Tuesday, 30 August 2011 - 20:00
Charts
Behavioural Finance With the turmoil in markets in the second week of August, both locally and abroad, one has to ask the question why common sense and rationality often does not prevail in markets.
The Efficient Markets Hypothesis (EMH) states that market prices reflect all available information, and that it is impossible to outperform the market consistently on a risk-adjusted basis. Whenever new information becomes available in the public domain, EMH proposes that a share’s price will quickly adjust to a new level implied by the underlying value of the share, given this new information. However, it is clear that as soon as humans and financial markets start interacting, EMH often does not hold at all!
The field of behavioural finance tries to examine and explain why we sometimes make irrational and incorrect choices when faced with financial decisions. Some of the more interesting observations in this field are:
Anchoring and Adjustment: When required to value a certain asset, most people start with an initial estimate and then adjust their answer away from this anchor. A good example may be a car advertised in the local newspaper for a certain amount, or “nearest cash offer”. The advertised price will immediately influence buyers’ valuation of the car, even though the anchor may be ridiculously high! In the investment environment it is prudent to distance oneself from unrealistic anchors observed in the market. Valuations are often driven up by fellow investors’ exuberance, and prices start to deviate too far from the underlying values. When investing for value as opposed to growth, be certain that the fundamentals of the proposed investment are sound!
Framing: In a past study an audience were asked either how “long” or how “short” the movie they saw was. The average answer to the first question was 2 hours and ten minutes, and to the second question only 1 hour and 40 minutes! In the financial sphere questions can often be framed either in terms of gains or losses, and the specific wording can have a big impact on the decision made. We feel the pain of a loss more intensely than the joy of a gain, and as a result we may be more risk-seeking when faced with potential losses in order to try and avoid the pain.
Status Quo bias: People often have a preference for maintaining their current situation and avoiding possible changes, despite all evidence and advice pointing in a different direction. An example might be an investor being invested in a specific fund for a very long time, and then being too foolhardy or sluggish to pull out when things take a turn for the worse.
Confirmation bias: Many investors start off with a certain view on a specific asset class or fund, and then hunt for evidence to support that view. Evidence not supporting the original view will merely be dismissed or not valued highly enough. With the wealth of data, ratios, and performance analysis tools out there, it is often said that almost any view can be supported by just discovering the right statistics. Always make sure that an asset’s value is supported by healthy fundamentals when faced with statistics and past figures that paint a very rosy picture.
At Seed we realise that investors driving markets are often irrational, and the challenge is to focus on our established methods of asset class valuations and manager research throughout the market cycle. The human factor will always be present in our decision-making process, but being aware of the factors mentioned above enables us to constantly improve our investment processes and research.
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Kind regards,
Cor van Deventer
info@seedinvestments.co.za
www.seedinvestments.co.za
021 9144 966
Tue, 30 Aug 2011
Top News
South Africa's economic growth figures for the second quarter were disappointing, but hopefully, the economy could still grow by more than three percent this year, said Finance Minister Pravin Gordhan. Full story
Revenue increased to R8.6 billion (2010: R7 billion). Operating profit rose to R552.3 million (2010: R519.7 million), while total comprehensive income for the period grew to R383.9 million (2010: R355.5 million). Furthermore, headline earnings per share was higher at 132.7cps (2010: 120.4cps Full story |
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Libya's interim leader on Tuesday gave forces loyal to deposed ruler Muammar Gaddafi a four-day deadline to surrender towns still under their control or risk a military showdown. Full storyProtesters across Syria demanded President Bashar al-Assad's removal after prayers marking the end of the Muslim fasting month of Ramadan, defying tanks and troops besieging many cities and towns, activists and residents said. Full storyNational Guard and firefighters rescued hundreds people from record flooding in New Jersey Tuesday and Vermont planned to airlift food and water to inland towns cut off by Hurricane Irene after its paralyzing rampage through the U.S. northeast. Full story |
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SA Business | More than 200,000 South African municipal workers who walked off the job two weeks ago demanding an 18 percent salary rise, will return to their posts on Wednesday while negotiations continue, a union spokesman said.. . . Full story | | The rand hit a three-week high on Tuesday as commodity currencies globally held on to gains from upbeat investors, while bonds are likely to firm if second quarter GDP data shows the economy is in deeper trouble than forecast.. . . Full story |
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| South Africa's economy grew at its slowest pace in almost two years in the second quarter as the manufacturing and mining. . . Full story | | Miner First Uranium narrowed its quarterly loss on Tuesday as higher gold prices outweighed rising operating costs at the company's two. . . Full story | | South Africa's Solidarity trade union said on Tuesday it was declaring a wage dispute with state power utility Eskom and was. . . Full story | | Impala Platinum (Implats), the world's second largest platinum producer, said on Tuesday it has stopped work at one of the shaft. . . Full story |
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| South Africa's Johannesburg Stock Exchange (JSE) will this week woo stock listings from a growing number of Australian mining companies searching. . . Full story | | South Africa exported 67,657 tonnes of white maize last week compared with 5,643 tonnes in the previous week, the South African. . . Full story | | South Africa's Treasury sold 1.1 billion randworth of the 2017 bond and 1 billion rand of the 2031 issue on Tuesday.. . . Full story | | Kenya's CFC Insurance Holdings said rising bond yields and a sliding stock market posed a challenge after reporting a 75 percent. . . Full story |
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Company News | Ordinary shareholders of BCX ("ordinary shareholders") and "A" ordinary shareholders of BCX (""A" shareholders") (collectively referred to as "shareholders") are referred. . . Full story | | Fiuranium announced the successful conclusion of the MWS Technical Completion Test, as defined in the MWS Gold Purchase Agreement. The Technical. . . Full story | | Shareholders are advised that at the general meeting held today, Tuesday, 30 August 2011, the special resolutions in terms of Section. . . Full story | | Shareholders were advised that there has been a change with regard to the audited results for the year ended 28 February. . . Full story |
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| Holders of ordinary shares in the company are advised that Investec Bank Ltd ("IBL") has acquired shares in the open market. . . Full story | | Shareholders are advised that Spur Corporation has entered into negotiations regarding a possible acquisition, which if successfully concluded, may impact on. . . Full story | | Shareholders are referred to the cautionary announcement dated Thursday, 4 August 2011, in which shareholders were advised that Cadiz had entered. . . Full story | | Shareholders were advised that Great Basin has appointed Sasfin Capital, a division of Sasfin Bank Ltd, as its sponsor with effect. . . Full story |
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Company Results | Revenue rose by 7.9% to R118.5 billion (R109.8 billion). Gross income increased by 6.7% to R24.6 billion (R23 billion). Operating profit. . . Full story | | Revenue improved to R2.6 billion (R2 billion) and net operating profit also rose to R292.7 million (R148.7 million). However, a loss. . . Full story | | Revenue increased to R8 651 million (2010: R7 797 million), while operating profit declined slightly to R1 610 million (2010: R1. . . Full story | | Turnover rose to R1.5 billion (R1.4 billion) and gross profit improved by 10% to R626 million (R570 million). Operating profit gained. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 17:00 | 30365.13 | 72.37 | 0.24% | JSE Top 40 | 17:00 | 27097.75 | 48.51 | 0.18% | JSE Gold | 17:00 | 2656.39 | 27.72 | 1.05% | JSE Financial | 17:00 | 21119.63 | -163.55 | -0.77% | JSE Industrial | 17:00 | 32095.00 | 188.04 | 0.59% | JSE Indust 25 | 17:00 | 26991.78 | 166.95 | 0.62% | JSE Resource | 17:00 | 49438.46 | 179.99 | 0.37% | DJ Futures | 19:56 | 11500.00 | -11.00 | -0.10% | DJ Ind | 19:41 | 11525.13 | -14.12 | -0.12% | SP 500 | 19:56 | 1207.43 | -2.65 | -0.22% | Nasdaq | 19:56 | 2563.52 | 1.41 | 0.06% | FTSE 100 | 17:35 | 5268.66 | 138.74 | 2.70% | DAX | 18:06 | 5643.92 | 106.44 | 1.92% | CAC40 | 18:06 | 3159.74 | 5.54 | 0.18% | Nikkei | 08:26 | 8953.90 | 156.12 | 1.77% | Shanghai | 09:26 | 2566.59 | -9.82 | -0.38% | Hang-Seng | 09:46 | 20195.92 | 613.04 | 3.13% | All Ords | 08:37 | 4341.40 | 7.70 | 0.18% | NZSE 50 | 07:46 | 3317.73 | 22.10 | 0.67% |
| | Name | Time | RP | Move | % Move | Gold | 19:58 | 1826.54 | 38.05 | 2.13% | Gold/Rand | 19:57 | 12929.15 | 328.59 | 2.61% | Gold/R kg | 19:56 | 415799 | 10610 | 2.62% | Silver | 19:58 | 41.3580 | .5780 | 1.42% | Platinum | 19:58 | 1847.00 | 29.25 | 1.61% | Palladium | 19:57 | 775.00 | 24.32 | 3.24% | R157 | 17:00 | 6.50 | -.05 | -0.76% | R204 | 17:00 | 7.46 | -.04 | -0.47% | Brent Crude | 19:56 | 114.42 | 1.20 | 1.06% | Rand / Dollar | 19:58 | 7.0802 | 0.0333 | 0.47% | Rand / Pound | 19:55 | 11.5058 | -0.0358 | -0.31% | Rand / Euro | 19:55 | 10.2102 | -0.0242 | -0.24% | Rand / NZD | 19:57 | 6.0288 | 0.0594 | 1.00% | Rand / AUD | 19:55 | 7.5580 | 0.0325 | 0.43% | Yen / Dollar | 19:58 | 76.7000 | -0.1300 | -0.17% | Euro / Dollar | 19:55 | 0.6932 | 0.0045 | 0.65% | Dollar / Euro | 19:58 | 1.4421 | -0.0093 | -0.64% | Pound / Dollar | 19:55 | 0.6134 | 0.0044 | 0.72% |
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Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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30/08/2011 | 203 | 140 | 83 | 426 | 335,713,959 | R14,194,074,357 | 96205 | 1889911 | 29/08/2011 | 278 | 97 | 67 | 442 | 204,808,817 | R9,291,435,939 | 93369 | 1439997 | 26/08/2011 | 167 | 158 | 81 | 406 | 228,475,717 | R11,233,812,520 | 86560 | 2367406 | 25/08/2011 | 141 | 208 | 80 | 429 | 302,923,962 | R13,578,127,923 | 107978 | 2327544 | 24/08/2011 | 213 | 119 | 88 | 420 | 251,148,622 | R12,593,383,527 | 99321 | 2275615 |
Index Summary Index Name | RP | Move | % Move | Top 40 | 27,097.75 | 48.51 | 0.18% | Industrial | 32,095.00 | 188.04 | 0.59% | Mid Cap | 41,091.14 | 235.28 | 0.58% | Small Cap | 31,095.94 | 112.90 | 0.36% | Resource 20 | 49,438.46 | 179.99 | 0.37% | Industrial 25 | 26,991.78 | 166.95 | 0.62% | Financial 15 | 7,902.91 | -73.51 | -0.92% | Financial & Ind. 30 | 29,980.78 | 15.44 | 0.05% | All Share | 30,365.13 | 72.37 | 0.24% | Oil & Gas | 24,717.69 | 492.73 | 2.03% | Mining | 32,539.75 | 41.37 | 0.13% | Gold Mining | 2,656.39 | 27.72 | 1.05% | Platinum Mining | 65.68 | .15 | 0.23% | GENERAL MINING | 7,948.48 | -12.47 | -0.16% | Oil & Gas Producers | 13,290.25 | 264.94 | 2.03% | Basic Materials | 27,534.17 | 29.57 | 0.11% | Chemicals | 12,571.63 | -53.53 | -0.42% | Forestry & Paper | 12,585.89 | -127.20 | -1.00% | Industrial Metals | 27,521.20 | 156.09 | 0.57% | Industrials | 26,646.73 | 80.53 | 0.30% | General Industrials | 74,326.83 | 186.25 | 0.25% | Consumer Goods | 26,637.40 | 83.67 | 0.32% | Automobiles & Parts | 3,577.84 | -33.97 | -0.94% | Household Goods | 142.48 | 2 | 1.58% | Health Care | 32,606.05 | 184.93 | 0.57% | Beverages | 86.11 | -.36 | -0.42% |
| | Index Name | RP | Move | % Move | Food Producers | 47,986.26 | 123.04 | 0.26% | Personal Goods | 393.41 | 4.89 | 1.26% | Consumer Services | 53,281.00 | 821.83 | 1.57% | General Retailers | 44,563.74 | 704.12 | 1.61% | Travel & Leisure | 3,579.13 | 50.73 | 1.44% | Media | 78.32 | 1.45 | 1.89% | Support Services | 2,228.37 | 16.15 | 0.73% | Telecommunications | 68,441.45 | 318.64 | 0.47% | Financials | 21,119.63 | -163.55 | -0.77% | Banks | 39,755.45 | -405.62 | -1.01% | Non-life Insurance | 31,681.44 | 397.69 | 1.27% | Life Insurance | 15,249.62 | -89.22 | -0.58% | General Financial | 2,145.30 | -6.41 | -0.30% | Technology | 22,268.00 | -109.36 | -0.49% | SHARIAH TOP40 | 2,939.73 | 11 | 0.38% | FTSE/JSE SHARIAH ALL | 3,005.38 | 11 | 0.38% | COAL MINING | 24,328.44 | 245 | 1.02% | FTSE JSE Fledgling | 4,428.15 | -19 | -0.43% | FTSE/JSE Alt X | 1,100.59 | 8 | 0.76% | SA LISTED PROPERTY | 389.56 | | -0.30% | CAPPED PROPERTY | 316.40 | | -0.60% | RESOURCE | 27,354.87 | 102 | 0.38% | DIVIDEND PLUS | 165.41 | 1 | 0.37% | FTSE/JSE RAFI 40 | 6,305.26 | 2 | 0.03% | Capped Top 40 | 14,242.66 | 32 | 0.23% | Capped All Share | 15,336.47 | 40 | 0.26% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | CAT | CAXTON & CTP PUBLISHERS &... | BUY | 26 Aug | NPK | NAMPAK | HOLD | 26 Aug | ASA | ABSA GROUP LIMITED | BUY | 26 Aug | SHF | STEINHOFF INTERNATIONAL H... | BUY | 26 Aug | EMI | EMIRA PROPERTY FUND | HOLD | 26 Aug |
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Results Expected** Expected | Company Name | Fin. Date | 31 Aug 2011 | ARM | June 2011 (Final) | 31 Aug 2011 | DIAMONDCP | June 2011 (Interim) | 31 Aug 2011 | LIATH | June 2011 (Interim) | 31 Aug 2011 | M-R-HLD | June 2011 (Final) | 31 Aug 2011 | MAS | May 2011 (Q) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | BIDVEST | 11-08-29 | 11-09-16 | 11-09-26 | R 2.5500 | SUNINT | 11-08-29 | 11-09-16 | 11-09-26 | R 1.2000 | DRDLD | 11-08-29 | 11-10-07 | 11-10-17 | R 0.0750 | HOWDEN | 11-08-26 | 11-09-09 | 11-09-19 | R 0.2000 | MUSTEK | 11-08-26 | 11-09-23 | 11-10-03 | R 0.1700 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | PALAMIN | 11-08-01 | 11-08-26 | 11-09-05 | R 9.3100 | STANBANK-P | 11-08-11 | 11-08-26 | 11-09-05 | R 3.1241 | LIB-HOLD | 11-08-04 | 11-08-26 | 11-09-05 | R 1.8200 | RESILIENT | 11-08-10 | 11-08-26 | 11-09-05 | R 1.0936 | GFIELDS | 11-08-11 | 11-08-26 | 11-09-05 | R 1.0000 |
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Upcoming AGMs** Code | Company Name | Date | Status | TKGB | Telkom SA Ltd | 30/08/2011 | Confirmed | TKGA | Telkom SA Ltd | 30/08/2011 | Confirmed | TKG | Telkom SA Ltd | 30/08/2011 | Confirmed | WKF | Workforce Holdings Ltd | 31/08/2011 | Confirmed | ERBP | Erbacon Investment Holdings Ltd | 31/08/2011 | Confirmed |
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