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Monday, 16 May 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
Structured products
An investment product that we have not really discussed is that of a structured product. In this first article, I provide a brief outline and introduction to just what is a structured product.
With the array of financial instruments available nowadays, including options, futures, forward rate contracts, zero coupon bonds, etc. There is any combination of payoff profiles that can be structured.
A typical scenario in creating and selling these structured products, is for an independent investment team outside or within a bank to design a certain payoff profile structure and for the bank or insurance company to then take this product to the retail market.
While the underlying workings of a structured product may be complex, these are not typically disclosed to the investor, nor indeed does he even need to understand them. This is because the bank or life company marketing the product, will package the product in such a way that it will create certain defined outcomes for the investor that are usually, but not always, relatively easy to understand.
By way of example, a typical retail structured product has an investor put down a lump sum for a period of 4 or 5 year with a financial institution. The payoff profile guaranteed back to the investor after the period of this time is the higher of the original capital and the return of a market index –usually capped at say 75%.
In this way these products appeal to investors looking for capital protection (i.e. capital remains intact in nominal terms over the defined period). At the same time it also appeals to the investor’s requirement for some growth linked to a specific equity index.
By interposing a financial institution between the underlying risky markets, investors have a greater sense of security and confidence in making this type of investment. For interest sake, take a look very briefly at how these structures are possible.
A typical structure
Source: Investopedia.com
• An investor puts down R100 000 for a period of 5 years into a structured product. The example above uses R1000 over a 3 year period.
• The bank will use approximately 70% of the funds to buy a zero coupon bond. i.e. a bond that rolls up all its coupons to maturity so that after 4 or 5 years, the R70 000 is back to the nominal R100 000. This is the component that allows the bank to provide the guarantee on the initial capital.
• A smaller portion of the capital is then used to buy a call option (or various combinations) on a specific equity index. Should the market move up, value will accrue to the purchase of the equity option. This provides for the capped upside performance.
• Where however the particular index moves only nominally up, sideways or down, then the option will expire worthless, leaving the investor with his original capital – thanks to the zero coupon bond.
• Obviously within the defined payoff guaranteed, the bank or insurance company builds in its own fee.
This is very simply what can be achieved behind the scenes.
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=%252Fnewsimages%252F2011-05-16T171135Z_01_AJOE74F1BRD00_RTROPTP_3_OZABS-REDCRESCENT-PETMIN-20110516.JPG "Mineworkers work deep underground at Harmony Gold Mine's Cooke shaft near Johannesburg") Red Crescent Resources said on Monday that South African miner Petmin has agreed to acquire a 10.1 percent stake in the Canadian exploration company for C$4.64 million. Full story ![[IMAGE]](image.php@width=300&height=150&cropratio=2%253A1&image=%252Fnews_images_sn%252F1295357754.jpg "Sandton City centre in Johannesburg at dusk") South Africa's rand ended firmer on Monday, recouping losses after earlier hitting a two-month low, as the dollar weakened against emerging market currencies. Full story |
 IMF chief Dominique Strauss-Kahn was denied bail on Monday on attempted rape and other criminal charges, and prosecutors said they are investigating whether he may have engaged in similar conduct once before. Full story  A war crimes prosecutor on Monday sought an arrest warrant for Muammar Gaddafi accusing him of killing protesters against his 41-year rule as NATO stepped up air strikes on Libyan forces. Full story  A visiting senior United States senator warned Pakistan on Monday that future relations would be determined by its actions, not words, after controversy over the killing of Osama bin Laden on Pakistani soil. Full story |
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Markets |
Technology and consumer
discretionary stocks tumbled on Monday as investors fretted
about signs of weakness in the economy that are likely to put
a. . . Full story |
The euro rose on Monday on
optimism that a meeting of European finance ministers will
offer more clarity on euro zone debt aid. . . Full story |
European shares closed lower on
Monday with banks most exposed to peripheral euro zone debt
pressured by the region's debt crisis as finance. . . Full story |
Britain's top shares closed flat
on Monday as weakness from banks was offset by an aggressive
rebound from mining stocks, helping the index. . . Full story | |||
Gold held steady on Monday as the
euro lifted off seven-week lows, but the currency remained
vulerable to uncertainty about indebted euro zone. . . Full story |
U.S. stock index futures fell
on Monday as investors shed riskier assets before euro zone
finance ministers meet to discuss the region's debt. . . Full story |
Japan's Nikkei stock average hit a
1-month low to end just under a key technical level on Monday,
hurt by volatile commodities as. . . Full story |
Australian stocks lost 1.3
percent on Monday to cling to support at 4,650, led lower by
resource shares as worries about global growth. . . Full story | ||||
SA Business |
U.S. retailer Wal-Mart Stores said it could walk away from a 16.5 billion rand deal to buy a 51 percent stake. . . Full story |
South Africa's Vodacom beat expectations with both its full-year profit and dividend, helped by a surge in mobile data usage that. . . Full story |
Diamond producer De Beers has named industry outsider Philippe Mellier, a senior executive at French engineering group Alstom, as its new. . . Full story |
South African power utility Eskom said on Monday it has lifted restrictions at its Medupi construction site following protests, but many. . . Full story | |||
Wal-Mart may drop its $2.4 billion bid for South Africa's Massmart if the government demands targets on using local suppliers, a. . . Full story | Agri-processing business Tongaat Hulett said on Monday it expects to post lower full-year profit, partly hit by last year's drought in. . . Full story | Outspoken former Treasury
chief Lesetja Kganyago arrival on Monday may stiffen South
Africa's central bank's resolve to do what is needed to bring
inflation. . . Full story | Wal-Mart and South African takeover target Massmart, a major retailer, said on Monday there would be no retrenchments for at least. . . Full story |
Sugar production at Zambia's largest sugar producer rose 22 percent to 385,000 tonnes in its financial year which ended March 31, the company said on Monday.. . . Full story | South Africa's Illovo Sugar Ltd said on Monday it has raised 940 million emalangeni to finance expansion at its unit in Swaziland.. . . Full story |
Company News |
HCI shareholders are informed that it is expected that for the year ended 31 March 2011, HCI's headline earnings will be. . . Full story |
Following the company's annual general meeting on 12 May 2011, the changes to the Board described below have now taken effect,. . . Full story |
According to The Sunday Times Business Times, Massmart Holdings Ltd was only Walmart's third choice, with the international retailer preferring to. . . Full story |
Great Basin announced the appointment of Anu Dhir, Octavia Matloa, Mametja Moshe, to the board of directors and one new director,. . . Full story | |||
The past year continued to be characterised by counteractive factors. Progress towards fully utilising Tongaat's installed sugar milling capacity of some. . . Full story |
At the annual general meeting of the company held on 11 November 2010, the requisite majority of shareholders approved a resolution. . . Full story |
Anglo American wished to draw attention to an announcement by De Beers in relation to the appointment of Philippe Mellier as. . . Full story |
Business Day reported that, Liberty has reported a surge in sales and corporate business during the first quarter of this year. . . Full story | ||||
Company Results | Revenue for the year ended 28 February 2011 improved to R281.8 million (February 2010: R188.7 million) and gross profit rose to. . . Full story | Revenue decreased slightly, by 2%, to R4.2 billion (R4.3 billion). Operating profit was up 23% to R375.4 million (R304.3 million) and. . . Full story | Revenue increased marginally by 3.2% to R11.4 billion (R11 billion) and gross profit also grew by 1.7% to R4.7 billion (R4.6. . . Full story | Revenue for the year ended 31 March 2011 increased to R61.2 billion (2010: R58.5 billion). Operating profit rose to R13.7 billion. . . Full story |
World Markets (Spot Prices)
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The JSE Today
Trading Statistics| Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
|---|---|---|---|---|---|---|---|---|
| 16/05/2011 | 154 | 162 | 83 | 399 | 240,222,858 | R10,809,816,699 | 88615 | 2006548 |
| 13/05/2011 | 233 | 109 | 82 | 424 | 272,874,593 | R11,830,088,101 | 91675 | 1964298 |
| 12/05/2011 | 83 | 236 | 79 | 398 | 264,465,126 | R13,048,737,068 | 96422 | 1997646 |
| 11/05/2011 | 159 | 181 | 85 | 425 | 282,588,135 | R15,255,496,872 | 110989 | 2238489 |
| 10/05/2011 | 242 | 93 | 75 | 410 | 302,922,569 | R13,330,206,641 | 95876 | 2205012 |
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Index Summary
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Stock Exchange News Service
| Date | Time | Headline |
| 16/05/2011 | 17:50 | Silverbridge Holdings Limited - Condensed group interim financial |
| 16/05/2011 | 17:45 | Datatec Limited - Grant and acceptance of rights to participate in share |
| 16/05/2011 | 17:45 | CCO - Capital & Counties Properties PLC - Voting Rights and Capital |
| 16/05/2011 | 17:43 | Erbacon Investment Holdings Limited - Audited condensed provisional |
| 16/05/2011 | 17:34 | Premium Properties Limited - Dealing In Securities By Directors |
| 16/05/2011 | 17:22 | Platfields Limited - Supplementary Trading Statement |
| 16/05/2011 | 17:12 | Hosken Consolidated Investments - Trading Statement |
| 16/05/2011 | 17:05 | Avusa Limited - Update on the receipt of an unsolicited expression of |
| 16/05/2011 | 16:53 | SPPNIG - Nedbank Limited - Dividend distribution announcement in relation to The |
| 16/05/2011 | 16:52 | PIKNIG - Nedbank Limited - Dividend Distribution Announcement in relation to The |
| 16/05/2011 | 16:35 | Old Mutual Plc - Board changes after the 2011 Annual General Meeting |
| 16/05/2011 | 16:29 | OLD MUTUAL plc - Rule 8.3 of the Takeover Code |
| 16/05/2011 | 14:45 | CCO - Capital & Counties Properties PLC - Notification of major interests in |
| 16/05/2011 | 14:38 | Paladin Capital Limited - Announcement in respect of the rights offer by |
| 16/05/2011 | 14:30 | Great Basin Gold Limited - Great Basin Gold announces the appointment of |
| 16/05/2011 | 14:07 | Tongaat Hulett Limited - Trading statement for the year to 31 March 2011 |
| 16/05/2011 | 14:00 | Sanyati Holdings Limited - Condensed consolidated audited results for the |
| 16/05/2011 | 13:44 | ABSW16 - ABSA Bank Limited - Notice of expiry and maturity |
| 16/05/2011 | 13:36 | Beige Holdings Limited - Results of rights offer |
| 16/05/2011 | 13:30 | JSE Limited - JSE 2006 Black Shareholder Retention Scheme - exercise of |
| 16/05/2011 | 13:15 | SCIB - The Standard Bank of South Africa Limited - Issue of Africa Total |
| 16/05/2011 | 13:00 | MND/MNP - Mondi - Notification of Major Interests in Shares |
| 16/05/2011 | 12:30 | Sephaku Holdings - General issue of shares for cash |
| 16/05/2011 | 11:56 | Interwaste Holdings Limited - Director`s dealings in securities |
| 16/05/2011 | 11:15 | Anglo American plc - De Beers announces appointment of Phillppe Mellier |
| 16/05/2011 | 11:10 | British American Tobacco p.l.c - Management Board Appointment at British |
| 16/05/2011 | 10:25 | IQuad Group Limited - Dealing in securities |
| 16/05/2011 | 10:24 | Bauba Platinum Limited - Director`s dealings in securities |
| 16/05/2011 | 10:15 | Afrimat Limited - Director`s Dealings |
| 16/05/2011 | 09:13 | Exxaro Resources Limited - Trading of Exxaro ordinary shares on behalf of |
| 16/05/2011 | 09:01 | Kelly Group - Transformation strategy positions Kelly Group for Growth |
| 16/05/2011 | 09:00 | Kelly Group - Unaudited interim results for the six months ended 31 March |
| 16/05/2011 | 09:00 | Real Africa Holdings Limited - Withdrawal of cautionary announcement |
| 16/05/2011 | 08:27 | Firestone Energy Limited - Change of Director`s Interest Notice |
| 16/05/2011 | 08:05 | Petmin Limited - Petmin to invest in Red Crescent Resources and its |
| 16/05/2011 | 08:00 | GPI - Salient features of the restructure |
| 16/05/2011 | 08:00 | Petmin Limited - Investment in Red Crescent Resources and withdrawal of |
| 16/05/2011 | 08:00 | Sun International Limited - Restructure of Sun International and GPI`S |
| 16/05/2011 | 07:47 | Gold One International Limited - Lifting of Trading Halt of Gold One |
| 16/05/2011 | 07:30 | Gold One International Limited - Gold One Presentation |
| 16/05/2011 | 07:18 | Gold One International Limited - Media Release |
| 16/05/2011 | 07:17 | Gold One International Limited - Recommended offer |
| 16/05/2011 | 07:15 | Raubex Group Limited - Audited results for the year ended 28 February |
| 16/05/2011 | 07:10 | British American Tobacco p.l.c - Transaction in own shares |
| 16/05/2011 | 07:05 | BHP Billiton Plc - Transaction in shares |
| 16/05/2011 | 07:05 | JD Group - Reviewed results for the six months ended 28 February 2011 |
| 16/05/2011 | 07:05 | Vodacom Group Limited - Preliminary results for the year ended 31 March |
| 16/05/2011 | 07:05 | Netcare Limited - Unaudited Group interim results for the six months |
| 16/05/2011 | 07:05 | Astral Foods Limited - Unaudited interim results and dividend |
| 16/05/2011 | 07:05 | Calgro M3 - Audited abridged results for the year ended 28 February 2011 |
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