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 The Sharenet Daily 
Monday, 14 November 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)

Economic Growth versus Market Returns

A common assumption often made by the layman and sometimes by the professional investor is that good growth, be it in company earnings or in an economy, will be followed by strong returns (from the company or market as a whole, as the case may be). The logic behind this thinking is that good growth should equate to good returns, and poor growth to poor returns. What is often forgotten is that markets are forward looking, and that good growth often gets priced in before it happens.

In order to determine whether good economic growth was generally followed by good market growth I took South Africa’s annual GDP real growth and the ALSI’s annual (calendar year) real return (i.e. both measures stripping out the effects of inflation) from 1969 – 2010, over which time the South African economy has grown at an average of 2.7% per annum. I then split each year’s growth into a bucket: GDP growth of between 1% and 4% was considered to be average (2.7% + or – approximately 1.5%) with any growth in excess of this considered high and any periods below this considered low growth periods.

The chart below shows the GDP growth buckets and the following year’s return from the market. It is interesting to note that periods of low economic growth have typically been followed by strong 12 month periods of market returns and average growth was followed by the worst returns.

In the following chart it is plain to see how uncorrelated these two data sets are, just going to show that good economic growth isn’t always followed by good market growth. Importantly this is just a general observation and there are good economic periods followed by good market growth and vice versa (in 1986 for instance, GDP growth was 0% and in 1987 the market fell by 20%). Investors should therefore be wary of blindly using this type of strategy when investing.

With my interest piqued, I decided to see whether there was any correlation between current market returns and future GDP growth. The logic behind this thinking was that markets should react favourably to future GDP growth.

Using the same data set, but lagging GDP growth rather than market returns, gave the outcome below. Essentially the graph indicates that good market returns are typically followed by strong economic growth, although one can’t assume that good market returns are the cause of good economic growth.

e v m lagged

Variations of this research have been done in many countries and economies with similar results. This isn’t a uniquely South African occurrence. Essentially what this research indicates is that investors at all times need to establish what’s in the price of any market (or share for that matter) and determine the difference between a good economy and one that will produce strong market returns, bearing in mind they often aren’t the same.

To sign up to Seed's newsletter (which includes weekly investment reports, fund fact sheets, market overviews, and more) click here and enter your details. For regular updates on investment and economic news visit our Facebook Fan Page by clicking here and 'Liking' our page.

Take care,

Mike Browne
021 9144 966

Mon, 14 Nov 2011
Top News
South Africa's rand weakened against the dollar on Monday as nagging worries about euro zone debt came back into play, wiping out some of last week's gains.  Full story

South African stocks gained marginally on Monday, led by Kumba Iron Ore and other mining firms while industrial group Barloworld rose 2.9 percent after full-year earnings beat estimates.  Full story
Syria incurred more European sanctions and criticism from Turkey and Jordan on Monday after a surprise Arab League decision to suspend it for failing to halt months of violence aimed at crushing opposition to President Bashar al-Assad.  Full story
Greece's conservatives vowed on Monday to reject any new austerity measures in return for the aid that is keeping Athens from bankruptcy, signalling a new coalition government may not enjoy the kind of cross-party support its lenders demand.  Full story
Norwegian anti-immigration militant Anders Behring Breivik spoke in open court for the first time on Monday and admitted killing 77 people at a July youth camp, but he denied any guilt, saying he was a military commander in a far-right resistance movement.  Full story
Wall Street stocks declined on Monday as euro zone data signaled the region could be facing a recession, adding to worries about Europe's. . .  Full story
Britain's top shares fell on Monday as the latest Italian bond auction dented investor confidence in the ability of new governments in Italy. . .  Full story
U.S. stocks added to losses at midday on Monday, pushing the S&P 500 down more than 1 percent as data increased fears of. . .  Full story
Global equity markets and the euro slid on Monday as investors, unnerved by an Italian bond auction, doubted the ability of new governments. . .  Full story

European shares fell on Monday as record high yields at an Italian bond auction served as a reminder that the country still faces. . .  Full story
Gold fell on Monday, under pressure from a stronger dollar, which gained after initial optimism over the ability of Italy and Greece to. . .  Full story
U.S. stocks opened lower on Monday as Italy and Greece rushed to form technocrat-led governments in a bid to stave of the euro. . .  Full story
European share prices fell further on Monday as an Italian bond auction showed investors were still reluctant to buy any more of the. . .  Full story
SA Business
Diversified miner Xstrata said on Monday that customer deliveries have not been hit by three weeks of strikes at ferrochrome operations. . .  Full story
India's No. 3 software exporter, Wipro, expects revenue from Africa to rise to $30 million in the current fiscal year from. . .  Full story
South Africa will set up clear rules to govern foreign direct investment, the finance minister said on Monday, after the government. . .  Full story
South Africa has made available 800 million rand for renewable energy projects and is seeking private partners to manage the fund,. . .  Full story

Kazakh miner ENRC said ferrochrome prices are near a bottom, weighed down by negative market sentiment and excess supply and that production cuts. . .  Full story
Lonmin, the world's third-largest platinum producer, beat expectations with a 59 percent jump in full-year earnings, even though a strike at. . .  Full story
China's antitrust regulator has approved a $1.2 billion bid for South Africa's Metorex by Jinchuan Group, Metorex said on Monday, with. . .  Full story
South Africa's rand and bonds started the week on a slightly firmer note on Monday as investors returned to riskier assets. . .  Full story

Harmony Gold, South Africa's third-largest gold producer, said on Monday it had received a number of enquiries and proposals from parties interested in acquiring its assets in Papua New Guinea, but. . .  Full story
. . .  Full story
South Africa's agri-processing business Tongaat Hulett posted flat first-half earnings on Monday and said it expects a 14 percent increase in sugar output for the year.. . .  Full story
Company News
HCI shareholders were referred to the announcement released on SENS on 11 November 2011 wherein shareholders were advised that HCI's earnings. . .  Full story
It was with deep regret that Fiuranium announced that a fall of ground has claimed the life of an underground employee. . .  Full story
The board announced the appointment of Dr Andre John Parker as an independent non-executive director of Orion with effect from 2. . .  Full story
Shareholders were referred to the company's detailed announcement on SENS dated 16 September 2011 ("the announcement") regarding the proposed acquisition of. . .  Full story

Unitholders are referred to the SENS announcement of Thursday, 20 October 2011, where it was announced that an income distribution, after non-permissible income of 4 709.59 cents (in aggregate) for every. . .  Full story
Property loan stock company Vukile is to acquire a portfolio of 20 properties, worth nearly R1.5 billion, from Sanlam Life Insurance. The acquisition is expected to be effective in June next. . .  Full story
Further to the cautionary announcement dated 3 November 2011, Vukile linked unitholders ("unitholders") are advised that the company has made an offer to Sanlam Life Insurance Limited ("Sanlam") dated 3 November. . .  Full story
Company Results
Revenue for the interim period ended 31 August 2011 decreased to R494.8 million (2010: R538.3 million). Earnings before interest, taxation, depreciation. . .  Full story
Contract revenue increased to R683.4 million (R601.3 million). Gross profit decreased to R21.9 million (R123.1 million) and operating loss was recorded. . .  Full story
Revenue increased by 3% to R8.6 billion (R8.4 billion). Net attributable profit rose by 20% to R429.2 million (R357.6 million). In. . .  Full story
Revenue was up by 6.7% to R2.3 billion (R2.1 billion) and operating profit climbed by 6.3% to R498.5 million (R468.9 million).. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0032343.8982.240.25%
JSE Top 4017:0028968.9380.430.28%
JSE Gold17:003195.8713.090.41%
JSE Financial17:0021401.79-68.91-0.32%
JSE Industrial17:0034092.34130.680.38%
JSE Indust 2517:0028682.43116.940.41%
JSE Resource17:0054194.45203.550.38%
DJ Futures19:5612000.00-112.00-0.92%
DJ Ind19:4512065.29-88.39-0.73%
SP 50020:001250.26-13.59-1.08%
FTSE 10018:355519.04-26.34-0.47%
All Ords07:414369.1010.500.24%
NZSE 5006:463309.86-12.15-0.37%
NameTimeRPMove% Move
Gold/R kg20:0045749181451.81%
Brent Crude19:56112.04-.16-0.14%
Rand / Dollar19:598.00940.13311.69%
Rand / Pound19:5512.71540.07090.56%
Rand / Euro19:5510.92090.05580.51%
Rand / NZD19:586.23450.01360.22%
Rand / AUD19:558.16020.02410.30%
Yen / Dollar19:5977.0370-0.1330-0.17%
Euro / Dollar19:550.73400.00851.17%
Dollar / Euro19:591.3620-0.0155-1.13%
Pound / Dollar19:550.62880.00691.11%

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

Major Moves Up
SharenameSaleMove% MoveVolume
1 AFROC-P  70010016.67.%5000
2 RANGOLD  275228.70.%107225
3 MMG  260208.33.%51400
4 AMECOR  206157.85.%29000
5 URONE  21701125.44.%5730
6 ARGENT  665345.39.%34511
7 MIXTEL  15664.00.%5700
8 RA-HOLD  400153.90.%390
9 JUBILEE  18963.28.%6000
10 MERAFE  10432.97.%626678
11 BARWORLD  71491992.86.%605287
12 JDGROUP  45651252.82.%833581
13 BLUETEL  555152.78.%249590
14 KUMBAIO  5167513752.73.%462382
15 CALGRO  20052.56.%100650
16 AQUARIUS  2273562.53.%83853
17 NICTUS  20552.50.%57800
18 SENTULA  21652.37.%45980
19 ESORFRANK  14832.07.%35198
20 HOSP-B  520101.96.%16138

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Major Moves Down
SharenameSaleMove% MoveVolume
1 AFRO-C  235-35-12.96.%67000
2 PLATMIN  220-28-11.29.%183900
3 BEE-SASOL  25100-1900-7.04.%200
4 INVICTA  4980-360-6.74.%503463
5 BAUBA  215-15-6.52.%7500
6 ARB  330-20-5.71.%7291
7 COMAIR  180-10-5.26.%100
8 PREMIUM  1415-75-5.03.%29620
9 VIVIDEND  466-24-4.90.%4000
10 CERAMIC  10400-420-3.88.%101
11 ANOORAQ  405-15-3.57.%11500
12 PETMIN  246-9-3.53.%3190736
13 AFRIMAT  440-15-3.30.%50163
14 KGMEDIA  1700-55-3.13.%11271
15 DISTELL  6705-195-2.83.%2537
16 OCTODEC  1415-35-2.41.%76802
17 COAL  671-14-2.04.%207584
18 VERIMARK  120-2-1.64.%194893
19 SASFIN  2980-45-1.49.%1000
20 ALTRON-P  2325-35-1.48.%7250

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New Highs
SharenameSaleHighMove% MoveVolume
1 AFROC-P  70070010016.67.%5000
2 MMG  260260208.33.%51400
3 AMECOR  206206157.85.%29000
4 CALGRO  20020552.56.%100650
5 KAP  26526551.92.%20000
6 MRPRICE  81008150740.92.%1249498
7 CAPCO  22522281160.72.%338370
8 DISCOVERY  41404279200.49.%432473
9 SPAR  1035010494240.23.%205345
10 TRNSHEX  3603800.168174
11 ACUCAP  39004250-20-0.51.%19953
12 DATATEC  41654220-34-0.81.%102086

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New Lows
SharenameSaleLowMove% MoveVolume
1 COMAIR  180180-10-5.26.%100
2 PETMIN  246242-9-3.53.%3190736
3 OCTODEC  14151355-35-2.41.%76802

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Index Summary
Index NameRPMove% Move
Top 4028,968.9380.430.28%
Mid Cap43,040.3266.230.15%
Small Cap32,088.61-1.07-0.00%
Resource 2054,194.45203.550.38%
Industrial 2528,682.43116.940.41%
Financial 157,985.01-28.75-0.36%
Financial & Ind. 3031,399.4754.150.17%
All Share32,343.8982.240.25%
Oil & Gas 28,655.52281.140.99%
Mining 35,359.09105.420.30%
Gold Mining3,195.8713.090.41%
Platinum Mining66.05.360.55%
GENERAL MINING8,527.2617.880.21%
Oil & Gas Producers 15,407.55151.170.99%
Basic Materials 29,771.29112.300.38%
Chemicals 12,951.18-6.06-0.05%
Forestry & Paper 11,530.3643.920.38%
Industrial Metals 30,076.96614.522.09%
Industrials 28,164.5439.670.14%
General Industrials 78,800.67147.280.19%
Consumer Goods 29,420.1870.650.24%
Automobiles & Parts 3,872.2222.640.59%
Household Goods152.5210.33%
Health Care 35,062.1056.510.16%
Beverages 96.13-.69-0.71%
Index NameRPMove% Move
Food Producers 52,220.44-1.13-0.00%
Personal Goods 432.167.691.81%
Consumer Services 57,174.71170.720.30%
General Retailers 48,095.359.540.02%
Travel & Leisure 3,672.97-8.14-0.22%
Support Services 2,217.807.390.33%
Telecommunications 67,068.98492.370.74%
Financials 21,401.79-68.91-0.32%
Banks 39,492.00-109.98-0.28%
Non-life Insurance 33,936.61-133.37-0.39%
Life Insurance 15,952.10-92.92-0.58%
General Financial 2,187.002.370.11%
Technology 24,757.16-55.26-0.22%
SHARIAH TOP40 3,165.37190.62%
FTSE/JSE SHARIAH ALL3,221.08190.58%
COAL MINING24,539.611740.71%
FTSE JSE Fledgling 4,626.46-20-0.42%
FTSE/JSE Alt X 1,236.94110.94%
CAPPED PROPERTY 317.08-0.32%
RESOURCE 29,988.871180.40%
DIVIDEND PLUS175.0300.18%
FTSE/JSE RAFI 406,642.45120.19%
Capped Top 4015,226.91440.29%
Capped All Share16,339.04420.26%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
15 Nov 2011CONDUITAugust 2011 (Final)
15 Nov 2011EHSVSeptember 2011 (Q)
15 Nov 2011FIURANIUMSeptember 2011 (Interim)
15 Nov 2011GB LDSeptember 2011 (Q)
15 Nov 2011GB LD OPTSeptember 2011 (Q)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
BCX11-11-1012-01-0612-01-16R 0.1400
ARGENT11-11-1011-12-0211-12-12R 0.0400
OCEANA11-11-1012-01-0612-01-16R 1.8300
EFFICIENT11-11-0911-11-2511-12-05R 0.0260
SPAR11-11-0911-11-2511-12-05R 2.3500
Ex Div**
Share NameDec-DateLDTPay-DateAmount
REMGRO11-09-2011-11-1111-11-21R 2.1300
OCTODEC11-10-2111-11-1111-11-21R 0.6430
PREMIUM11-10-2111-11-1111-11-21R 0.5580
MVELASV11-09-1511-11-1111-11-21R 0.3600
CBH11-08-2311-11-1111-11-21R 0.1084

Upcoming AGMs**
CodeCompany NameDateStatus
SLOSouthern Electricity Company Ltd15/11/2011Confirmed
EMIEmira Property Fund15/11/2011Confirmed
AONAfrican and Overseas Enterprises Ltd16/11/2011Confirmed
AOOAfrican and Overseas Enterprises Ltd16/11/2011Confirmed
AOVPAfrican and Overseas Enterprises Ltd16/11/2011Confirmed

Stock Exchange News Service
14/11/201117:49 Kumba Iron Ore Limited - Dealing in securities by the Company Secretary
14/11/201117:43 Gold Fields Limited - Dealing in securities by director
14/11/201117:36 Rare Holdings Limited - Changes to the reviewed provisional results,
14/11/201117:36 Resilient Property Income Fund Limited - Dealing in securities
14/11/201117:34 Resilient Property Income Fund Limited - Acceptance of linked units in
14/11/201117:28 AH-VEST Limited - Change of role of director
14/11/201117:20 Rebosis Properties Limited - Dealing in securities
14/11/201117:20 Hosken Consolidated Investments - Trading Statement
14/11/201117:10OML - Old Mutual plc - Form 8.3
14/11/201116:59 Petmin Limited - Directors` dealing in securities
14/11/201116:50 Putprop Limited - Dealings in securities by director
14/11/201116:49 Octodec Investments Limited - Dealing in securities by a director and
14/11/201116:48 First Uranium Corporation - First Uranium reports financial results
14/11/201116:29 First Uranium Corporation - Fatal accident at Ezulwini Mine
14/11/201116:27 Orion Real Estate Limited - Appointment of director
14/11/201116:26 Orion Real Estate Limited - Director`s Dealings
14/11/201116:22BIFR1 - FirstRand Bank Limited - Listing of Tap Issues
14/11/201116:16 Ububele Holdings Limited - Update on acquisition by yield Chemicals
14/11/201116:13 Mercantile Bank Holdings Limited - Unaudited disclosure in terms of
14/11/201116:07IND146 - iNdwa Investments Limited - Full capital redemption
14/11/201116:06GR1A2A - Greenhouse Funding (Proprietary) Limited - Series 1 - Partial Capital
14/11/201116:00 Mazor Group Limited - Unaudited condensed consolidated interim results for
14/11/201115:54 Exxaro Resources Limited - Trading of Exxaro ordinary shares on
14/11/201115:30BIIND - iNdwa Investments Limited - Listing of Tap Issues
14/11/201115:16 Sephaku Holdings Limited - Notification of Share Dealing by Director of
14/11/201115:11 Eastern Platinum Limited - Eastern Platinum Limited management`s
14/11/201115:10 Eastern Platinum Limited - Condensed consolidated interim financial
14/11/201115:09 Eastern Platinum Limited - Eastern Platinum reports results for the
14/11/201114:56 Argent Industrial Limited - Dealing in securities by directors
14/11/201114:41 Oasis Crescent Property Fund - Results announcement in respect of the
14/11/201114:30 Excellerate Holdings Limited - Dealings in securities by directors
14/11/201114:12 Octodec Investments Limited - Disclosure of disposal of securities
14/11/201113:48TFS73 - Toyota Financial Services (South Africa) (Proprietary) Limited -
14/11/201113:31 Lonmin Plc - Final dividend timetable
14/11/201113:15 Invicta Holdings Limited - Directors dealing in securities
14/11/201113:12 Nictus Limited - Trading statement
14/11/201112:55INL/INP - Investec Limited/Investec plc - Form 8 (DD)
14/11/201112:54INL/INL - Investec Limited/Investec plc - Form 8 (DD)
14/11/201112:02ING53 - iNguza Investments (Proprietary) Limited - Full Capital
14/11/201112:00INL/INP - Investec Limited/Investec plc - Notification of major
14/11/201111:52TRA - Transnet SOC Limited - Moody`s changes outlook on Transnet`s A3/P-2
14/11/201111:48BIBAW - Barloworld Limited - Audited results for the year ended 30 September
14/11/201111:31 Peregrine Holdings Limited - Unaudited results for the six months ended 30
14/11/201111:30 Northam Platinum Limited - Northam enters into a R1.0 Billion
14/11/201111:28TONIDH - Investec - Declared interim dividend announcement on Tongaat Hulett
14/11/201111:22INL/INP - Investec Limited/Investec plc - Disclosure in accordance with
14/11/201109:05 Lonmin Plc - Fourth Quarter 2011 Production Report
14/11/201109:04 Lonmin Plc - Final Results Announcement
14/11/201109:00 Sacoil Holdings Limited - Half Yearly 2011 Financial Results
14/11/201108:50 Metorex - Update on Conditions relating to the Scheme
14/11/201108:26 BHP Billiton Plc - BHP Billiton Petroleum Onshore US shale briefing
14/11/201108:01 Harmony Gold Mining Company Ltd - Press release
14/11/201108:00 Netcare - Audited Group results for the year ended 30 September 2011
14/11/201107:31 Vukile Property Fund Limited - Vukile to acquire R1.5 billion property
14/11/201107:30 Vukile Property Fund Limited - Detailed cautionary announcement regarding
14/11/201107:13 British American Tobacco p.l.c. - Transaction in own shares
14/11/201107:10BAW/BAWP - Barloworld Limited - Audited results for the year ended 30 September
14/11/201107:09 JD Group Limited - Audited results for the year ended 31 August
14/11/201107:08 Astral Foods Limited - Audited annual financial results and dividend
14/11/201107:07 Lewis Group Limited - Unaudited interim results for the six months ended
14/11/201107:06 B & W Instrumentation and Electrical Limited - Audited condensed
14/11/201107:05 Protech Khuthele Holdings Limited - Reviewed consolidated interim
14/11/201107:05 Tongaat Hulett Limited - Interim results for the six months ended
14/11/201107:05 Kairos Industrial Holdings Limited - Renewal of cautionary

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