Tuesday, 07 June 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
The correlation between implied earnings growth and actual performance In our monthly analysis of the valuation of the local equity market, we place little to no value in attempting to forecast data. Forecasting suffers from at least two problems. In the first instance forecasting of uncertain events has a low degree of predictability and secondly even if one were to correctly forecast certain factors such as the oil price for an oil company or the input cost of maize to a poultry producer, there is little to no correlation with investment performance.
Fundamental company analysts tend to build models that attempt to assess the main drivers of a company's performance, be it the price of oil, or maize or margins and volume growth of a retailer etc. We do agree that analysis plays a very important part in the understanding of the business drivers and risks. When investing hard earned money into a business an investor will want to have an understanding of the main factors involved.
However of even more importance than the primary drivers is the valuations component. The reason that forecasting has a degree of predictability on actual investor returns is that at times both analysts and investors tend to become very optimistic about future prospects. This optimism is quickly factored into prices, which in turn leads to lower than expected returns.
Conversely when expectations about future earnings are on the lower end of the spectrum, actual future investment returns realised tend to be higher. The scenario tends to be a case of build in low expectations and wait to be surprised on the upside. We tested this theory looking back in time.
On the assumption then that an investor is looking for say a 15% compounded nominal return over a 5 year period, we can look back in time at what the market prices were implying for company earnings growth.
On the assumptions used, the market moves from a case of implying 5% earnings growth to 25% earnings growth.
We then overlayed this with the actual 5 year compounded return that an investor would have received had he invested at that point in time. The chart below provides a summary.
Chart : Implied earnings growth on JSE and actual compounded return
Source: Seed Investments
The results back up our hypothesis in that at the times when the market is implying high earnings, this tends to correlate with low 5 year actual returns.
Conversely at times when the implied earnings expectations fall to below 10%, investors tend to be rewarded on the upside with superior investment performance.
With the market flat over the last 6 months, despite earnings growth, the implied growth is slowly being lowered from higher levels.
Kind regards
Ian de Lange
info@seedinvestments.co.za
www.seedinvestments.co.za
021 9144 966
Tue, 07 Jun 2011
Top News
South Africa's rand firmed more than 1 percent against the dollar on Tuesday, gaining along with other emerging market currencies on the soft greenback. Full story
The rand is likely to weaken by 6 percent in the next 12 months as new signs of weakness in the global economy put investors off high-risk assets, a Reuters poll showed on Tuesday. Full story |
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Waves of NATO aircraft hit Tripoli on Tuesday in the most sustained bombardment of the Libyan capital since Western forces began air strikes in March. Full storyThousands of protesters gathered in front of the Yemeni vice president's residence on Tuesday, demanding the acting leader for wounded President Ali Abdullah Saleh form a transitional council to create a new government. Full storyThe head of Moldova's tennis federation died of wounds sustained when a parked car blew up on Tuesday in the centre of the capital Chisinau as he walked by, police and doctors said. Full story |
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Markets | European shares fell for the
fifth straight day on Tuesday, with investors worried by slowing
economic growth and the euro zone peripheral debt. . . Full story | | Gold fell on Tuesday, as
steadier stock markets prompted some investors to take profits
from bullion, pulling it off a one-month high hit. . . Full story | | Wall Street bounced in light
volume on Tuesday, a day after the S&P 500 fell to its lowest
in over two months, with. . . Full story | | Britain's top share index closed
marginally higher on Tuesday as UK insurer Resolution's bumper
cash return helped boost insurance-related firms, while
integrated oils weighed. . . Full story |
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| The U.S. dollar fell against
major currencies on Tuesday after a senior Chinese currency
regulator warned about the risks of excessive dollar holdings,
while. . . Full story | | Australian stocks rebounded to
end the day almost unchanged after the Reserve Bank of Australia
held rates steady and sounded less likely to. . . Full story | | Tokyo shares on Tuesday snapped a
three-day losing streak in which the market slid 3 percent, as
hedge funds covered short positions and. . . Full story | | Gold inched up on Tuesday,
after rising to its strongest in more than a month in the
previous session, as fears about a. . . Full story |
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SA Business | South Africa's rand firmed slightly against the dollar on Tuesday paring some of its overnight losses which were prompted by increased importer demand for the greenback.. . . Full story | | The rand ended weaker against the dollar in local trade on Monday as importers sold the currency for dollars after it hit a fresh one-month high of 6.6750 early in the session.. . . Full story |
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| A Nigerian court handed a setback to South Africa's Telkom on Tuesday, ruling disputed lease agreements between its Nigerian unit and a local company were valid.. . . Full story | | Shipping and logistics group Grindrod plans to expand its Mozambican and South African coal terminals to meet fast-growing demand for export capacity from miners, its chief executive said on Tuesday.. . . Full story | | Zimbabwe's second-largest supermarket chain by assets, OK Zimbabwe, recorded a 153 percent increase in full-year earnings in the year through March 2011 as the country's economy recovers.. . . Full story |
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Company News | Further to the cautionary announcement dated Monday, 24 January 2011, and the further cautionary announcements dated, Tuesday, 8 March 2011 and. . . Full story | | Wesizwe announced that the official launch date for its Frischgewaagd-Ledig mine development project has been agreed as 4 July 2011.. . . Full story | | Unitholders are referred to the publication of Oasis' abridged audited results for the year ended 31 March 2011 on SENS on. . . Full story | | The company announced that Mr Jack Thompson, a non executive director of the company, resigned as a director of Century Aluminum. . . Full story |
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| Business Day reported that Spur MD Pierre van Tonder commented that the company is looking for more opportunities even after acquiring a 60% stake in restaurant chain Cappuccino's for R25 million. "We are always seeking new growth opportunities," he said. The. . . Full story | | Business Day reported that Fiuranium CEO Deon van der Mescht announced that the company will postpone the commissioning of its uranium plant at its tailings treatment business to conserve cash ahead of a convertible debenture maturing next June. The postponement is. . . Full story |
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Company Results | First Uranium's consolidated revenue was USD172 million for March 2011, an increase of 86% from USD93 million, resulting in the company reflecting a gross profit of USD20 million (2010: gross loss of USD18 million). Remembering that First Uranium remains in a capital development and growth phase, the consolidated loss for the year was USD70 million (2010: loss of USD92.2 million). Basic loss per common share was reduced to 38cps (2010: basic loss per common share of 56cps).
Prospects. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 17:00 | 31818.30 | 240.27 | 0.76% | JSE Top 40 | 17:00 | 28494.90 | 217.80 | 0.77% | JSE Gold | 17:00 | 2464.34 | -46.34 | -1.85% | JSE Financial | 17:00 | 21560.31 | 135.71 | 0.63% | JSE Industrial | 17:00 | 33049.61 | 226.70 | 0.69% | JSE Indust 25 | 17:00 | 27794.34 | 180.52 | 0.65% | JSE Resource | 17:00 | 53617.10 | 519.50 | 0.98% | DJ Futures | 20:00 | 12150.00 | 71.00 | 0.59% | DJ Ind | 19:35 | 12161.89 | 71.93 | 0.59% | SP 500 | 19:56 | 1293.49 | 7.32 | 0.57% | Nasdaq | 19:56 | 2715.52 | 12.96 | 0.48% | FTSE 100 | 17:35 | 5864.65 | 1.49 | 0.03% | DAX | 17:56 | 7103.25 | 18.68 | 0.26% | CAC40 | 17:40 | 3871.92 | 8.52 | 0.22% | Nikkei | 08:56 | 9442.95 | 62.60 | 0.67% | Shanghai | 09:26 | 2745.52 | 17.29 | 0.63% | Hang-Seng | 12:22 | 22868.67 | -80.89 | -0.35% | All Ords | 08:37 | 4641.10 | -7.60 | -0.16% | NZSE 50 | 07:32 | 3505.61 | -9.15 | -0.26% |
| | Name | Time | RP | Move | % Move | Gold | 19:58 | 1543.08 | -1.63 | -0.11% | Gold/Rand | 20:00 | 10346.20 | -127.99 | -1.22% | Gold/R kg | 20:00 | 332630 | -4777 | -1.42% | Silver | 19:58 | 37.1190 | .4010 | 1.09% | Platinum | 19:58 | 1826.75 | 21.45 | 1.19% | Palladium | 19:58 | 806.50 | 22.92 | 2.93% | R157 | 17:00 | 7.37 | -.04 | -0.54% | R204 | 17:00 | 8.08 | -.02 | -0.25% | Brent Crude | 19:56 | 115.52 | .55 | 0.48% | Rand / Dollar | 19:58 | 6.7049 | -0.0778 | -1.15% | Rand / Pound | 19:55 | 10.9934 | -0.0693 | -0.63% | Rand / Euro | 19:55 | 9.8450 | -0.0453 | -0.46% | Rand / NZD | 19:58 | 5.5094 | -0.0135 | -0.24% | Rand / AUD | 19:55 | 7.1945 | -0.0868 | -1.19% | Yen / Dollar | 19:58 | 80.1500 | 0.0300 | 0.04% | Euro / Dollar | 19:57 | 0.6811 | -0.0048 | -0.70% | Dollar / Euro | 19:57 | 1.4683 | 0.0104 | 0.71% | Pound / Dollar | 19:55 | 0.6079 | -0.0033 | -0.54% |
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The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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07/06/2011 | 215 | 115 | 79 | 409 | 256,815,594 | R13,316,645,845 | 105587 | 1645193 | 06/06/2011 | 154 | 173 | 82 | 409 | 227,940,534 | R10,531,278,670 | 74371 | 1574719 | 03/06/2011 | 121 | 203 | 78 | 402 | 279,754,474 | R14,253,513,253 | 107175 | 1741087 | 02/06/2011 | 101 | 238 | 80 | 419 | 250,824,272 | R12,193,489,656 | 103922 | 1555471 | 01/06/2011 | 121 | 215 | 74 | 410 | 225,795,481 | R9,863,692,055 | 87696 | 1709465 |
Index Summary Index Name | RP | Move | % Move | Top 40 | 28,494.90 | 217.80 | 0.77% | Industrial | 33,049.61 | 226.70 | 0.69% | Mid Cap | 42,195.29 | 322.82 | 0.77% | Small Cap | 32,316.23 | 113.85 | 0.35% | Resource 20 | 53,617.10 | 519.50 | 0.98% | Industrial 25 | 27,794.34 | 180.52 | 0.65% | Financial 15 | 8,111.74 | 53.50 | 0.66% | Financial & Ind. 30 | 30,850.19 | 199.10 | 0.65% | All Share | 31,818.30 | 240.27 | 0.76% | Oil & Gas | 26,684.20 | 481.16 | 1.84% | Mining | 35,255.62 | 266.48 | 0.76% | Gold Mining | 2,464.34 | -46.34 | -1.85% | Platinum Mining | 71.88 | 1.59 | 2.26% | Oil & Gas Producers | 14,347.60 | 258.71 | 1.84% | Basic Materials | 29,894.82 | 247.96 | 0.84% | Chemicals | 13,713.11 | -22.67 | -0.17% | Forestry & Paper | 14,966.91 | 248.83 | 1.69% | Industrial Metals | 29,273.84 | 568.47 | 1.98% | Industrials | 28,076.69 | 357.43 | 1.29% | General Industrials | 76,742.60 | 870.04 | 1.15% | Consumer Goods | 27,310.54 | 35.86 | 0.13% | Automobiles & Parts | 3,226.85 | .00 | 0.00% | Household Goods | 150.30 | 1 | 0.64% | Health Care | 33,551.05 | 287.57 | 0.86% | Beverages | 84.75 | .57 | 0.68% | Food Producers | 47,797.36 | 423.40 | 0.89% |
| | Index Name | RP | Move | % Move | Personal Goods | 430.47 | -3.99 | -0.92% | Consumer Services | 54,163.93 | 514.24 | 0.96% | General Retailers | 41,006.13 | 212.92 | 0.52% | Travel & Leisure | 3,656.91 | 28.65 | 0.79% | Media | 89.46 | 1.31 | 1.49% | Support Services | 2,390.59 | 15.39 | 0.65% | Telecommunications | 68,963.23 | 405.73 | 0.59% | Financials | 21,560.31 | 135.71 | 0.63% | Banks | 39,973.99 | 168.36 | 0.42% | Non-life Insurance | 30,502.93 | 191.56 | 0.63% | Life Insurance | 15,835.40 | 132.12 | 0.84% | General Financial | 2,309.79 | 16.78 | 0.73% | Technology | 21,183.04 | -134.02 | -0.63% | SHARIAH TOP40 | 3,139.21 | 30 | 0.95% | FTSE/JSE SHARIAH ALL | 3,205.18 | 30 | 0.95% | COAL MINING | 21,646.22 | 297 | 1.39% | FTSE JSE Fledgling | 4,610.21 | -17 | -0.37% | FTSE/JSE Alt X | 1,058.50 | -7 | -0.68% | SA LISTED PROPERTY | 384.53 | | 0.88% | CAPPED PROPERTY | 318.86 | | 0.87% | RESOURCE | 29,624.89 | 264 | 0.90% | DIVIDEND PLUS | 169.54 | 1 | 0.85% | FTSE/JSE RAFI 40 | 6,643.93 | 59 | 0.90% | Capped Top 40 | 14,885.07 | 107 | 0.73% | Capped All Share | 16,036.70 | 117 | 0.73% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | NED | NEDBANK GROUP LTD | SELL | 02 Jun | SBK | STANDARD BANK GROUP LIMIT... | SELL | 02 Jun | AIP | ADCOCK INGRAM HLGS LD | HOLD | 02 Jun | LHC | LIFE HEALTHCARE GRP HLDG ... | BUY | 02 Jun | EQS | EQSTRA HOLDINGS LTD | HOLD | 02 Jun |
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Results Expected** Expected | Company Name | Fin. Date | 08 Jun 2011 | RACEC | March 2011 (Interim) | 09 Jun 2011 | ACUCAP | March 2011 (Final) | 09 Jun 2011 | KEATON | March 2011 (Final) | 13 Jun 2011 | BSI STEEL | March 2011 (Final) | 13 Jun 2011 | MIXTEL | March 2011 (Final) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | CLOVERPREF | 11-06-02 | 11-06-17 | 11-06-27 | R 0.0586 | INVICTA | 11-06-01 | 11-07-01 | 11-07-11 | R 1.2600 | PERGRIN | 11-06-01 | 11-07-15 | 11-07-25 | R 0.3500 | CROOKES | 11-05-31 | 11-07-01 | 11-07-11 | R 0.6500 | ILLOVO | 11-05-30 | 11-07-01 | 11-07-11 | R 0.3400 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | CERAMIC | 11-05-17 | 11-06-03 | 11-06-13 | R 15.0000 | SBRJSEP11 | 11-05-20 | 11-06-03 | 11-06-15 | R 1.4500 | SPAR | 11-05-11 | 11-06-03 | 11-06-13 | R 1.4200 | PICKNPAY | 11-04-18 | 11-06-03 | 11-06-13 | R 1.0550 | CORONAT | 11-05-17 | 11-06-03 | 11-06-13 | R 0.8000 |
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Upcoming AGMs** Code | Company Name | Date | Status | SLM | Sanlam Ltd | 08/06/2011 | Confirmed | SLMB | Sanlam Ltd | 08/06/2011 | Confirmed | SLMP1 | Sanlam Ltd | 08/06/2011 | Confirmed | SLMA | Sanlam Ltd | 08/06/2011 | Confirmed | TLM | TeleMasters Holdings Ltd | 10/06/2011 | Confirmed |
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