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Welcome to the Sharenet Daily Equity Report
 Issue: 10 February 2011 20:00

The outlook for longer term interest rates

Long term interest rates are typically a good predicator of market sentiment. These rates are closely followed and so it was interesting to see BCA Research make the comment yesterday that, “The recent breakout of the U.S. 10-year Treasury yield above 3½% is an important technical signal, highlighting that the macro backdrop is increasingly turning against the bond market.”

Chart US 10 year Treasury yields

Source: Yahoo

Short term interest rates are driven by central banks to either stimulate or curtail growth and inflation, while longer term rates are a clearer reflection of where the market sees inflation over time.

At major turning points the combined market has been wrong. 30 years ago US bonds were yielding 15% as lenders banked on high inflation. As US inflation trended down, so lenders adjusted long rates down in sympathy.

Now we are arguably at another inflection point. Should inflation prove to be difficult to contain, long term interest rates will have to continue to steadily adjust upwards. It will never be in a linear fashion, and so while there will be opportunities on a tactical basis, there is a good probability that this will not be the case strategically.

Graph: real effective funds rate

Against a likely backdrop of higher future inflation, the valuation of global bonds is not attractive, given that they love a low inflation or a steadily declining inflation environment.

The chart presented by BCA Research clearly indicates how the US quickly moved to negative real interest rates in 2008 in a direct attempt to pump liquidity into markets. There was a degree of normalisation in 2009, but as inflation started picking up in 2010, while at the same time that the US maintained near zero interest rates, the real rates turned negative again.

Despite the inflationary concerns across the developed market’s three main central banks, i.e. the US Federal Reserve, UK’s Bank of England and Europe’s, European Central Bank, are likely to hold rates at low levels until early 2012. There is an outside chance that the Bank of England jumps the gun in 2011, given its high inflation numbers.

Source: Wells Fargo Securities

If you are an investor that shares these views of higher inflationary pressure into the future, it is important to assess the composition of your asset allocation.

If you would like to set up a time to meet in order to discuss your portfolio and its positioning, please don't hesitate to contact us.

Kind regards

Ian de Lange
021 9144 966

Thu, 10 Feb 2011

South Africa's rand fell more than 1.0 percent against the dollar on Thursday, hit by worse-than-expected local manufacturing data and tracking weaker emerging markets as investors avoided holding riskier assets.  Full story
A fall in South African thermal coal prices to $113 a tonne this week has started to draw out Indian buyers who have been sidelined since November, Indian traders said on Thursday.  Full story
A spike in iron ore prices lifted Kumba Iron Ore's full-year profit, with the company saying it expected prices to remain firm this year.  Full story
Revenue for the interim period ended 31 December 2010 increased to R322.4 million (2009: R249.2 million). Operating profit for the period was higher at R40.3 million (2009: R34.9 million). Attributable to equity holders of the parent rose slightly to R22.8 million (2009: R22.4 million). Head  Full story

Anglo American's thermal coal unit is keen to expand its operations in South Africa and beyond, but is waiting for price. . .  Full story
South Africa's Telkom will offer some of its workers voluntary severance packages and met with unions this week, as the struggling. . .  Full story
Growth in South Africa's manufacturing output slowed to just 0.2 percent on the year in December and was far below analysts. . .  Full story
South Africa's rand fell over 1.0 percent against the dollar after worse-than-expected December manufacturing data on Thursday.. . .  Full story

Trading Statistics


Major Moves Up
SharenameSaleMove% MoveVolume
1 ONELOGIX  134129.84.%65571
2 METROFILE  19573.72.%26550
3 S-OCEAN  21573.37.%18000
4 AFRO-C  16553.13.%15000
5 PALCAP  30093.09.%9485
6 CBH  360102.86.%8509
7 ACUCAP  3227872.77.%36426
8 OMNIA  76002002.70.%32600
9 AVENG  3785852.30.%1155789
10 STEFSTOCK  1135252.25.%63555
11 UNIVERSAL  13932.21.%14070
12 MONDIPLCP  61001302.18.%1365989
13 VIVIDEND  480102.13.%43000
14 COMAIR  24241.68.%4550
15 JSE  7882921.18.%364662
16 RAUBEX  2090231.11.%203196
17 GROUP-5  3085331.08.%46095
18 MONDILTDP  6040601.00.%418168
19 SASOL  369813640.99.%2344614
20 PERGRIN  1080100.93.%26800

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Major Moves Down
SharenameSaleMove% MoveVolume
1 MMG  181-19-9.50.%3300
2 WITSGOLD  4999-501-9.11.%29176
3 AMECOR  160-13-7.51.%8184
4 ROLFES  177-13-6.84.%1823
5 EASTPLATS  1197-81-6.34.%29243
6 TRNSHEX  246-16-6.11.%10199
7 CASHBIL  8600-558-6.09.%19513
8 AMA  198-12-5.71.%109768
9 GOLDREEF  1680-90-5.08.%714486
10 ANOORAQ  1098-52-4.52.%40090
11 SOVFOOD  650-30-4.41.%15000
12 AME  4000-150-3.61.%222
13 URONE  4540-166-3.53.%25168
14 WESCOAL  115-4-3.36.%39800
15 BCX  575-20-3.36.%44899
16 ALTECH  6000-199-3.21.%394774
17 GBGOLD  1930-62-3.11.%2216
18 HARMONY  7799-250-3.11.%1672394
19 CML  1650-50-2.94.%573954
20 RESILIENT  3024-90-2.89.%652393

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New Highs
SharenameSaleHighMove% MoveVolume

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New Lows
SharenameSaleLowMove% MoveVolume
1 MRHLD  29702852200.68.%1232113

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Spot Prices
NameTimeRPMove% Move
JSE Overall17:0032409.48-268.08-0.82%
JSE Top 4017:0029247.51-259.51-0.88%
JSE Gold17:002600.79-55.79-2.10%
JSE Financial17:0021195.54-162.45-0.76%
JSE Industrial17:0031535.18-259.92-0.82%
JSE Indust 2517:0026293.56-222.68-0.84%
JSE Resource17:0059595.79-510.33-0.85%
DJ Futures19:5612184.00-18.00-0.15%
DJ Ind19:4512206.59-33.30-0.27%
SP 50019:401320.63-0.25-0.02%
FTSE 10018:356020.01-32.28-0.53%
All Ords07:365001.706.600.13%
NZSE 5006:323365.87-20.61-0.61%
NameTimeRPMove% Move
Gold/R kg20:0031777213630.43%
Brent Crude19:56100.80.340.34%
Rand / Dollar19:597.25850.06200.86%
Rand / Pound19:5511.66370.08930.77%
Rand / Euro19:559.8866-0.0078-0.08%
Rand / NZD19:585.56420.01180.21%
Rand / AUD19:557.29430.00550.08%
Yen / Dollar19:5983.20000.84001.02%
Euro / Dollar19:550.73360.00520.71%
Dollar / Euro19:591.3625-0.0098-0.71%
Pound / Dollar19:550.6200-0.0008-0.13%

Click here for the Sharenet Spot Price page
Index Summary
Index NameRPMove% Move
Top 4029,247.51-259.51-0.88%
Mid Cap41,014.98-206.76-0.50%
Small Cap32,381.56-99.54-0.31%
Resource 2059,595.79-510.33-0.85%
Industrial 2526,293.56-222.68-0.84%
Financial 158,015.49-74.98-0.93%
Financial & Ind. 3029,591.03-267.31-0.90%
All Share32,409.48-268.08-0.82%
Oil & Gas 28,032.81274.570.99%
Mining 39,321.75-440.00-1.11%
Gold Mining2,600.79-55.79-2.10%
Platinum Mining80.00-.22-0.27%
Oil & Gas Producers 15,072.72147.630.99%
Basic Materials 32,985.63-345.20-1.04%
Chemicals 13,504.01-23.94-0.18%
Forestry & Paper 14,006.7197.920.70%
Industrial Metals 29,787.90-261.07-0.87%
Industrials 28,323.93-100.53-0.35%
General Industrials 77,170.86-313.87-0.41%
Consumer Goods 26,682.49-21.71-0.08%
Automobiles & Parts 2,830.57.000.00%
Household Goods155.77-3-1.69%
Health Care 31,440.49-215.26-0.68%
Beverages 82,525.1437.590.05%
Food Producers 47,604.98-520.55-1.08%
Index NameRPMove% Move
Personal Goods 415.881.490.36%
Consumer Services 50,845.66-921.94-1.78%
General Retailers 36,791.93-698.29-1.86%
Travel & Leisure 4,007.56-36.84-0.91%
Media 85,156.07-1649.75-1.90%
Support Services 2,545.47-7.48-0.29%
Telecommunications 60,386.39-1136.76-1.85%
Financials 21,195.54-162.45-0.76%
Banks 38,960.92-568.40-1.44%
Non-life Insurance 30,553.86.000.00%
Life Insurance 16,093.88-30.65-0.19%
General Financial 2,311.90-21.88-0.94%
Technology 20,886.03-146.88-0.70%
SHARIAH TOP40 3,335.75-33-0.97%
FTSE/JSE SHARIAH ALL3,386.20-31-0.91%
COAL MINING21,563.28260.12%
FTSE JSE Fledgling 4,652.10-14-0.30%
FTSE/JSE Alt X 1,103.85131.16%
RESOURCE 32,788.01-281-0.85%
DIVIDEND PLUS165.91-2-1.11%
FTSE/JSE RAFI 406,780.36-50-0.73%
Capped Top 4015,107.37-132-0.87%
Capped All Share16,248.07-134-0.82%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
11 Feb 2011AQUARIUSDecember 2010 (Interim)
11 Feb 2011AQUARIUSCVTDecember 2010 (Interim)
14 Feb 2011GROUP 5December 2010 (Interim)
15 Feb 2011CLIENTELEDecember 2010 (Interim)
15 Feb 2011HULAMINDecember 2010 (Final)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
FIRSTRANDB-P11-02-0311-02-1811-02-28R 3.1355
CAPITAL11-02-0311-02-1811-02-28R 0.3178
REDEFINE11-02-0211-02-1811-02-28R 0.1500
HUDACO11-01-2811-03-0411-03-14R 2.3500
CBH11-01-2711-05-0611-05-16R 0.1110
Ex Div**
Share NameDec-DateLDTPay-DateAmount
FOORDCMPS11-01-2011-02-0411-02-14R 0.5385
UCS10-11-2311-02-0411-02-14R 0.0500

Upcoming AGMs**
CodeCompany NameDateStatus
ARLAstral Foods Ltd10/02/2011Confirmed
OCEOceana Group Ltd10/02/2011Confirmed
ANDPAndulela Investment Holdings Ltd11/02/2011Unconfirmed
SKYSea Kay Holdings Ltd11/02/2011Confirmed
ANDAndulela Investment Holdings Ltd11/02/2011Unconfirmed

Stock Exchange News Service
10/02/201117:50 Sea Kay Holdings Limited - Fulfilment of commitment to the NHFC, Gauteng
10/02/201117:43 Blue - Proposed Blue BEE Transaction, Publication of Financial Effects
10/02/201117:34 Quantum Property Group Limited - Change to the board of directors
10/02/201117:30 Nictus Limited - Dealing in securities by a director
10/02/201117:00 New Europe Property Investments Plc - Condensed consolidated audited
10/02/201116:03 Austro Group Limited - No change statement and notice of Annual General
10/02/201115:15CCO - Capital & Counties Properties PLC - Notification of major interests in
10/02/201114:02 SABMiller Plc - Millercoors posts strong profit growth in 2010
10/02/201113:46 Bioscience Brands Limited - Sale of Phyto Nova Brand and a further
10/02/201113:24 Sekunjalo Investments Limited - Results of the annual general meeting
10/02/201113:00 Glenrand M I B Limited - Important Dates and times in respect of the
10/02/201112:42 Cape Empowerment Limited - Cautionary Announcement
10/02/201111:00 Aquarius Platinum Limited - 2011 Half year financial results - December
10/02/201110:56KIOIHD - Investec Warrants - Declared final dividend announcement on Kumba Iron
10/02/201109:38 BHP Billiton Limited - Transaction In Shares
10/02/201109:10 Anglo American Plc - Anglo American plc notification: Kumba Iron Ore
10/02/201109:00MND/MNP - Mondi Limited/Mondi Plc - Mondi Group: Trading Statement
10/02/201109:00 Pan African Resources plc - Site Visit to Barberton Mines
10/02/201108:00 Kumba Iron Ore - Audited condensed consolidated financial report for the
10/02/201107:06 DRDGOLD Limited - Interim report to shareholders for the quarter and
10/02/201107:05 DRDGOLD Limited - DRDGOLD to develop separate investment opportunities for
10/02/201107:05 DigiCore Holdings Limited - Group interim results for the six months ended

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