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Welcome to the Sharenet Daily Equity Report
 Issue: 31 January 2011 20:00

Another look at investment returns and economic growth

Investors and many fund managers tend to focus a lot on economic growth, past and future, but as we have mentioned before, there is a low to negative correlation between economic growth and investment returns.

The Credit Suisse Global Investment Returns yearbook 2010, opens under the heading, Emerging Markets, with this question, “The opening years of the twenty-first century have been a lost decade for equity investors, with the MSCI world index giving a return close to zero. However, emerging markets have been a bright spot, with an annualized return of 10%. Looking ahead, can we expect this differential to persist?"

This question was asked a year back. With the on-going focus on economic growth coming from emerging markets, it remains a valid question.

US fund managers, Brandes, reported on the work done by 3 London Business School professors and Credit Suisse that reveals that there is no evidence of a connection between growth in a country’s GDP and investment results. Credit Suisse looked at 83 countries, segmenting them based on their real GDP growth over the preceding five years. Then within each quintile an equal amount was invested into the equity market of each constituent country.

The process was repeated each year, and with some countries the study, GDP and return data went back to 1900.

The chart below reflects some of the countries and their corresponding GDP.

Returns, dividends and GDP growth, 1900 - 2009

Source: Credit Suisse

Annualised equity returns by GDP growth
Quintiles- all 83 countries, 1900-2009.

Very surprisingly the countries with the lowest GDP growth had the highest market returns.

In answering the question, as to what explains the disappointing returns from investing in high growth economies, Credit Suisse came up with these answers.

• It may have been a matter of luck, with low growth economies having resources, which with hindsight were undervalued, or

• Investors may have shunned equities in distressed countries, and bid up prices of assets in growing economies to unrealistic levels, or

• Stock prices reflect projected cash flows and their riskiness. When an economy grows, dividends tend to rise, risk is reduced and so the equity premium shrinks. With a smaller equity risk premium, subsequent equity returns should be expected to be lower.

In other words, they conclude, “If the market functions effectively, stock returns should decline after economic growth, and should increase after economic decline.” This is exactly what the research finds.

The research indicates that investors should not spend an inordinate amount on economic data such as GDP when making investment decision.

Kind regards

Ian de Lange
021 9144 966

Mon, 31 Jan 2011

Shares in Rwandan brewer Bralirwa jumped 62 percent on their market debut as the country's stock exchange opened for business on Monday.  Full story
South African government bonds and the rand currency fell to multi-month lows on Monday as political uncertainties in the region centred on unrest in Egypt kept investors away from risky assets.  Full story
South Africa has taken measures to counter capital inflows but the rand is still overvalued, the country's finance minister said on Friday.  Full story

14h16 South Africa's trade account recorded a 10.3 billion rand surplus in December compared with an 8.4 billion rand surplus in November,. . .  Full story
08h47 South Africa's rand firmed slightly against the dollar on Monday, recouping some of the losses that took it to a 4-1/2. . .  Full story
South African stocks dropped over 2 percent on Friday with Murray & Roberts among the worst performers after the construction firm. . .  Full story
South Africa has taken measures to counter capital inflows but the rand is still overvalued, the country's finance minister said on. . .  Full story

Trading Statistics


Major Moves Up
SharenameSaleMove% MoveVolume
1 TRADEH  800720900.00.%
2 KAP  239146.22.%43000
3 SASFIN  42002285.74.%3813
4 AME  39002005.41.%1000
5 GBGOLD  1950754.00.%90
6 ELLIES   21883.81.%125000
7 PBT  11043.77.%11420
8 JASCO  14553.57.%73743
9 RBPLAT  65502203.48.%31823
10 METROFILE  20163.08.%9600
11 URONE  43591252.95.%9682
12 WESCOAL  12032.56.%21000
13 DRDGOLD  33082.48.%298497
14 SOVFOOD  685152.24.%15019
15 SACOIL  15032.04.%1712366
16 MERAFE  15431.99.%10732571
17 SPANJRD  37271.92.%10000
18 MAZOR  16531.85.%72822
19 VUKILE  1385251.84.%7930
20 RAUBEX  2157371.75.%699339

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Major Moves Down
SharenameSaleMove% MoveVolume
1 MRHLD  3110-350-10.12.%11884465
2 OANDO  316-29-8.41.%15160
3 BAUBA  210-16-7.08.%5928
4 DIGICOR  302-22-6.79.%117107
5 VILLAGE  222-13-5.53.%8339
6 ESORFRANK  196-11-5.31.%150669
7 PPC  3120-145-4.44.%3694522
8 ROLFES  177-8-4.32.%6000
9 GROUP-5  3211-144-4.29.%183202
10 TFG  7900-325-3.95.%1572345
11 EHSV  8750-350-3.85.%20705
12 AVENG  3802-148-3.75.%5434941
13 TELEMASTR  130-5-3.70.%23500
14 IMPERIAL  11030-420-3.67.%2204826
15 EQSTRA  675-25-3.57.%326856
16 PICKNPAY  4280-156-3.52.%4395252
17 NUWORLD  2750-100-3.51.%500
18 MRPRICE  5686-204-3.46.%1320634
19 PIKWIK  1830-65-3.43.%532309
20 FAMBRANDS  3780-120-3.08.%50030

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New Highs
SharenameSaleHighMove% MoveVolume
1 TRADEH  800800720900.00.%
2 SASFIN  420042002285.74.%3813
3 URONE  435943601252.95.%9682
4 BELL  11901250100.85.%55862
5 TREMATON  13013010.78.%50000
6 ITLTILE  42542520.47.%9400
7 CERAMIC  14600146500.450

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New Lows
SharenameSaleLowMove% MoveVolume
1 MRHLD  31103026-350-10.12.%11884465
2 KEATON   380344-9-2.31.%219456
3 RBPLAT  655062302203.48.%31823

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Spot Prices
NameTimeRPMove% Move
JSE Overall17:0031398.75-144.30-0.46%
JSE Top 4017:0028145.34-86.76-0.31%
JSE Gold17:002522.15.680.03%
JSE Financial17:0021320.65-142.44-0.66%
JSE Industrial17:0030955.60-450.39-1.43%
JSE Indust 2517:0025664.50-375.13-1.44%
JSE Resource17:0056044.76353.010.63%
DJ Futures20:0011840.0065.000.55%
DJ Ind19:4111872.4448.740.41%
SP 50019:501285.268.920.70%
FTSE 10018:355862.94-18.43-0.31%
All Ords07:504850.00-22.50-0.46%
NZSE 5006:323338.74-13.90-0.41%
NameTimeRPMove% Move
Gold/R kg20:0030832244971.48%
Brent Crude19:56100.022.842.92%
Rand / Dollar19:597.17430.00650.09%
Rand / Pound19:5511.47070.12921.14%
Rand / Euro19:559.82270.07150.73%
Rand / NZD19:585.54600.03020.55%
Rand / AUD19:557.16250.05350.75%
Yen / Dollar19:5981.9700-0.1700-0.21%
Euro / Dollar19:550.7301-0.0062-0.84%
Dollar / Euro19:551.36940.01150.85%
Pound / Dollar19:550.6234-0.0080-1.27%

Click here for the Sharenet Spot Price page
Index Summary
Index NameRPMove% Move
Top 4028,145.34-86.76-0.31%
Mid Cap41,330.13-605.01-1.44%
Small Cap32,439.73-119.50-0.37%
Resource 2056,044.76353.010.63%
Industrial 2525,664.50-375.13-1.44%
Financial 158,069.33-60.82-0.75%
Financial & Ind. 3029,102.83-345.64-1.17%
All Share31,398.75-144.30-0.46%
Oil & Gas 26,308.80-142.59-0.54%
Mining 36,988.99294.990.80%
Gold Mining2,522.15.680.03%
Platinum Mining77.57.350.45%
Oil & Gas Producers 14,145.76-76.66-0.54%
Basic Materials 31,112.06221.280.72%
Chemicals 13,398.66-94.59-0.70%
Forestry & Paper 13,513.13130.180.97%
Industrial Metals 28,906.69-255.60-0.88%
Industrials 28,539.59-642.40-2.20%
General Industrials 76,479.75-736.65-0.95%
Consumer Goods 25,499.45-316.57-1.23%
Automobiles & Parts 2,830.5722.640.81%
Household Goods147.95-1-0.94%
Health Care 31,701.03-261.04-0.82%
Beverages 79,073.77-1264.36-1.57%
Food Producers 47,756.05-192.61-0.40%
Index NameRPMove% Move
Personal Goods 389.82-4.29-1.09%
Consumer Services 50,574.21-651.27-1.27%
General Retailers 37,943.32-805.55-2.08%
Travel & Leisure 4,038.64-35.82-0.88%
Media 82,169.47202.470.25%
Support Services 2,526.69-21.29-0.84%
Telecommunications 60,055.12-1380.12-2.25%
Financials 21,320.65-142.44-0.66%
Banks 40,144.61-293.58-0.73%
Non-life Insurance 30,250.74-84.88-0.28%
Life Insurance 15,624.22-168.04-1.06%
General Financial 2,295.61-22.66-0.98%
Technology 20,544.6734.020.17%
SHARIAH TOP40 3,166.8060.19%
FTSE/JSE SHARIAH ALL3,228.7520.06%
COAL MINING20,322.08-158-0.77%
FTSE JSE Fledgling 4,754.07280.59%
FTSE/JSE Alt X 1,109.23-5-0.43%
RESOURCE 30,833.941940.63%
DIVIDEND PLUS167.93-3-1.71%
FTSE/JSE RAFI 406,564.97-33-0.50%
Capped Top 4014,588.93-70-0.48%
Capped All Share15,765.26-87-0.55%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
31 Jan 2011CAPITALDecember 2010 (Final)
02 Feb 2011GIJIMADecember 2010 (Interim)
02 Feb 2011TOP FIXDecember 2010 (Interim)
04 Feb 2011GFIELDSDecember 2010 (Q)
04 Feb 2011GFIELDSPDecember 2010 (Q)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
FOORDCMPS11-01-2011-02-0411-02-14R 0.5385
DIALOGUE11-01-1311-02-1811-02-28R 0.1238
SBRJSEP1110-12-1511-03-0411-03-15R 1.4100
WINHOLD10-11-2911-02-1111-02-21R 0.1000
UCS10-11-2311-02-0411-02-14R 0.0500
Ex Div**
Share NameDec-DateLDTPay-DateAmount
SBR00310-11-0511-01-2811-02-07R 1.6000

Upcoming AGMs**
CodeCompany NameDateStatus
RDFRedefine Properties Ltd31/01/2011Confirmed
PPCPretoria Portland Cement Company Ltd31/01/2011Confirmed
DLGDialogue Group Holdings Ltd31/01/2011Confirmed
NPKONampak Ltd01/02/2011Confirmed
NPP1Nampak Ltd01/02/2011Confirmed

Stock Exchange News Service
31/01/201117:49 Bauba Platinum Limited - Renewal of cautionary announcement
31/01/201117:39 Capital Shopping Centres Group Plc - Notification of major interests in
31/01/201117:38 Capital Shopping Centres Group Plc - Voting rights and capital
31/01/201117:36EXT - Extract Resources - Adjournment of General Meeting of shareholders
31/01/201117:33GEN - FTSE/JSE Resources 20 - Ground Rule Change
31/01/201117:25 Redefine Properties Limited - Redefine to pay distributions twice a
31/01/201117:24 Redefine Properties Limited - Results of Annual General Meeting
31/01/201117:13 Aveng Limited - Voluntary Trading Update: 31 January 2011
31/01/201117:09 Steinhoff International Holdings Limited - Steinhoff International
31/01/201116:55 Evraz Highveld Steel and Vanadium Limited - Evraz Highveld granted
31/01/201116:05 Optimum Coal Holdings Limited - Trading statement in respect of the six
31/01/201116:00 Argent Industrial Limited - Dealing in securities by director
31/01/201116:00 S A French Limited - No change statement and notice of annual general
31/01/201115:56 Nampak Limited - Conversion and listing of Nampak ordinary shares in
31/01/201115:37 Glenrand M I B Limited - Posting of Glenrand M I B`s annual report and
31/01/201115:30INL/INP - Investec Limited/Investec plc - Investec PLC - Voting rights and
31/01/201115:08 Freeworld Coatings Limited - Hearing of the Securities Regulation Panel on
31/01/201114:00ASA/ABSP - ABSA Group Limited/ABSA Bank Limited - ABSA Group and ABSA bank:
31/01/201113:41 Capitec Bank Holdings Limited - Capitec Rights Offer Results Announcement
31/01/201113:36 Pretoria Portland Cement Company Limited - Results of The Annual General
31/01/201113:21MTNIDI - Investec Bank Limited - Expiry of enhanced dividend securities 14
31/01/201113:18 Taste Holdings Limited - Voluntary Sales Update
31/01/201112:15 Pretoria Portland Cement Company Limited - Trading update for the period
31/01/201112:00 SABMiller plc - Total voting rights and capital
31/01/201111:50 Firestone Energy Limited - Director Resignation and Appointment of New
31/01/201111:49 Firestone Energy Limited - Appendix 3Z
31/01/201111:01 Resource Generation Limited - Rail Link Route Confirmed
31/01/201110:50 Remgro Limited - Finalisation announcement relating to the transfer
31/01/201110:38 Chrometco Limited - Revised Dealing in securities announcement by a
31/01/201109:48 Firestone Energy Limited - Appendix 3X Initial Director`s Interest Notice
31/01/201109:43 Oceana Group Limited - Resignation of company secretary and appointment
31/01/201109:31 Consolidated Infrastructure Group Limited - Dealing in securities
31/01/201109:30BAW/ BAWP - Barloworld divisional day - 31st January 2011
31/01/201109:29 Firestone Energy Limited - Appendix 3X - Initial Director`s Interest
31/01/201109:28 MMI Holdings Limited - MMI Holdings Limited withdraws appeal
31/01/201108:45 Glenrand MIB Limited - Executive director changes
31/01/201108:43 Hulamin Limited - Proposed amendments to The Hulamin Bee transaction
31/01/201108:42 Coal of Africa Limited - Appendix 5B Mining Exploration Entity Quarterly
31/01/201108:39 Capital Shopping Centres Group Plc - Notification of major interests in
31/01/201108:28 Coal of Africa Limited - Report for the Quarter Ended 31 December 2010
31/01/201108:20 Firestone Energy Limited - Renewal of cautionary announcement and trading
31/01/201108:00GLD - NewGold Issuer Limited - Partial de-listing of NewGold debentures
31/01/201108:00 KAP International Holdings Limited - Trading statement
31/01/201107:51INVS - Investec Bank Limited - Expiry of Enhanced Dividend Securities 14
31/01/201107:50INVS - Investec Bank Limited - Expiry of enhanced dividend securities 14
31/01/201107:45INVS - Investec Bank Limited - Expiry notice of barrier put securities on 14
31/01/201107:44INVS - Investec Bank Limited - Expiry of hot enhanced dividend securities 14
31/01/201107:43BILIHG - Investec Bank Limited - Expiry of Hot Enhanced Dividend Securities 14
31/01/201107:42AMSIRS - Investec Bank Limited - Expiry Notice of Barrier Put Securities on 14
31/01/201107:07 BHP Billiton Plc - Transaction in Shares
31/01/201107:06 Gold One International Limited - Press Release: December 2010 Quarterly
31/01/201107:05 Gold One International Limited - Quarterly Activities Report
31/01/201107:05GEN - FTSE/JSE Africa Index Series - Capital Shopping Centres Group PLC (South

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