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Market Scorecard
Stocks on Friday got a boost from the plan announced by our president on Friday. We are currently light on details, but they should roll in over time, starting with the new visa regulations today. As the president said, we don't have the ability to spend more money, so it is a matter of changing our priorities. I agree, we don't need a government that spends more, only to make our finances more precarious.
There is an economic term called 'crowding out', which is where government spending gets too big and doesn't allow room for the private sector to operate. If you have a choice, the private sector should do more and governments should do less because governments can't help but be inefficient. How much better off would the people of South Africa be if the government increased grants, built houses or improved our roads, instead of wasting money on SAA. As we saw last week from Comair, it is possible to run an airline profitably.
In general, the government should focus on infrastructure development and protecting private property rights, and then leave the free market to allocate resources. A smaller government means, lower taxes, which translates into more private expenditure and better economic growth. The hard part is having a small government.
Some non-cash changes that President Cyril Ramaphosa announced which should improve growth almost off that bat, are the relapsing of much-needed spectrum for 4G and 5G, and then the visa initiative. Both these initiatives basically boil down to using less regulation to boost economic growth. Good news all around.
Yesterday the S&P 500 closed down 0.35%, and the Nasdaq closed up 0.08%.
Company Corner
One thing, from Paul
Amgen is a core holding in Vestact US portfolios. It is one of the world's leading biotechnology companies, and it closed at a lifetime high of $207.21 last night, giving it a market capitalisation of $134 billion.
It has a portfolio of drugs in production and as well as new ones in development. It's areas of focus are cardiovascular disease, oncology, bone health, neuroscience, nephrology and inflammation.
One of its new cancer drugs in trial is code-named AMG 420. Sounds like a new model of Mercedes Benz!? It is actually an experimental treatment for Myeloma, which is cancer of the blood plasma. It's an anti-BCMA agent, working on the B-cell maturation antigen (BCMA) to activate the body's auto-immune response. In other words, its BiTEs (Bi-specific T-cell engagers) direct the host's T cells to attack the cancer cells.
Anyway, Amgen's AMG 420 is undergoing detailed clinical testing, and the BiTE study has been delivering encouraging results. The findings were presented at a Myeloma conference, to much acclaim. As you can imagine, finding a treatment which works to delay or reverse cancer is hugely significant.
If you can handle lots of medical acronyms, click here to read more on the Pharma website EndPoints
Byron's Beats
On the 22nd of September Mediclinic opened it's Parkview Hospital. No, this facility is not overlooking Zoo Lake. It is in fact a 182-bed in- and out-patient facility conveniently located on the intersection of Umm Suqeim Road and Sheikh Mohammed Bin Zayed Road in Dubai.
We are not used to hearing this in SA but the hospital came in 6 months ahead of its original schedule. That is good going. The project is the biggest greenfield construction project by value ever undertaken by Mediclinic. Here is what the hospital looks like.
Our 10c Worth
Michael's Musings
If you own an Apple device, you would have received an email last week telling you to pre-order your new iPhone. I know that our Apple products are more expensive than the US, but I was surprised by how much.
The reason for the price difference is our import taxes. I did some quick Googling to see what those rates were, I found this nice breakdown from 2014. Since then our VAT rate has increased, and I wouldn't be surprised if the luxury mark up rate is higher too.
Table found here - Smartphone imports in SA: what you should know
Basically, we are paying an extra 25% thanks to taxes. If you want to tax the rich, targeting iPhones is a good way to do it!
Bright's Banter
I received a Bloomberg notification yesterday as I was basking in the sun in Emmarentia. The Bloomberg notification was about accessory-maker Michael Kors being rumoured to be making a $2 billion offer for legendary Italian fashion house Versace.
Donatella Versace (20% owner of Versace) has a company meeting today with employees and executives on the issue. Current management of Versace includes Donatella and her brother Santo; since their brother Gianni was murdered in the late '90s (Byron says "The Assassination of Gianni Versace" is a must watch).
Michael Kors is on a buying spree as they recently added luxury shoe brand Jimmy Choo in a $1.2 billion deal. Jimmy Choo helped Michael Kors get back on track in terms of earnings growth. Other shareholders in the Versace business include private equity firm Blackstone, which owns 20% of the business and are keen sellers at the price.
Linkfest, Lap it Up
Comcast won a blind auction for UK broadcaster Sky with a winning bid of more than $39 billion.
How can a 4 bedroom house be sold for so much!? What makes it worse is that it is rundown - Four-Bedroom Home Goes on Sale in Hong Kong for $446 Million
Seeing someone in person is over-rated, well it is according to teenagers anyway - Less Talk, More Texting
You will find more infographics at Statista
Vestact Out and About
Michael gets a mention in this Moneyweb article about Aspen's tough times - Aspen Pharma suffers week of woe as valuation tumbles by R45bn
Signing off
The JSE All-share is lower this morning, playing catch up after being closed yesterday. Later today we are expected to hear more about how our visa regulations will change. A headline just flashed up on Bloomberg saying that China will not finance any new coal-fired power stations. They will honour current commitments, that are still unbuilt but will not sign off on any new projects. I can't find any articles online yet though, hopefully, I will have more details for you tomorrow. Then this evening Nike releases their 1Q results. Exciting times after an amazing Tiger win this weekend!
Sent to you by Team Vestact.