"Locally yesterday the equities market after the rates announcement and commitment seemingly to rates lower for a while saw the currency strengthen, and that is normally not the best for the local market. Good news for consumers though, at least the pressures are starting to ease. The local market ended the day off 1.75 percent, yowsers, resource stocks down three and a quarter percent."
To market, to market to buy a fat pig. Holy smokes, on the companies front locally that was one of the busiest days that I had seen in a while, at least from a majors point of view. Smaller businesses obliged to report their numbers inside of three months after their reporting period sometimes all come at the same times, within the last few days, this however was different. Trading updates, company results, Byron was on the telly later in the day, on closing bell and processing all the information was quite a mean feat. It is tricky to try and have an opinion on everything, that is the nature of our job however, to try and find out as much as we can on all these listed businesses.
Whilst these company results were flying in there was the debut speech of the Reserve Bank governor Lesetja Kganyago, delivering the
statement of the MPC. He was precise and clear in his delivery, confident and gave the impression that he was in charge, in a measured sort of a way. You got the sense that the continuity that you were looking for was clearly there, it was business as usual. There were few hellos and here I am, just an on your marks, get set, and go. Lower growth expectations and moderating inflation all pointed to low rates for now, in order to boost growth. Kganyago through the delivery of the address kept on stressing what his predecessor had, the volatility of the currency makes it difficult with regards to the inflation outlook.
Consumers locally will have enjoyed around 1.90 Rand per litre decrease (the expectations are for around a 72 cents decrease in the petrol price in December), I suspect that there may be a few more before settling in March next year, having watched these things for a while. The fuel levy (according to this table on the Shell website:
Petrol Price) is 224.5 ZA cents, with the RAF levy being 104 ZA cents. On the highveld here (unbeaten Lions team in the Ram Slam T20!) we pay another 33.1 cents (zone differential), 4 cents excise duty which all equates to over 350 cents on top of a basic fuel price (BFP) of 771.75 cents for 93 Unleaded Petrol. That is 45 percent of the basic fuel price. If minister Davies really wanted fuel prices to be cheaper, perhaps he should look at utilising the funds from the collections better and committing to reducing it over time. Better idea? Of course, for us of course.
Locally yesterday the equities market after the rates announcement and commitment seemingly to rates lower for a while saw the currency strengthen, and that is normally not the best for the local market. Good news for consumers though, at least the pressures are starting to ease. The local market ended the day off 1.75 percent, yowsers, resource stocks down three and a quarter percent. Listen in here a second, in Rand terms resource stocks as a collective down 8.25 percent. Phew! Gold stocks down 57.4 percent over the same time frames, five years. Platinum stocks down 48.5 percent over five years. Over the same time frame the overall market is up nearly 83 percent. That is telling, South African is not the investment destination of yesteryear, less resources and more retail, financial services.
Over the seas and far away, stocks rallied in the latter part of trade, closing at another all time high. We have a mere week to go to Thanksgiving (less now) and of course the huge shopping holiday, that being black Friday. Singles day (11/11) in China, Black Friday and Cyber Monday (the Monday after Thanksgiving) all fall during November, and then the traditional holiday season shopping around Christmas. There is absolutely nothing that I think that I need this year and sadly I cannot think of anything that I want just yet. Boring me! This Barron's piece was pretty telling:
iPhone 6 May Rob Holiday Sales From Some Retailers. Funny sort of headline that, rob from who? Consumers decide at the end of the day what they want to buy and what they do not want to buy, not so?
Company corner snippets
Nampak were out with a couple of announcements yesterday, firstly their results for the full year to end September ->
Audited Preliminary Group Results. At the same time, you can see that there was an announcement about the disposal of their paper businesses here in South Africa was sold to Ethos for 1.575 billion Rand. Proceeds?
"Nampak intends to invest the proceeds of the transaction mainly in strategic growth opportunities in the rest of Africa." Mr. Market did not like the selling price, in the release the value of the assets were 1.969 billion Rand. They have written the asset down by 394 million. Nampak have clearly stated here that they are willing to sell the asset, for cash, at a lower price in order to explore further options across the continent, where the company anticipates higher growth rates. Ex Sasol North America exec, current Nampak CEO Andre de Ruyter suggested in a TV interview that he expected very little from a GDP point of view locally. That does not mean that the company will not invest locally, just in the higher margin businesses. Good business, There is possibly muted growth ahead for a couple of years, the stock looks expensive now, it does have a good dividend underpin.
Investec had results yesterday, for their half year:
Interim Results - November 2014. You need to check out the associated presentation ->
Interim results presentation. You can also watch the associated video. This company is only 40 years old, it is a lifetime however for Stephen Koseff, he has been in an executive role there since 1986, nearly 30 years. I remember in our old offices there was a fabulous chap, friendly, humble and interested in your "stuff", going about his business. I knew his name was Errol, learning a little later that it was not just any Errol, rather Errol Grolman, one of the founders. Ha-ha! Kosseff is 63, I guess he seems in good health and possibly will keep going for some time, the energy is still there, the shift to asset management focus (and selling of underperforming assets) has certainly led to a share price rerating.
Things that we are reading, that we think you should be too
The move toward mobile is good for Apple, Google, Tencent (Naspers), Twitter, Facebook, MTN and a many more stocks -
For The First Time Ever, Americans Spend More Time Using Mobile Devices Than TV. Byron found a stat yesterday that showed 17% of all mobile time is spent using Facebook.
According to this article, oil will probably stay low for the foreseeable future -
Oil at $75 Means Patches of Texas Shale Turn Unprofitable. Even as some shale oil is unprofitable and will stop producing, there is a multitude of other profitable site coming online.
"About 80 percent of potential growth from U.S. shale oil in 2015 would remain economic at $70 a barrel, IHS Inc. said in a report today. At an average annual price of $77 a barrel, output will rise by 700,000 barrels a day in 2015,"
It is no surprise to see that the US dominates in terms of numbers for the super rich -
Wealth is on the way up - 20/11/2014.
Then lastly, a controversial video to end of the week -
In defence of sweatshops - they're often the best and fastest way for the poor to escape poverty. There are many assumptions in the video and some very good points made by the author. I would go one step further and say that governments would not need to interfere in what people get paid if they were not already interfering in the economy already. Governments are slow and inefficient, which leads to the argument that if governments did less there would be more to go around.
Home again, home again, jiggety-jog. Stocks are mostly higher after a better performance in New York overnight than the corresponding one here. Mario Draghi was talking about trying to get inflation back up to desired levels, Mr. Market seemed to interpret that as more central bank intervention. All markets marginally higher across the globe, US futures are up too, indicating another record session for Wall Street.
Sasha Naryshkine, Byron Lotter and Michael Treherne