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Tuesday, 19 April 2011 - 20:00
Sharenet is pleased to announce the launch of our new publication, The Sharenet Daily. We have built on the success of our Daily Equity Report, while adding more content and helpful information. The result is a publication that gives readers a quick, easy to read and informative synopsis of market activity, company results and news on the JSE for the day, as well as an overview of what transpired on important overseas markets.The Sharenet Daily includes helpful charts that give a graphical impression of events, and our news content is sourced from a number of contributors, including Reuters. In addition, Sharenet's popular price information is available in our Spot Price format which provides a snapshot of the JSE and world indices, currencies and commodities.
All the JSE trading statistics; major movers; latest dividends; upcoming AGM dates and more are provided to insure that you keep abreast of market developments. The Sharenet Daily is published at 8pm each day on the website and also distributed via email for your convenience. As always, we welcome your comments, feedback and suggestions at support@sharenet.co.za
Charts
US equity and bond market
This week we had rating agency Standard and Poor revise its outlook on the United States sovereign credit rating of AAA from “stable” to “negative”. This had an immediate negative impact on the world equity markets – but the shock seems to have been short lived.
The rating report cited rising budget deficits and US debt levels – the US debt position is hardly new and so there are some question marks as to why this has been done at this stage.
The question though is if these same credit rating agencies could not be trusted in the credit crisis, why do so many investors continue to place such a high emphasis on them now.
Barry Ritholz of the Big Picture puts it succinctly saying “Who Cares. It’s not that I disagree with their assessment — I do not — but I pay it little heed. It was much more important to me as an investor that PIMCO’s Bill Gross was out of Treasuries a month ago (and indeed, is short) than what S&P says. That was all any bond investor needed to know — no ratings agency necessary.”
In February we commented on the fact that the US 10 year Treasury yield had moved back up through the 3,5% level, which according to BCA Research was an important technical signal, highlighting the fact that the macro picture is increasingly turning against the bond market.
US Bonds
There has been a lot of debate about what the US Federal Reserve will do when its current $600 billion in bond purchases comes to an end in June. At this stage it does not appear that it will be extended, but the Federal Reserve does have around $17 billion a month that is maturing from mortgage debt and reports indicate that the Fed will probably use this to keep buying US treasuries and so continue to support the US bond market in an ongoing attempt to keep a lid on rising yields.
Asset allocation in this market
GMO’s James Montier made the comment about the lack of value across most asset classes around the world in a recent report, saying, “This dearth of assets offering a margin of safety raises a conundrum for the asset allocation professional: what does one do in a world where nothing is cheap? Personally, I’d seek to raise cash. This is obvious not for its thoroughly uninspiring near-zero yield, but because it acts as dry powder – a store of value to deploy when the opportunity set offered by Mr. Market once again becomes more appealing.”
He put out this chart, which is a long term chart comparing yields on US bonds to yields on US equities. Looking at yields is one of the best ways to compare one asset class against another. From there an investor can adjust, compensating for the riskiness of the income stream.
The anomaly cited is the assertion that bond yields have been falling from high levels in the early 1980’s. The argument goes that the dispersion in yields that we are seeing now is more of a reversion to normal levels. i.e. looking back over 30 years, shares appear relatively cheap against bonds – but on a longer term basis, this is perhaps where yields should be trading.
Long term chart of relationship between bond and equity yields
Source: GMO
S&P 500 earnings
The chart below reflects the extremely sharp drop off in earnings reported by the 500 largest companies and the equally sharp reversion of these earnings to the end of 2010 back to the long term upward trend. These are 12 months earnings per share – constant March 2011 dollars.
Source : Standard and Poor and Robert Shiller
Companies are starting to report their first quarter numbers. Again it appears that these are coming in firmly – despite now off a much higher base.
Kind regards
Ian de Lange
info@seedinvestments.co.za
www.seedinvestments.co.za
021 9144 966
Top News
![[IMAGE]](image.php@width=300&height=150&cropratio=2%253A1&image=%252Fnews_images_sn%252F1295529183.jpg "Man walks past the Johannesburg stock exchange offices in Sandton") South African government bonds gained strongly on Tuesday after a weekly debt auction was successfully covered and demand for the front end of the curve picked up, while the rand was on a soft footing above Monday's three-week low against the dollar. Full story ![[IMAGE]](image.php@width=300&height=150&cropratio=2%253A1&image=http%253A%252F%252Fwww.sharenet.co.za%252Fimages%252Fprofile%252Fvox_telecom.gif) Revenue for the interim period decreased to R925 million (2010: R1 billion). Gross profit increased to R257 million (2010: R234.9 million), while operating profit fell to R35.9 million (2010: R39.3 million), and profit for the year lowering to R23.9 million (2010: R25.5 million). Furthermore Full story |
 Medics in northern Nigeria on Tuesday treated hundreds of victims of rioting against President Goodluck Jonathan's election victory, some of them children with gunshot and machete wounds. Full story  Syria's government passed a draft law on Tuesday to lift 48 years of emergency rule, a concession to unprecedented demands for greater freedom in the tightly-controlled Arab country. Full story  The United Nations appealed on Tuesday for a cease-fire in the Libyan city of Misrata, saying at least 20 children had been killed in attacks by besieging government forces on rebel-held parts of the city. Full story |
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Markets |
World stocks rose on
Tuesday, recouping the prior day's losses, but nagging debt
worries both sides of the Atlantic and new signals of. . . Full story |
U.S. gold futures hit an
all-time high above $1,500 an ounce on Tuesday on a combination
of dollar decline, recovering crude oil prices. . . Full story |
Upbeat corporate results helped
European shares to rebound on Tuesday from hefty falls a day
earlier, led by strong sales figures from luxury. . . Full story |
U.S. stocks were little
changed on Tuesday as sliding revenue in financial companies
pointed to a struggling economy.. . . Full story | |||
Strength in oversold commodity
issues fuelled a modest rally by Britain's top share index on
Tuesday, while sovereign debt worries continued to dog. . . Full story |
European shares rallied on
Tuesday as fund managers said strong earnings would support
markets in the short term, overshadowing economic risks, with
LVMH and. . . Full story |
Tokyo stocks hit a three-week
low on Tuesday after chipmaker Texas Instruments warned the
impact from Japan's earthquake last month would result in. . . Full story |
Australian stocks stumbled 1.4 percent on
Tuesday to a three-week low, led lower by banks and miners after the S&P
downgrade of the. . . Full story | ||||
SA Business |
South Africa's economy has started to show positive signs of recovery but it will take time to recover from the job. . . Full story |
DRDGold, South Africa's fourth-largest gold producer, said on Tuesday it planned to sell its Blyvoor mine in a move that could. . . Full story |
South Africa expects 115 billion rand worth of investments flowing into Africa's biggest economy over the next three years, the trade. . . Full story |
South Africa exported 45,132 tonnes of white maize last week compared with 47,484 tonnes in the previous week, the South African. . . Full story | |||
Japan's Kansai Paint. . . Full story | South Africa's Freeworld Coatings said on Tuesday its board will convene a meeting before the end of the week to discuss. . . Full story | Zimbabwe will ban the export of chrome from Wednesday, and will look to build internal refinery capacity, the Ministry of Mines. . . Full story | London Commodity Brokers (LCB), one of the world's biggest physical coal and iron ore brokerages, has opened an office in Johannesburg. . . Full story |
South Africa's National Union of Mineworkers (NUM) reiterated on Tuesday that it would take strike action against state power utility Eskom and said it was now demanding a 16 percent, one-year. . . Full story | South Africa has lifted restrictions on red meat exports, but kept a ban on the movement of live animals following a suspected outbreak of foot and mouth disease in February, the. . . Full story | Brewer SABMiller Plc beat forecasts with a 3 percent rise in beer volumes in the first three months of 2011, led by emerging markets in Africa and Asia as all its. . . Full story |
Company News |
Crookes announced the following changes to the board of directors.
* Phumla Mnganga (43) BA, BEd and MBL and;
* Rodger. . . Full story |
Shareholders of Morvest are referred to the announcement released on SENS on 7 April 2011, wherein they were advised that Morvest. . . Full story |
Shareholders are advised that all of the resolutions tabled at the AGM on Tuesday, 19 April 2011, were passed by the. . . Full story |
Vukile linked unitholders ("Linked Unitholders") are referred to the circular dated 26 November 2009 in which details of the call option. . . Full story | |||
Business Day reported that Pick n Pay chairman Gareth Ackerman announced that the company would not change its dividend policy despite criticism from analysts who say the policy is stunting the. . . Full story |
Business Day reported that Pick n Pay chairman Gareth Ackerman announced that the company would not change its dividend policy despite criticism from analysts who say the policy is stunting the. . . Full story |
Calgro is successfully leveraging its recognised expertise to capitalise on the recent improvement in the housing market, specifically the affordable housing segment. A relative minnow in the broader construction industry with. . . Full story | |||||
Company Results | Contract revenue rose significantly to R386.6 million (R248.6 million), but gross profit dropped to R43.8 million (R57.1 million). Operating profit fell. . . Full story | Headline earnings for the year amount to R423.4 million (R549.9 million). As a result, headline earnings per share from continuing operations. . . Full story | Turnover. . . Full story | The net profit for the period amounted to R31 million (profit of R2.6 million). In addition, a headline loss per share. . . Full story |
World Markets (Spot Prices)
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The JSE Today
Trading Statistics| Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
|---|---|---|---|---|---|---|---|---|
| 19/04/2011 | 214 | 127 | 83 | 424 | 263,324,515 | R11,531,658,381 | 100435 | 2163910 |
| 18/04/2011 | 86 | 275 | 70 | 431 | 309,928,429 | R13,037,551,462 | 103004 | 2255963 |
| 15/04/2011 | 138 | 165 | 97 | 400 | 314,291,948 | R11,231,575,882 | 92021 | 1900066 |
| 14/04/2011 | 149 | 168 | 91 | 408 | 262,351,618 | R12,143,488,835 | 103431 | 2026385 |
| 13/04/2011 | 173 | 149 | 74 | 396 | 287,045,805 | R12,191,506,387 | 87265 | 1930759 |
Major Moves Up
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Major Moves Down
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New Highs
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New Lows
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Index Summary
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Latest Consensus Changes**
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Stock Exchange News Service
| Date | Time | Headline |
| 19/04/2011 | 17:45 | WBO-Wilson Bayly Holmes-Ovcon Ltd - Update on Competition Commission |
| 19/04/2011 | 17:26 | PBT Group Limited - Reviewed Interim Results for the six months ended 28 |
| 19/04/2011 | 17:11 | Allied Technologies Limited - Appointment of COO |
| 19/04/2011 | 17:08 | GEN - General - Kansai Paint Co., Ltd - Announcement Regarding Competition |
| 19/04/2011 | 16:51 | Crookes Brothers Limited - Changes to the board |
| 19/04/2011 | 16:43 | Vox Telecom Limited - Reviewed results for the six months ended 28 |
| 19/04/2011 | 16:29 | Reunert Limited - Trading statement |
| 19/04/2011 | 15:53 | AG Industries Limited - Update on status of AGI and renewal of cautionary |
| 19/04/2011 | 15:51 | Capitec Bank Holdings Limited - Dealing in securities by a director |
| 19/04/2011 | 15:50 | Morvest Business Group Limited - Amendment to the sale of shares agreement |
| 19/04/2011 | 15:38 | FirstRand Limited - Dealings in securities by a director |
| 19/04/2011 | 15:37 | Firstrand Limited - Deferral of variable pay: acceptance by directors of |
| 19/04/2011 | 15:27 | MMH - Miranda Mineral Holdings Limited - Halt in Trade in Letters of Allocation |
| 19/04/2011 | 15:24 | Ingenuity Property Investments Limited - Dealing in securities by a |
| 19/04/2011 | 15:02 | Ideco Group Limited - Results of annual general meeting |
| 19/04/2011 | 14:59 | NFSH40 - Newfunds Shariah Top 40 Index ETF - Distribution finalisation |
| 19/04/2011 | 14:46 | Freeworld Coatings Limited - Competition commission`s decision |
| 19/04/2011 | 14:19 | RAFISA - NewFunds eRAFI(TM) Overall SA Index ETF Portfolio - Distribution |
| 19/04/2011 | 14:18 | THG - Trackhedge (Proprietary) Limited - Distribution finalisation announcement |
| 19/04/2011 | 14:14 | Metrofile Holdings Limited - Appointment of alternate director |
| 19/04/2011 | 14:08 | RAFFIN - Newfunds eRAFI(TM)SA Financial 15 Index ETF - Distribution |
| 19/04/2011 | 14:06 | RAFRES - Newfunds eRAFI(TM) SA Resource 20 Index ETF - Distribution finalisation |
| 19/04/2011 | 14:00 | RAFIND - Newfunds eRAFI(TM) SA Industrial 25 Index ETF - Distribution |
| 19/04/2011 | 13:53 | NEWFSA - Newfunds NEWSA Index Portfolio - Distribution Finalisation |
| 19/04/2011 | 13:37 | Vukile Property Fund Limited - Further update regarding the call option |
| 19/04/2011 | 13:37 | THEE - The Competition Commission - Kansai`s acquisition of Freeworld |
| 19/04/2011 | 13:37 | FCPD - Foord Compass Limited - Changes to the board of directors |
| 19/04/2011 | 13:37 | FCPD - Foord Compass Limited - Results of Annual General Meeting of debenture |
| 19/04/2011 | 13:18 | Exxaro Resources - Trading of Exxaro ordinary shares on behalf of The |
| 19/04/2011 | 13:16 | Tradehold Limited - Trading statement |
| 19/04/2011 | 13:06 | Datacentrix Holdings Limited - Audited results for the financial year |
| 19/04/2011 | 12:40 | Anglo American plc - Anglo American Share Incentive Plan - SIP |
| 19/04/2011 | 12:00 | Old Mutual Plc - Notification of transactions of directors |
| 19/04/2011 | 12:00 | Combined Motor Holdings Limited - Audited results for the year ended |
| 19/04/2011 | 11:49 | Zaptronix Limited - Results of the Annual General Meeting |
| 19/04/2011 | 11:48 | New Europe Property Investments plc - Dealing in securities |
| 19/04/2011 | 11:40 | Eqstra Holdings Limited - Directors` dealings |
| 19/04/2011 | 11:32 | MMI Holdings Limited - Dealings in securities by a director |
| 19/04/2011 | 11:28 | Trematon Capital Investments Limited - Unaudited interim results for the |
| 19/04/2011 | 10:49 | Gold Fields Limited - Correction to media release |
| 19/04/2011 | 10:19 | Astral Foods Limited - Trading statement |
| 19/04/2011 | 10:10 | Calgro M3 - Press release - Calgro M3 is David taking on industry |
| 19/04/2011 | 08:04 | Sea Kay Holdings Limited - Further cautionary announcement |
| 19/04/2011 | 08:00 | Old Mutual plc - TR-1: Notification of major interest in shares |
| 19/04/2011 | 08:00 | SABMiller plc - SABMiller plc trading update |
| 19/04/2011 | 08:00 | DRDGold Limited - Report to shareholders for the quarter and nine months |
| 19/04/2011 | 07:10 | British American Tobacco p.l.c - Transaction in own shares |
| 19/04/2011 | 07:06 | Excellent March 2011 Quarter for Gold One |
| 19/04/2011 | 07:05 | Gold One International Limited - Quarterly Activities Report - Quarter |
| 19/04/2011 | 07:05 | BHP Billiton Plc - Transaction in shares |
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