a corner. With Covid-19 being the latest in a barrage of bad news for SA Inc, the last five years have not been kind to Remgro’s domestically focused portfolio, but management is taking action to make the best of a difficult situation. The challenges facing Remgro are manifold. When the market is under pressure, investors prefer a more direct route to assets, eschewing the danger of discounts to net asset value (NAV) that plague holding company structures and bog down growth in their invested capital. When markets turn, however, windfalls can be created from narrowing discounts to NAV and the sale or unbundling of underlying assets…

published earlier this year, Johan Fourie’s Our long walk to economic freedom – Lessons from 100 000 years of human history, is a succinct and accessible piece of economic history. For the lover of history, the central importance of economics in how humans as a species developed over the aeons is set out in a meticulous way in this book. Your book traces humanity’s rise as a species to its current position as the dominating species on the planet. Why is history, especially the history of economics, a necessary subject to understand? It is important to distinguish between economic history and the history of economics. The history of economics is about studying the ideas of the great economic thinkers, like Adam Smith and John Maynard Keynes. Economic history tells the…

the deadline for the implementation of the remaining provisions of the Protection of Personal Information Act (POPIA) is less than a week away and the gravity of the process has now dawned on people. Many companies have left it too late, despite having had a grace period of 12 months to ensure they amend their systems, procedures and policies to become fully compliant. The key sections that come into effect on 1 July include the eight conditions for the lawful processing of personal information, dealing with special personal information (such as race, health, religion) and direct marketing. The conditions and obligations are quite onerous, particularly for small businesses that process personal information, and special personal information. Many small businesses have heard about the act, but have very little understanding of…

if there’s one lesson we’ve learned from economic history, it’s that innovation is key to human flourishing. One would think, therefore, that innovation is at the forefront of government policy. But sadly, that is often not the case. In fact, as Deidre McCloskey and Alberto Mingardi argue in their book, The Myth of the Entrepreneurial State, a response to Maria Mazzucato’s popular The Entrepreneurial State, the state is often a barrier rather than a boost to innovation. It is this lack of innovation that has contributed to the rapid growth of a relatively recent institutional innovation: the tech incubator and accelerator. Josh Romisher is CEO of the Nedbank Stellenbosch University Launchlab, an incubator for new start-ups. Having lived and worked in the US, Europe, Africa and Australia, he has seen…

– Tsholofelo Moreo, mayor of Ditsobotla local municipality in the North West, said the provincial government set up a task team of MECs to persuade Clover from closing SA’s biggest cheese factory in Lichtenburg. The dairy group announced that ongoing poor municipal service delivery, such as poor infrastructure, and water and power outages in the area, led to its decision to shut down and move production to Durban at a cost of around R1.5bn. Clover said despite numerous efforts to engage with the municipality on these matters, the issues have not been resolved.…

crises often lead to unexpected innovations, and it is often in times of need that people come up with great ideas. One such plan for a new business was born Today, Brendan Williamson is the MD of Aquasky, which uses technology to extract water from the air and bottling it. He says that as Capetonians with Day Zero looming before them, they quickly had to adapt to the new norm, conserving water and finding new solutions. He was in the fast-moving consumer goods (FMCG) industry for many years, and during that time he took a break and used the time to investigate several options in finding a sustainable solution for water shortages. He came upon the concept of extracting water from air, and because he has always wanted to start…

president Cyril Ramaphosa’s unexpected decision to lift the cap on private sector electricity generation has fuelled hope that an end to South Africa’s power crisis is in sight, and that further long-awaited reforms to spur the sluggish economy are imminent. But even in the best case scenario, it will be another two years before enough new generation capacity is installed to cover the existing gap between supply and demand, allowing Eskom to end the rolling power cuts, which it has been forced to implement to protect the national grid. Eskom spokesperson Sikonathi Mantshantsha was blunt about this in interviews following the 10 June announcement of Ramaphosa’s decision, saying that loadshedding would not be eliminated until the country had an additional 4 000MW of additional generation capacity. But there are implementation…

established in 1947 and listed on the JSE in 1997, Woolworths Holdings is an investment holding company. Its operating segments include clothing, general merchandise, food, David Jones and Country Road Group. It operates in 11 countries in sub-Saharan Africa. Its David Jones and Country Road divisions, department store chains located in Australia, have approximately 89 stores in 11 countries. It has over 1 300 store locations. Share price history Woolworths tested an all-time high at 10 800c/share in November 2015, after buying Australia’s second-largest department store David Jones for $2bn (R21.5bn) in June 2014 – its biggest deal to date, making them the leading retailer in the southern hemisphere. Having grown profits by 20% annually on investments in product development five years prior, Woolworths’ growth trajectory was steep, possibly reaching…

we tend to watch directors of listed companies like hawks, analysing their every move and worry when we see they sell shares or announce their departure from the company. Recently it was announced that Purple Group* founder and current chairman, Mark Barnes, would be selling a chunk of the Purple Group shares that he owns via Business Venture Investments 1 847 (BVI) (of which he owns 50%). The deal is complex, but essentially BVI holds some 34% of Purple and will sell between 4% and 18% of Purple Group. This resulted in several people contacting me in a panic wanting to know why he is selling and if they should worry as he’s an insider and there is a problem at Purple Group. Now, I don’t have any insight into…

it came as a great shock to find out that our local labour market is not just struggling, but that the situation has also worsened, with our unemployment rate having risen from 29.1% at the end of 2019 to 32.6% in the first quarter of 2021. Let’s put this into context: Of course, South Africa is still an emerging country, and like a child needs time to grow up, we know both scenarios cannot happen overnight. However, the increase from the (already high) rate of 24.8% ten years ago to the current 32.6%, means that something, somewhere has gone very wrong. According to Stats SA, the current number of unemployed people in SA amounts to 7.242m. Let’s picture it this way: If we add up all employed people currently living…

the South African economic saga continues to be disconcerting and consistently impaired by a largely socialistically leaning, corrupt, cadre-laden and inept regime. On the flip side, however, has been the profound enterprise and endurance of the country’s private sector. Far too little credit is accorded its valiant attempt in boosting economic growth and development in the face of fierce nationalisation challenges to mining, energy, agriculture, healthcare and alike. However, all is not doom and gloom. Quality shares look cheap, bonds have delivered good returns for investors, commodity prices are up 20% this year, agricultural exports promise to perform across the board and the rand is outperforming the basket of currencies of our trading partners. Within a broader milieu, several SA mutual funds have generated excellent returns of between 30% and…

in the prologue to his book Antifragile, Nassim Nicholas Taleb says, “You want to be the fire and wish for the wind.” We are not sure if Cape Town’s firefighters would be saying the same after the devastating fires that took place recently. The point he makes, though, is relevant for us operating in the financial markets, which is that we do not want to hide from uncertainty, chaos and randomness, as he puts it, but to embrace it and benefit from it. When we survey the economic landscape in South Africa today, we observe much pessimism about the future, precisely because so many areas face uncertainty and risks. Over the past year we have been living through the Covid-19 pandemic, only adding to the existing misery. The deterioration in…

record low interest rates and rising inflation fears have complicated the decision-making process for investors who need to either generate an income or are looking for lower-risk investment options. Selectivity remains key in the fixed-income space where risks abound, but investors also need an expanded toolkit to meet the challenges of the current unprecedented financial environment. Given these conditions, we believe multi-asset funds deserve a fresh look: Their ability to access a variety of asset classes and adjust allocations in line with the fund mandate as conditions change, can be valuable to income investors with the capacity for marginally more risk. At PSG Asset Management, we aim to allocate capital to our best ideas, balancing risk and reward in accordance with the mandate needs. Importantly, we do not self-identify as…

If savings are your area, pension funds your business, investing your passion – we’ve got the information you need to read. www.moneymarketing.co.za FOLLOW US! Follow @MMMagza on Twitter and @MoneyMarketingSA on Facebook and Linkedin. Subscribe to our NEWSLETTER bit.ly/2XzZiMV For more information and advertising opportunities, contact Mildred Manthey. Direct: +27 (0)11 877 6195 Cell: +27 (0)72 832 5104 Email: mildred.manthey@newmedia.co.za…

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You do as you see This issue’s isiZulu word is ufuzo. Ufuzo is inheritance – taking after someone. It isn’t inheritance as in the assets or money you get when your parents, grandparents or other family members pass on. Ufuzo is the genetic and habitual stuff, you get from your people. For example: If I were a corrupt executive that couldn’t stop myself from embezzling, and my daughter grows up to be an embezzler too, people would say it’s ufuzo – she takes after me. But it means I have inherited my thieving streak. I didn’t create it and was surely not the first one in my bloodline to be a thieving fiend. People lay all your children’s shortcomings at your doorstep when you too are a victim of ufuzo.…

the goal of building an inclusive, demographically representative economy will for an exceptionally long time remain a challenge that many South African corporates will have to grapple with. What some perceive as inclusion can easily be viewed as exclusion by others, often creating a climate of distrust, fear, loathing, and sometimes serious corporate bust-ups. While corporates always must find a balance between bringing previously excluded people (black people) onto their boards and executive teams, they equally must be careful of not being seen as engaging in reverse racism by people (white people) who historically benefitted from apartheid policies that economically disempowered black people. Even though as a country we have employment equity laws to guide companies on implementing transformation in their workforces, from top to bottom, the task of implementing…

– Johann van Tonder, economist at Momentum, noted that SA’s first quarter economic growth rate of 4.6% (on a seasonally adjusted and annualised rate), including the opening of the world economy, which created more demand for exports, among other factors, will contribute significantly to this year’s growth rate. Should the current international and domestic economic environment continue for the rest of the year and Covid-19 vaccinations accelerate henceforth, the economic growth rate may well exceed 4% in 2021, Van Tonder said.…

mr Price recently released solid financial results for the 53 weeks ended 3 April 2021. These results beat analyst expectations across most metrics. The company’s operational performance was driven by market share gains and a stronger second-half performance. We think the positive share price reaction was driven by the solid results and their newly outlined strategy during its earnings call, which was positively received by the market. Mr Price intends being the best value retailer in Africa across all retail segments by way of market cap valuation, and identified six strategic pillars to achieve this. Mr Price also plans to improve its earnings growth significantly over the next few years. The company said that it will be looking to pursue growth opportunities in the aspirational value segment in SA across…

creating a future-proof business with sustainability is crucial for the property sector’s prosperity. Climate change and the impact of Covid-19 shine the spotlight on sustainability, and environmental, social and (corporate) governance (ESG) factors have taken prominence. According to the OECD Business and Financial Outlook 2020 report, investors consider ESG information increasingly important to determine whether a company is adequately managing risk and aligning its strategy to achieve long-term returns. Pension funds and insurance companies are increasingly choosing to integrate ESG factors in their investment decisions, the report says. So, how does the property sector stack up from a sustainability and ESG perspective? South Africa’s real estate investment trusts (Reits) adhere to best practice recommendations (BPR), which improve transparency and comparability of financial reporting. For example, SA’s second largest Reit, Redefine…

the US-dollar-based and award-winning Denker Global Financial Fund, managed by Kokkie Kooyman, returned a phenomenal 77.7% during the 12 past months to the end of May 2021, well ahead of the MSCI World Financial Index’s return of 62.5%. Naturally, attractive valuations, good stock-picking and the lift in global equity markets contributed to the performance, but much also was grounded on Kooyman’s personal insight, judgement and general acumen. He previously filled several investment management roles at Old Mutual, spent several years managing local and global funds at Coronation, and established SIM Global in 2004, which merged with SIM Unconstrained Capital Partners to form Denker Capital. He answers a few questions. Does the global financial sector still offer opportunity? Definitely. The sector was sold down aggressively in the first quarter of 2020…

for the past two decades, the Coronation Capital Plus Fund has been the ideal solution to a delicately balanced problem faced by post-retirement investors. With its 20-year anniversary due in July, we look at how this fund has delivered exceptional outcomes for those drawing a regular income. We also look at how investors can expect enhanced outcomes in future, thanks to recent mandate changes and a fee reduction. A delicately balanced problem Post-retirement investors rely on their asset manager to achieve a dual objective on their behalf: balancing the need for capital growth with the associated risks of drawing a regular income. On the one hand, these investors require capital growth through inflation-beating returns to keep up with rising prices and to make that capital last over a multidecade period…

stock markets have been all over the show in recent years and South African shares have been no exception. In the past year, we saw the FTSE/JSE All Share Index lose about a third of its value and now it’s up more than 35% on March 2020. Five years ago, our market had been considered too expensive, yet in ensuing years, many general unit trusts performed pretty poorly relative to domestic inflation. Not dissimilarly on the international front, we’ve seen the Global Dow rise by 54% in the past year, the Dow Jones Industrial up 40%, and the Nasdaq up 46%. Where does this leave us going forward? Allan Gray’s Sandy McGregor points to the US being of critical importance to all investors, regardless of where they are domiciled. The…

global giving is growing, gaining visibility and creating much-needed change around the world, according to a global philanthropy report by the Swiss multinational investment bank and financial services company, UBS Group AG. It states that over time and across geographies, the world has witnessed a near-universal charitable instinct to help others. Wealthy individuals, families and corporations are indeed looking to give more. This has been witnessed in recent years with the formation of The Giving Pledge in 2010 by Warren Buffett and Bill and Melinda Gates. It is a commitment by the world’s wealthiest individuals and families to give back, at least half of their wealth. Those who have taken the pledge include Mark Zuckerberg and Dr Priscilla Chan, Elon Musk, Strive and Tsitsi Masiyiwa, Patrice and Dr Precious Motsepe.…