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 The Sharenet Daily 
Monday, 24 October 2011 - 20:00
Top News
SA Business
Company News
Company Results
World Markets (Spot Prices)
JSE Today
JSE Trading Statistics
Major Moves
Index Summary
Latest Consensus Changes / Results Expected
Recent Dividends / Ex Div
Upcoming AGMs
Stock Exchange News Service (SENS)

Purchasing Power Parity

Purchasing Power Parity (PPP) is an economic and investment concept explaining how prices of goods and services increase at the same rate (all else equal) around the world. Over the long run, differences in inflation rates should result in changes in exchange rates, with those countries experiencing high inflation seeing their currencies depreciate and vice versa.

The table below shows how this concept works in reality (using an extreme example to illustrate the theory):

In the above example we can see that at the start of the period identical rugby balls cost the same amount (in common currency) in South Africa (SA) and New Zealand (NZ). Over the period SA has a higher inflation rate and at the end of the period in order for the rugby balls to still cost the same (in common currency) the rand would need to have weakened to R9.09/NZ$.

In a world of zero frictional costs (i.e. transport, taxes, etc) if the actual exchange rate is R4.55/NZ$ (too strong) then South Africans’ would be able to exchange R 1 000 for NZ$ 220 (R 1 000 / R4.55/NZ$) and buy 2 rugby balls in NZ. They would then be able to sell these balls in SA for R 2 000 and make a riskless profit of 100% (R 1 000). Conversely if the rand had weakened to R20/NZ$ then rugby balls could be bought in SA and sold in NZ at a healthy profit. This process is known as arbitrage and will happen until either the price of rugby balls changes to neutralise the difference (change in inflation rate) or the exchange rate moves to neutralise the difference.

In this frictionless world exchange rates would always trade at fair value. In the real world there are frictional costs which therefore result in currencies spending periods where they are either over or undervalued relative to other currencies. PPP therefore doesn’t hold over the short term, but will generally provide a good estimate of fair value over the longer term.

As a currency moves further and further away from its fair value, the likelihood being able to arbitrage (make a riskless profit) goods between the two countries increases. At some point the currency will move back to fair value as the flow of goods and cash equalises the exchange rate.

In reality this plays out in the import and export sectors. Importers always want a strong currency so that imported goods cost less, while exporters prefer a weaker currency which lowers the prices of their goods in foreign currencies and therefore boosts demand.

The chart below shows how the rand has traded against the US$ over the past 26 years and compares it to the fair value exchange rate implied by PPP (i.e. the difference in inflation rates between the two countries). Notice that there are extended periods where the rand doesn’t trade at fair value, but over this long period we can see that the PPP fair value rate does provide a good anchor of where the actual exchange rate should be. The recent rand weakness has seen it move closer to fair value, but will still think that it is overvalued.

This method of valuing currencies is a blunt method and should therefore not be used to predict short term movements, but it does give an indication of which way your currency should move over the longer term.

Take care,

Mike Browne
021 9144 966

Mon, 24 Oct 2011
Top News
South African stocks closed at their highest level in nearly three months as demand for resources firms rose with hope that European Union leaders will agree on a solution to their region's debt woes later this week.  Full story

Revenue decreased by 10.9% to R762.1 million (R855.3 million). Gross profit declined to R83 millio (R96.9 million). Net attributable profit slumped by 38.3% to R13.5 million (R21.8 million). In addition, headline earnings per share was down by 43% to 3.09c (5.42cps). Prospects Sanyati e  Full story
Rescuers searched the rubble of collapsed buildings Monday for survivors and victims of a major earthquake that killed at least 279 people and injured more than 1,300 in mainly Kurdish southeast Turkey.  Full story
Yemeni President Ali Abdullah Saleh, facing an increasingly entrenched uprising against his rule, on Monday welcomed a U.N. Security Council resolution urging him to sign a Gulf-mediated power transfer plan, the state news agency reported.  Full story
The United States has pulled its ambassador out of Syria because of what it said were credible threats to his safety after his public support for protesters led to attacks on his embassy and diplomatic convoy by supporters of President Bashar al-Assad.  Full story
U.S. stocks rose on Monday, adding to three weeks of gains by the S&P 500, after strong earnings from Caterpillar and some proposed. . .  Full story
European shares closed higher after choppy trading on Monday with Chinese economic data buoying miners and euro zone banks reversing early weakness on progress. . .  Full story
Global stocks hit a seven-week high on Monday and commodities rallied on optimism European leaders were moving closer to resolving their debt crisis. . .  Full story
Britain's top share index hit a 2-1/2-month closing high on Monday, as strong manufacturing data in China lifted miners and on hopes that. . .  Full story

Gold gained 1 percent on Monday, rising with commodities and equities on hopes that European Union leaders were making progress to tackle the region's. . .  Full story
U.S. stocks opened modestly higher on Monday as strong earnings from Caterpillar offset concerns European policymakers were struggling to narrow differences in tackling the. . .  Full story
World stocks gained on Monday as investors bet on a positive outcome to the euro zone crisis talks and took comfort from signs. . .  Full story
Hong Kong shares recorded their best daily performance in two weeks on Monday, led by mainland energy and materials plays that suffered the. . .  Full story
SA Business
Great Basin Gold Ltd sold 27 percent less gold sequentially in the third quarter from its operations in Nevada and South. . .  Full story
Global miner Xstrata said on Monday it had met with South Africa's National Union of Mineworkers (NUM) in a bid to. . .  Full story
South Africa's rand reversed earlier gains against the dollar on Monday, falling more than 0.2 percent mainly in line with a. . .  Full story
South Africa's rand reversed earlier gains against the dollar on Monday, falling more than 0.2 percent mainly in line with a. . .  Full story

South Africa's rand turned positive against the dollar in volatile late Monday trade, gaining as much as 2.3 percent to a week's high in what some traders said was a retracement. . .  Full story
South Africa's rand started on a firmer note on Monday, shrugging off last week's weakness that took it to two-week lows, with dealers seeing it gaining further.. . .  Full story
South Africa's rand gained 1.4 percent against the dollar on Monday, as market players were encouraged to take on risky assets after a weekend euro zone summit made progress towards an. . .  Full story
Company News
Further to the cautionary announcement dated 30 September 2010 and subsequent renewal of cautionary announcements, the last of which was dated. . .  Full story
Shareholders were advised that the annual financial statements will be distributed to shareholders on or about 31 October 2011 and contain. . .  Full story
Seardel advised that for the six months ended 30 September 2011 the company expects its financial results to fall within the. . .  Full story
Great Basin reported an operational update for the three months ended September 30, 2011. The company will file its management discussion. . .  Full story

The Minister of Mineral Resources of the Republic of South Africa ("the Minister") has consented to the temporary suspension of her. . .  Full story
At the annual general meeting of shareholders of Seardel held on Monday, 24 October 2011 (in terms of the notice of. . .  Full story
Shareholders of HCI are hereby advised that at the annual general meeting held today, 24 October 2011, all the ordinary and. . .  Full story
Grindrod shareholders are referred to the joint announcement published by Grindrod and Remgro Ltd ("Remgro") on Tuesday, 20 September 2011, relating. . .  Full story
Company Results
Revenue for the interim period increased to R30.6 million (2010: R26.6 million). Gross profit rose to R20.2 million (2010: R19.2 million), operating profit grew to R2 million (2010: loss of R370 000), while profit attributable to ordinary shareholders was higher at R1.2 million (2010: loss of R265 000). Furthermore, headline earnings per share improved to 0.5cps (2010: loss of 0.1cps). Dividend No dividend has been declared for the interim period. Prospects The core focus will c. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0031654.31204.320.65%
JSE Top 4017:0028370.97205.360.73%
JSE Gold17:002835.3740.621.45%
JSE Financial17:0021456.79-28.01-0.13%
JSE Industrial17:0033652.7310.030.03%
JSE Indust 2517:0028458.18-8.37-0.03%
JSE Resource17:0052010.99929.881.82%
DJ Futures19:2011842.0085.000.72%
DJ Ind19:4511937.53128.741.09%
SP 50020:001256.3018.051.46%
FTSE 10017:355548.0659.411.08%
All Ords07:384313.60110.202.62%
NZSE 5021/103281.16-8.61-0.26%
NameTimeRPMove% Move
Gold/R kg20:00418104-7046-1.66%
Brent Crude19:56112.371.361.23%
Rand / Dollar19:597.8593-0.1827-2.27%
Rand / Pound19:5512.5439-0.2766-2.16%
Rand / Euro19:5510.9600-0.2143-1.92%
Rand / NZD19:586.3696-0.0831-1.29%
Rand / AUD19:558.2513-0.0787-0.94%
Yen / Dollar19:5876.0250-0.2140-0.28%
Euro / Dollar19:550.7168-0.0039-0.54%
Dollar / Euro19:591.39460.00770.56%
Pound / Dollar19:550.6245-0.0024-0.38%

Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics

Major Moves Up
SharenameSaleMove% MoveVolume
1 LONAFRIC  2002916.96.%550
2 DELRAND  1722214.67.%420
3 AFRO-C  218136.34.%4800
4 METROFILE  235114.91.%14057
5 ONELOGIX  13464.69.%382600
6 RANGOLD  230104.55.%3517
7 ROLFES  255104.08.%53475
8 LONMIN  137005003.79.%214594
9 AQUARIUS  2278783.55.%197205
10 BARWORLD  66322173.38.%1309853
11 HULAMIN  720213.00.%670064
12 OCTODEC  1750502.94.%34826
13 MONDIPLCP  59871532.62.%551259
14 PAN-AF  16342.52.%1179924
15 BILLITON  251006002.45.%5053657
16 CML  2150512.43.%217973
17 DAWN  517122.38.%3980
18 RAINBOW  1600362.30.%63439
19 SHOPRIT  118002562.22.%1076223
20 PICKNPAY  3945842.18.%1830087

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Major Moves Down
SharenameSaleMove% MoveVolume
1 PLATMIN  245-39-13.73.%288620
2 COMPCLEAR  270-30-10.00.%3000
3 MMG  202-13-6.05.%10000
4 YORK  310-15-4.62.%1000
5 EASTPLATS  564-25-4.24.%163485
6 LITHA  235-10-4.08.%389285
7 AVUSA  2260-85-3.62.%4300
8 CMH  950-35-3.55.%59273
9 GBGOLD  1225-45-3.54.%6500
10 OPTIMUM  3380-100-2.87.%402465
11 BATS  35995-1051-2.84.%491847
12 STEINHOFF  2280-66-2.81.%3454084
13 COAL  695-20-2.80.%181502
14 PUTPROP  525-15-2.78.%4500
15 KELLY  355-10-2.74.%400
16 JUBILEE  180-5-2.70.%6066
17 ROCKWELL  390-10-2.50.%398
18 VERIMARK  126-3-2.33.%38454
19 INVPLC  4730-94-1.95.%1146289
20 ILIAD  520-10-1.89.%22045

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New Highs
SharenameSaleHighMove% MoveVolume
1 CML  21502180512.43.%217973
2 CALGRO  19020031.60.%74500
3 ABSA  13892145001110.81.%803178
4 REMGRO  1173511824410.35.%650212
5 MEDCLIN  35423560120.34.%1278807
6 OCEANA  420043500.28565
7 TIGBRANDS  2265022985-45-0.20.%325838
8 GOLDONE  442450-1-0.23.%2492057
9 SANLAM  28702925-19-0.66.%2716080
10 TASTE  167199-3-1.76.%317310

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New Lows
SharenameSaleLowMove% MoveVolume
1 PLATMIN  245245-39-13.73.%288620
2 CMH  950950-35-3.55.%59273
3 ARGENT  591590-4-0.67.%12000
4 TELKOM  30603035-15-0.49.%996011

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Index Summary
Index NameRPMove% Move
Top 4028,370.97205.360.73%
Mid Cap41,888.13109.820.26%
Small Cap31,661.3616.420.05%
Resource 2052,010.99929.881.82%
Industrial 2528,458.18-8.37-0.03%
Financial 158,017.90-21.86-0.27%
Financial & Ind. 3031,317.81-36.59-0.12%
All Share31,654.31204.320.65%
Oil & Gas 27,621.70529.441.95%
Mining 33,813.35587.271.77%
Gold Mining2,835.3740.621.45%
Platinum Mining63.27.080.13%
GENERAL MINING8,332.67177.212.17%
Oil & Gas Producers 14,851.68284.671.95%
Basic Materials 28,484.67465.781.66%
Chemicals 12,892.2951.460.40%
Forestry & Paper 11,923.81244.742.10%
Industrial Metals 27,542.81-112.32-0.41%
Industrials 27,473.69218.900.80%
General Industrials 77,652.081063.211.39%
Consumer Goods 30,017.51-149.01-0.49%
Automobiles & Parts 3,725.0311.320.30%
Household Goods144.90-4-2.81%
Health Care 34,115.49119.340.35%
Beverages 99.80-1.01-1.00%
Index NameRPMove% Move
Food Producers 51,001.22-89.18-0.17%
Personal Goods 441.352.590.59%
Consumer Services 55,571.29609.581.11%
General Retailers 45,213.63129.130.29%
Travel & Leisure 3,465.20.510.01%
Media 82.661.251.54%
Support Services 2,249.1210.670.48%
Telecommunications 64,399.54-720.10-1.11%
Financials 21,456.79-28.01-0.13%
Banks 39,752.9870.630.18%
Non-life Insurance 33,584.99121.240.36%
Life Insurance 15,936.19-122.48-0.76%
General Financial 2,150.79-5.73-0.27%
Technology 23,410.21-88.29-0.38%
SHARIAH TOP40 3,048.05351.17%
FTSE/JSE SHARIAH ALL3,106.18341.10%
COAL MINING23,089.241850.81%
FTSE JSE Fledgling 4,518.13170.37%
FTSE/JSE Alt X 1,174.93554.94%
RESOURCE 28,710.095061.79%
DIVIDEND PLUS169.0200.20%
FTSE/JSE RAFI 406,541.22370.57%
Capped Top 4014,903.69930.63%
Capped All Share15,983.02980.62%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
25 Oct 2011SANYATIAugust 2011 (Interim)
26 Oct 2011AQUARIUSSeptember 2011 (Q)
26 Oct 2011AQUARIUSCVTSeptember 2011 (Q)
26 Oct 2011KAIROSAugust 2011 (Interim)
26 Oct 2011PSVAugust 2011 (Interim)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
OCTODEC11-10-2111-11-1111-11-21R 0.6430
PREMIUM11-10-2111-11-1111-11-21R 0.5580
CLICKS11-10-2012-01-2012-01-30R 0.8800
FAMBRANDS11-10-2011-12-0811-12-19R 0.8000
OASIS11-10-2011-11-0411-11-14R 0.4710
Ex Div**
Share NameDec-DateLDTPay-DateAmount
SHFINV-PREF11-09-0611-10-2111-10-31R 3.5500
NTC PREF11-10-0311-10-2111-10-31R 3.3842
EOH11-09-1211-10-2111-10-31R 0.4800
ELBGROUP11-09-2111-10-2111-10-31R 0.4000
OPTIMUM11-08-2511-10-2111-10-31R 0.3000

Upcoming AGMs**
CodeCompany NameDateStatus
SERSeardel Investment Corporation Ltd24/10/2011Confirmed
SRNSeardel Investment Corporation Ltd24/10/2011Confirmed
HCIHosken Consolidated Investments Ltd24/10/2011Confirmed
PKHProtech Khuthele Holdings Ltd24/10/2011Confirmed
IFHIFA Hotels - Resorts Ltd25/10/2011Unconfirmed

Stock Exchange News Service
24/10/201117:35 Fountainhead - Director`s Dealings in Fountainhead Units
24/10/201117:30 Lonrho Plc - TR-1: Notification of major interest in shares
24/10/201117:25SBS16 - The Standard Bank of South Africa Limited - New Financial Instrument
24/10/201117:00 Avusa Limited - Trading statement
24/10/201116:57 Poynting Holdings Limited - Dealings in securities by a
24/10/201116:39 Shoprite Holdings Limited - Dealing in securities by a non-
24/10/201116:34 Metmar Limited - Trading Statement
24/10/201116:25OML - OLD MUTUAL plc - Form 8.3
24/10/201116:07 Thabex - Renewal of Cautionary Announcement
24/10/201116:00 Simmer & Jack Mines, Limited - No change statement and notice of
24/10/201116:00 Sanyati Holdings Limited - Unaudited interim results for the six months
24/10/201115:59MAQ007 - Macquarie Securities South Africa (Proprietary) Limited - New
24/10/201115:06 Protech Khuthele Holdings Limited - Results of the Annual General
24/10/201115:04SER/SRN - Seardel Investment Corporation Limited - Trading statement
24/10/201114:54 WG Wearne Limited - Results of Annual General Meeting, appointment
24/10/201114:45 Great Basin Gold Limited - Provides operational update -
24/10/201114:40 Central Rand Gold Limited - Suspension of decision to cancel mining
24/10/201113:31SER/SRN - Seardel Investment Corporation Limited - Results of Annual General
24/10/201113:30 Hosken Consolidated Investments Limited - Results of the Annual
24/10/201112:23INL/INP - Investec Limited/Investec plc - Form 8 (DD)
24/10/201112:22INL/INP - Investec - FORM 8 (DD)
24/10/201112:12BIBID - Bidvestco Limited - Listing of New Financial Instruments
24/10/201112:10IND143 - iNdwa Investments Limited - Full capital redemption
24/10/201112:09FRC29 - FirstRand Bank Limited - Interest rate reset announcement
24/10/201111:57 Discovery Holdings Limited - Disclosure of dealing in securities by
24/10/201111:33GND/GNDP - Grindrod Limited - Results of General Meeting
24/10/201111:15 Astral Foods Limited - Trading statement
24/10/201111:00 DiamondCorp plc - TR-1: Notification of major interest in shares
24/10/201110:56 Resource Generation Limited - Resource Generation Limited
24/10/201110:32 Resource Generation Limited - AGM Presentation
24/10/201110:31 Resource Generation Limited - Minutes of the Annual General
24/10/201110:27 Skinwell Holdings Limited - Reviewed condensed interim financial
24/10/201110:00 Coal of Africa Limited - Posting of Annual Report 2011
24/10/201109:50INL/INP - Investec Limited/Investec plc - Disclosure in accordance with Rule
24/10/201109:40 Assore Limited - No change statement and Notice of Annual General Meeting
24/10/201109:15 Oceana Group Limited - Cautionary announcement
24/10/201109:12 Oceana Group Limited - Trading Statement
24/10/201108:49 Country Bird Holdings Limited - Dealings in securities
24/10/201108:30 AFGRI Limited - Announcement relating to the disposal by GroCapital
24/10/201108:00 Harmony Gold Mining Company Limited - Harmony publishes its annual
24/10/201107:10 British American Tobacco p.l.c.- Transaction in own shares

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