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Welcome to the Sharenet Daily Equity Report
 Issue: 07 March 2011 20:00

Looking back at bond performance

The annual Credit Suisse Global Investment yearbook was released last week. This report tracks the performance of 19 markets with data compiled going back from 1900 to the end of 2010. The report computes a 19 country world equity and world bond index in a common currency.

Over the 111 years the real return on the world index was 5,5% per year for equities and 1,6% per year for bonds. On a cumulative basis this additional 3,9% over an extended period makes a big difference.

We all know the long term story for equities – i.e. investors who maintain a long enough investment horizon will invariably be rewarded for the additional risk taken on.

But there have also been protracted periods of time where this has not held true and the performance from supposedly lower risk bonds has been on a par with that of global equities.

In fact we are coming out of such a period.

Bonds have been excellent performers over the last decade and indeed from 1980

In the US from 1980 to the end of 2010, the inflation adjusted return from government bonds was an annual 6%. This a far superior return compared to the preceding 80 years where the real return was only 0,2% per annum.

A similar result occurred in the UK where from 1980 to 2010 government bonds produced an annual real return of 6,3%. Over the preceding 80 years UK government bonds had produced an annualised real return of -0,5%.

Therefore in these 2 countries at least government bonds have exceeded investor expectations over the last 30 years, while the performance from equities has generally been disappointing, especially when both these asset classes are adjusted for risk.

Taking all 19 countries into account, over the 111 year period, equities have produced an annual 3,8% superior performance. However over the last 10 years for the most part government bonds have been a better asset class than equities, with equities producing an a -3,2% equity risk premium.

Looking back there are good reasons why government bonds have done well over the last 10 and indeed 30 years. Structurally the US and UK started moving away from big government to smaller government in the late 1970’s to early 1980’s. By starting to squeeze down inflation, boosted with China starting to come on board as a production powerhouse, the environment was created for interest rates to drop from high to low rates. Lenders to government benefited as interest rates fell.

There are periods when bonds can be very risky in real terms.

Looking back in time at the cumulative percentage decline in real terms for an investment in US equities and US bonds, gives an indication of just how risky bonds can be.

The chart below reflects that after the 1929 stock market crash, shares (in blue) fell to a low in July 1932, which in real terms was 79% below the September 1929 peak.

This was extreme. But look at bonds in red, where the major decline started in December 1940 declining some 67% in real terms to 1981. The UK had a similar experience where bonds slid from 1946 to 1974 – losing 73% of their value.

Should investors be wary of bond performance

As with all investment asset classes the returns are not experienced in a linear fashion. This also holds true for bonds where there have been extremes in real return performances.

We have generally come through an extended “golden era” period for bond performance – see the chart below.

The danger now is that investors look back over the last 10 years and even up to 30 years and extrapolate the superior bond performance into their projections. Given the much higher base, lower value, it is highly unlikely that these same returns will be repeated again over the next 10 years.

Kind regards

Ian de Lange
021 9144 966

Source: Credit Suisse

Mon, 07 Mar 2011

South Africa's rand hit a seven-week high to the dollar on Monday and longer-dated bonds firmed as supply worries eased after Finance Minister Pravin Gordhan promised to be "prudent" on new issuance.  Full story
JP Morgan Chase wants to open a full branch in Nigeria by next year and representative offices in Ghana and Kenya as it tracks its multinational clients into frontier Africa, its regional head said.  Full story
FirstRand, South Africa's second-largest bank by market value, reported a 9 percent rise in first-half profit on Monday, helped by a decline in bad debts.  Full story
Nigeria's banking sector could see 20-25 percent loan growth over the next three to five years as demand for both consumer and infrastructure finance increases, the chief executive of Stanbic IBTC said.  Full story

Revenue increased by 13% to R26.8 million (R23.8 million). Operating profit rose by 10% to R5.7 million (R5.2 million). Net attributable. . .  Full story
Total income/net income from operations rose by 22% to R7.3 billion (R5.9 billion). Net attributable profit soared by more than 100%. . .  Full story
Revenue for the interim period ended 31 December 2010 increased to R160.2 million (2009: R2.6 million). Operating profit rose to R28.6. . .  Full story
South African group Sasol posted a 22 percent rise in first-half profit, boosted by cost cuts and higher oil and product. . .  Full story

Trading Statistics


Major Moves Up
SharenameSaleMove% MoveVolume
1 IPS  1061719.10.%8500
2 SACOIL  2572711.74.%6699925
3 EHSV  99495495.84.%962
4 PBT  13075.69.%41230
5 REXTRU-N  1300504.00.%9696
6 DORBYL  300103.45.%20000
7 JUBILEE  330113.45.%144585
8 HARMONY  83502503.09.%1521458
9 EASTPLATS  1155343.03.%11195
10 ONELOGIX  14942.76.%950
11 BELL  1334342.62.%206360
12 ESORFRANK  16542.48.%797111
13 DIGICOR  30572.35.%67300
14 AFRO-C  17542.34.%47725
15 HULAMIN  814182.26.%555753
16 SPURCORP  1400302.19.%8700
17 MTN  126502502.02.%7608986
18 WESCOAL  10321.98.%41700
19 ARCMITTAL  88001691.96.%410050
20 MRHLD  2508481.95.%1897712

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Major Moves Down
SharenameSaleMove% MoveVolume
1 RMBH  2640-1160-30.53.%9358847
2 YORK  330-50-13.16.%39935
3 MMG  135-15-10.00.%1081454
4 KELLY  400-29-6.76.%1800
5 SILVERB  150-10-6.25.%9800
6 CROOKES  3600-200-5.26.%2000
7 COMAIR  215-10-4.44.%350
8 CLICKS  3852-178-4.42.%2646077
9 BATS  26900-1216-4.32.%658350
10 COAL  993-38-3.69.%18043
11 PUTPROP  540-20-3.57.%1000
12 PARACON  169-6-3.43.%8620
13 MIXTEL  120-4-3.23.%12000
14 PANPROP  1810-60-3.21.%609473
15 WOOLIES  2688-87-3.14.%2228492
16 OMNIA  7460-240-3.12.%50739
17 KAP  220-7-3.08.%28400
18 RMIH  1251-39-3.02.%15696108
19 LONFIN  197-6-2.96.%40
20 HOSP-A  1350-40-2.88.%14700

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New Highs
SharenameSaleHighMove% MoveVolume
1 SACOIL  2572692711.74.%6699925
2 BRIMSTON  7901785101.28.%139442
3 MONDIPLCP  63706436731.16.%1152472
4 EOH  17901800201.13.%145227
5 RAINBOW  18001800201.12.%471358
6 RMIH  12511380-39-3.02.%15696108

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New Lows
SharenameSaleLowMove% MoveVolume
1 RMBH  26402418-1160-30.53.%9358847
2 LONFIN  197197-6-2.96.%40
3 BRAIT  17991766-51-2.76.%730617
4 PPC  26102552-45-1.69.%2760404
5 GROUP-5  26942440-22-0.81.%50393

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Spot Prices
NameTimeRPMove% Move
JSE Overall17:0032298.21-38.85-0.12%
JSE Top 4017:0029168.45-9.67-0.03%
JSE Gold17:002703.89-16.30-0.60%
JSE Financial17:0021133.04-38.75-0.18%
JSE Industrial17:0031742.0979.830.25%
JSE Indust 2517:0026597.89103.570.39%
JSE Resource17:0058801.99-269.88-0.46%
DJ Futures19:5612085.00-75.00-0.62%
DJ Ind19:4512068.16-101.72-0.84%
SP 50018:301313.95-7.20-0.54%
FTSE 10018:355973.78-16.61-0.28%
All Ords07:404895.90-62.70-1.26%
NZSE 5006:563430.0511.950.35%
NameTimeRPMove% Move
Gold/R kg20:003165619200.29%
Brent Crude19:56116.33.280.24%
Rand / Dollar19:596.87870.00160.02%
Rand / Pound19:5511.1056-0.0629-0.56%
Rand / Euro19:559.6059-0.0229-0.24%
Rand / NZD19:585.0660-0.0060-0.12%
Rand / AUD19:556.9540-0.0313-0.45%
Yen / Dollar19:5982.1600-0.0800-0.10%
Euro / Dollar19:550.71570.00130.18%
Dollar / Euro19:581.3963-0.0032-0.23%
Pound / Dollar19:550.61730.00310.50%

Click here for the Sharenet Spot Price page
Index Summary
Index NameRPMove% Move
Top 4029,168.45-9.67-0.03%
Mid Cap40,788.24-274.50-0.67%
Small Cap31,695.41-126.78-0.40%
Resource 2058,801.99-269.88-0.46%
Industrial 2526,597.89103.570.39%
Financial 158,016.05-7.31-0.09%
Financial & Ind. 3029,824.14102.020.34%
All Share32,298.21-38.85-0.12%
Oil & Gas 29,365.75198.390.68%
Mining 38,462.56-241.26-0.62%
Gold Mining2,703.89-16.30-0.60%
Platinum Mining76.90-.91-1.17%
Oil & Gas Producers 15,789.42106.670.68%
Basic Materials 32,398.42-169.91-0.52%
Chemicals 13,421.81-125.45-0.93%
Forestry & Paper 14,309.9434.210.24%
Industrial Metals 30,984.56361.971.18%
Industrials 27,535.50-85.00-0.31%
General Industrials 76,587.33-235.84-0.31%
Consumer Goods 26,226.33172.620.66%
Automobiles & Parts 3,009.479.060.30%
Household Goods159.9621.09%
Health Care 30,990.55-175.22-0.56%
Beverages 80,471.40-3.42-0.00%
Food Producers 46,904.79-181.96-0.39%
Index NameRPMove% Move
Personal Goods 409.497.491.86%
Consumer Services 53,470.45-484.19-0.90%
General Retailers 39,165.41-408.07-1.03%
Travel & Leisure 3,754.90-18.30-0.48%
Media 88,984.05-555.47-0.62%
Support Services 2,417.29-19.86-0.81%
Telecommunications 61,818.431002.841.65%
Financials 21,133.04-38.75-0.18%
Banks 38,923.83-152.22-0.39%
Non-life Insurance 31,402.5897.000.31%
Life Insurance 16,098.8210.400.06%
General Financial 2,270.4812.860.57%
Technology 20,548.35-10.35-0.05%
SHARIAH TOP40 3,315.81-3-0.11%
FTSE/JSE SHARIAH ALL3,360.77-4-0.11%
COAL MINING21,885.751720.79%
FTSE JSE Fledgling 4,662.64-28-0.60%
FTSE/JSE Alt X 1,036.50-11-1.02%
CAPPED PROPERTY 302.56-0.52%
RESOURCE 32,356.31-147-0.45%
DIVIDEND PLUS164.67-1-0.33%
FTSE/JSE RAFI 406,777.64-6-0.08%
Capped Top 4015,123.8560.04%
Capped All Share16,220.77-14-0.09%

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Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
08 Mar 2011CERAMICJanuary 2011 (Interim)
08 Mar 2011COMPCLEARDecember 2010 (Interim)
08 Mar 2011FIRSTRANDDecember 2010 (Interim)
08 Mar 2011FIRSTRANDB-PDecember 2010 (Interim)
08 Mar 2011FIRSTRNDPADecember 2010 (Interim)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
AMAPS11-03-0411-03-2511-04-01R 0.0400
ASTRAPAKP11-03-0411-03-2511-04-04R 3.4269
SPURCORP11-03-0311-03-1711-03-28R 0.3300
STANBANK-P11-03-0311-03-2511-04-04R 3.3790
STANBANK6.511-03-0311-03-2511-04-04R 0.0325
Ex Div**
Share NameDec-DateLDTPay-DateAmount
ABSABANK-P11-02-1511-03-0411-03-14R 28.8760
ANGLOPLAT11-02-0711-03-0411-03-14R 6.8300
HUDACO11-01-2811-03-0411-03-14R 2.3500
ABSA11-02-1511-03-0411-03-14R 2.3000
ASSORE11-02-1611-03-0411-03-14R 2.0000

Upcoming AGMs**
CodeCompany NameDateStatus
PCNParacon Holdings Ltd07/03/2011Confirmed
PCNPParacon Holdings Ltd07/03/2011Confirmed
QPGQuantum Property Group Ltd08/03/2011Confirmed
WEZWesizwe Platinum Ltd09/03/2011Confirmed
FWDFreeworld Coatings Ltd10/03/2011Confirmed

Stock Exchange News Service
07/03/201117:46 Anglo American Plc - Director/PDMR Interests
07/03/201117:45 Anglo American plc - PDMR/Directors` interests
07/03/201117:22 Capital Shopping Centres Group Plc - Annual financial report 2010 and
07/03/201117:00 Compu-Clearing Outsourcing Limited - Reviewed Results for 6 Months Ended
07/03/201117:00 Command Holdings Limited - Resignation of company secretary
07/03/201116:58BILIHH - Investec Warrants - Declared Dividend Announcement on Bhp Billiton Plc
07/03/201116:56BILIDI - Investec Warrants - Declared dividend announcement on BHP Billiton Plc
07/03/201116:55 Jasco Electronics Holdings Limited - Trading Statement
07/03/201116:10 FirstRand Limited - Unaudited interim results and cash dividend
07/03/201116:00 Masonite - Trading update
07/03/201115:09 Fulfilment of conditions precedent to 1Time BEE Transaction and change
07/03/201115:00 Mr Price Group Limited - Trading statement
07/03/201114:24 Grand Parade Investments Limited - Unaudited interim results for the six
07/03/201113:48 Village Main Reef Gold Mining Company (1934) Limited - Resignation of
07/03/201113:16SOLIHG - Investec Bank Limited - Declared a interim dividend announcement on
07/03/201113:14SOLIDI - Investec Warrants - Declared interim dividend announcement on Sasol
07/03/201113:02 Sea Kay Holdings Limited - Further Cautionary Announcement
07/03/201111:55 York Timber Holdings Limited - Trading Statement
07/03/201111:30NEDB - Nedbank Limited - SENS announcement expiry of share instalments
07/03/201111:30 Investec plc - Abridged Pre-Listing Statement
07/03/201111:18BILNND - Nedbank Limited - Dividend distribution announcement in relation to the
07/03/201111:16BILNIG - Nedbank Limited - Dividend distribution announcement in relation to the
07/03/201110:39NEDB - Nedbank Limited - Expiry of Share Instalments
07/03/201110:24 IQuad Group Limited - Resignation from the board of directors
07/03/201110:08 Amalgamated Appliance Holdings Limited - Amendment to the Interim
07/03/201109:38 Argent Industrial Limited - Dealing in securities by director
07/03/201109:36ABL / ABLP - African Bank Investments - Dealing in securities by director
07/03/201109:27 Rainbow Chicken Limited - Dealing in securities by a director
07/03/201108:07 BHP Billiton Plc - Off-market buy-back booklet and buy-back tender forms
07/03/201108:01 Village - Fulfilment of all the remaining suspensive conditions of the
07/03/201107:50 AVI limited - Unaudited interim results for the six months ended 31
07/03/201107:30 Gijima Group Limited - Resolution between the department of home affairs
07/03/201107:16 Anglo American plc - Treasury shares - Transfers
07/03/201107:15 Anglo American plc - Directors` interests
07/03/201107:10 British American Tobacco P.L.C - Transaction in own shares
07/03/201107:05 BHP Billiton Plc - Transaction in shares
07/03/201107:05SOL - Sasol - Sasol Limited interim financial results for the six months ended

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