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 The Sharenet Daily 
Tuesday, 09 July 2013 - 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)

Interest Rates and the Impact on Asset Prices

Investopedia explains interest as that charged by lenders as compensation for the loss of the asset's use. In the case of lending money, the lender could have invested the funds instead of lending them out.

Interest rates are also used as the core component to discount future cash flows in order to determine their present value. This is essentially taking the time value of money into account with the concept that money available today is worth more than money available at a later date because it can earn interest and the risk of the future cash flows.

An example of discounting future cash flows at different interest rates:

An investment asset that produces future cash flow of R1 000 a year for 10 years and then has a value after the 10 year period of R15 000 (i.e. a total expected cash flow of R25 000), will have a present value of R17 000, should we discount the future cash flows using an interest rate of 5%.

Now using the same cash flows, but rather discounting at a higher interest rate of 8.5%, the value of the same investment asset reduces to R13 200. The upward move in the interest rates negatively impacted the present value of the investment by 28%.

It makes intuitive sense then that at lower interest rates, and all else being equal, income generating assets are worth more than at higher rates of interest. This, very simply, is the major reason that central banks around the world have continued to suppress interest rates over the last 4 years.

Ever since the 2008 global financial crisis which began in September 2008, the US Federal Reserve has been increasingly aggressive about providing financial markets with easy money. So called QE1, started in November 2008, QE2 in Nov 2010, and QE3 in September 2012, where the US is creating an annual $1 trillion in new money in order to purchase US treasury bonds and mortgage backed securities.

In the last Federal Reserve meeting, while the official statement mentioned no real change in current monetary policy, the Fed chairman Ben Bernanke told reporters that asset purchases by the Federal Reserve may begin to wind down. The mentioned timeline of reduced purchases in 2013 and into 2014 spooked the market.

There is some opinion that while the central bank may slow down on newly printed money, it is still likely to hold the benchmark federal fund rate at between 0% and 0.25% per annum for a lot longer and so continue to try and hold down at least shorter term interest rates.

The mere hint at a central bank slowdown saw an immediate spike up in the US 10 year Treasury yield from below 1.7% to 2.15% and now at 2.5% as per the chart below.

The long term chart below gives a clear indication of the tailwinds that asset prices have enjoyed over multi decades as the cost of money and hence the discount rate applied to asset valuations has declined.

The magnitude and direction of interest rates affects both the US local market and global markets in a number of interrelated ways. For example:

  • The average rate for a 30-year fixed-rate mortgage rose to 4.6% at the end of June, compared to the record low average of 3.4% in December 2012. The low rates have benefitted the recent upswing in property purchases, but this more recent rise will be a slight dampener.
  • As US interest rates rose, so investors withdrew from the local bond market with foreign investors disinvesting R 6 bn over the last 2 months.
  • Foreign withdrawals negatively affected various currencies especially in emerging markets. The rand declined from R9/USD at the beginning of May to its current level above R10/USD.
  • The local JSE All Share index fell from 42 000 to 38 000 mid June.
  • Local listed property shares slumped just on 20% from mid-May to mid-June

    Because of the importance of interest rates on the valuations of all asset prices, it is of critical importance to try and have an understanding of both the direction and the magnitude of interest rates into the future. The longer term picture indicates that we should still be in a downward trend, but shorter term rates have moved up sharply with a negative impact on valuations. It is often, however, at these times of sell-off that investors should take advantage of buying in at cheaper prices.

    Kind regards,

    Ian de Lange

    021 914 4966

  • Tue, 09 Jul 2013
    Top News
    The rand firmed against the dollar on Tuesday with investors booking profits on the U.S. currency and with risk sentiment improved after Greece managed to secure a bail-out to prevent Athens defaulting on debt due next month.  Full story

    Gold rose 1 percent on Monday as a weaker U.S. dollar triggered bargain hunting after the yellow metal's two-day slide caused by concerns the Federal Reserve could soon start tapering its monetary stimulus. Investors are also digesting news that hedge fund manager John Paulson's gold fund has lo  Full story
    Egypt named an interim prime minister on Tuesday and rich Gulf states poured in $8 billion in aid, as the biggest Arab nation sought ways out of a crisis a day after troops killed dozens of Islamists.  Full story
    The role of the pilots in Saturday's crash of an Asiana Airlines plane in San Francisco came under increasing scrutiny on Monday as U.S. investigators began to interview them and released new details about the jet's dangerously slow air speed before it slammed into the ground.  Full story
    U.S. stocks rose on Tuesday, carrying the S&P 500 closer to all-time highs and putting it on track for a fourth straight advance. . .  Full story
    Miners powered European shares to their highest close in a month on Tuesday after encouraging results from U.S. peer Alcoa and a. . .  Full story
    Global equity markets extended gains on Tuesday and the dollar traded near a three-year high, spurred by an optimistic tone after a good. . .  Full story
    Britain's blue chip share index rose to one-month highs on Tuesday, backed by a fresh batch of strong domestic data and with heavyweight. . .  Full story

    Miners powered European shares to their highest close in a month on Tuesday after U.S. firm Alcoa's results and bullish outlook boosted sentiment towards. . .  Full story
    Gold rose to a one-week high on Tuesday, as the dollar steadied below three-year highs and Chinese inflation data boosted the metal's appeal. . .  Full story
    U.S. stocks rose at the open on Tuesday, putting the S&P 500 on pace for a fourth straight advance, after Alcoa's earnings caused. . .  Full story
    Britain's blue chip share index touched a one-month high on Tuesday, backed by a fresh batch of strong domestic data and with heavyweight. . .  Full story

    South Africa's second-largest casino operator Sun International Ltd plans to build a $300 million entertainment complex in the Pretoria region, it. . .  Full story
    Turkey's efforts to pull the lira off record lows on Monday are likely to be emulated across emerging markets as central banks fight. . .  Full story
    South Africa's Treasury sold a total 2.35 billion rand of its 2023, 2031 and 2048 government bonds on Tuesday.. . .  Full story
    Anglo American Platinum, the world's biggest platinum producer, said on Tuesday 5,600 workers had returned to work after a one-day wildcat. . .  Full story

    Turkey's efforts to pull the lira off record lows on Monday are likely to be emulated across emerging markets as central banks fight to avert an exodus of foreign capital driven by the impending turn in U.S. policy.. . .  Full story
    Company News
    The Company announced the resignation of Gold Equity Registrars Close Corporation as company secretary effective immediately and the appointment of Arcay. . .  Full story
    The General Meetings of Investec plc and Investec Ltd. to consider the proposed sale by Investec of 15 per cent of. . .  Full story
    Shareholders are advised that, with effect from 8 July 2013, Ms Gesina ("Ina") Cross has been appointed as Sentula's company secretary,. . .  Full story
    Mr Peter Cooper has been appointed as an alternate non- executive director of FirstRand and its wholly-owned subsidiary, FirstRand Bank Ltd.,. . .  Full story

    Muvoni shareholders are referred to the announcement published on SENS on 14 June 2013, regarding the approval at the Muvoni shareholders'. . .  Full story
    Intu announced that it intends to release its half year results for the six months ended 30 June 2013 on Thursday,. . .  Full story
    Shareholders of Omnia ("shareholders") were advised that the Omnia integrated annual report 2013 ("Integrated Report"), incorporating the annual financial statements for. . .  Full story
    The board of Gijima ("the board") informed shareholders that the board has appointed Ms Liesl Tweedie as acting Chief Financial Officer. . .  Full story
    Company Results
    Net distributable profit rose to R105.8 million (R94.7 million). Profit attributable to ordinary shareholders more than doubled to R24.2 million (R9.7 million). In addition, earnings per ordinary share was up by more than 150% to 275cps (110.2cps). Interest payment An interim debenture interest payment of 30cps has been declared. Outlook Notwithstanding the recent weakness, foreign equities remain attractive, especially as investors rotate out of bonds as yields rise. However, th. . .  Full story
    World Markets (Spot Prices)
    NameTimeRPMove% Move
    JSE Overall17:0039769.08-26.09-0.07%
    JSE Top 4017:0035301.39-69.28-0.20%
    JSE Gold17:001168.08-16.80-1.42%
    JSE Financial17:0029883.4384.690.28%
    JSE Industrial17:0053412.1636.040.07%
    JSE Indust 2517:0046725.9524.140.05%
    JSE Resource17:0042221.08-258.32-0.61%
    DJ Futures19:4815250.0090.000.59%
    DJ Ind20:0015300.2175.520.50%
    SP 50020:001652.2611.800.72%
    FTSE 10017:356513.0863.010.98%
    All Ords08:474866.5068.901.44%
    NZSE 5007:484523.6930.390.68%
    NameTimeRPMove% Move
    Gold $19:591244.628.380.68%
    Gold R20:0012486.64-235.27-1.85%
    Gold R/kg20:00401446-1998-0.50%
    Silver $19:5919.1790.10900.57%
    Platinum $19:591365.507.000.52%
    Palladium $19:59695.50.700.10%
    Brent Crude20:00107.46-.26-0.24%
    Rand / Dollar19:5910.0246-0.1310-1.29%
    Rand / Pound19:5514.8654-0.2859-1.89%
    Rand / Euro19:5512.8033-0.2675-2.05%
    Rand / NZD00:007.93050.07800.99%
    Rand / AUD19:559.2039-0.0715-0.77%
    Yen / Dollar19:59100.95600.08400.08%
    Euro / Dollar19:550.78290.00590.76%
    Dollar / Euro19:591.2770-0.0098-0.76%
    Pound / Dollar19:550.67280.00380.57%

    Click here for the Sharenet Spot Price page
    The JSE Today

    Trading Statistics
    * Includes all listed instruments on the JSE
    Major Moves Up
    SharenameSaleMove% MoveVolume
    1 LONAFRIC  160106.67.%261
    2 NETCARE  2345954.22.%1356535
    3 GOLDONE  13054.00.%4500
    4 TREMATON  260104.00.%120613
    5 BRIMSTON  1300493.92.%1654
    6 CROOKES  57002003.64.%400
    7 FPT  742253.49.%1074336
    8 TIMES  1975653.40.%
    9 TRUWTHS  86602813.35.%794722
    10 REBOSIS  1200383.27.%93139
    11 REMGRO  189505953.24.%758056
    12 FORTRESSA  1479453.14.%577903
    13 LIFEHC  36301103.13.%834336
    14 BARWORLD  83502473.05.%258358
    15 NAMPAK  3250963.04.%1079053
    16 MRPRICE  131103802.99.%648071
    17 KUMBAIO  4590013002.91.%365753
    18 DATATEC  55791542.84.%66497
    19 SAPPI  2473682.83.%749880
    20 PALLINGHT  19052.70.%7850419

    Click here for more Major Moves...
    Major Moves Down
    SharenameSaleMove% MoveVolume
    1 NEPI-NPL  335-45-11.84.%112301
    2 GOLIATH  215-25-10.42.%8000
    3 ELBGROUP  3000-199-6.22.%81
    4 ADVTECH  681-43-5.94.%233043
    5 PETMIN  195-10-4.88.%653667
    6 ATLATSA  195-10-4.88.%75062
    7 DELPROP  823-41-4.75.%72082
    8 ZEDER  370-18-4.64.%532035
    9 COMPCLEAR  350-15-4.11.%3000
    10 KEATON   185-7-3.65.%19048
    11 HOSP-B  530-20-3.64.%206469
    12 SEPHAKU  530-20-3.64.%32117
    13 KGMEDIA  2350-75-3.09.%91612
    14 BASREAD  720-21-2.83.%173924
    15 ARB  462-13-2.74.%10639
    16 CIL  1830-50-2.66.%57405
    17 MAZOR  185-5-2.63.%5000
    18 ALTRON  1900-50-2.56.%1132
    19 TASTE  380-10-2.56.%1550
    20 URONE  2560-65-2.48.%2622

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    New Highs
    SharenameSaleHighMove% MoveVolume
    1 LONAFRIC  160160106.67.%261
    2 TREMATON  260260104.00.%120613
    3 ASPEN  24033243305082.16.%1028902
    4 CML  665867601312.01.%592638
    5 REDEFINTL  67370030.45.%193159
    6 GROUP-5  3937427920.05.%191088
    7 CAPCO  53205450-105-1.94.%315036
    8 MRHLD  25602641-63-2.40.%1409141

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    New Lows
    SharenameSaleLowMove% MoveVolume
    1 GOLIATH  215200-25-10.42.%8000
    2 ALTRON  19001526-50-2.56.%1132
    3 ANGGOLD  1278012600-252-1.93.%1348302

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    Index Summary
    Index NameRPMove% Move
    Top 4035,301.00-68.00-0.19%
    Mid Cap54,650.00395.000.73%
    Small Cap44,060.00-113.00-0.26%
    Resource 2042,221.00-257.00-0.61%
    Industrial 2546,725.0024.000.05%
    Financial 1511,184.0019.000.18%
    Financial & Ind. 3049,394.00-11.00-0.02%
    All Share39,769.00-25.00-0.07%
    Oil & Gas 32,406.00-95.00-0.29%
    Mining 25,297.00-178.00-0.70%
    Gold Mining1,168.00-15.00-1.34%
    Platinum Mining36.00.00-0.27%
    GENERAL MINING7,245.00-40.00-0.55%
    Oil & Gas Producers 17,424.00-50.00-0.29%
    Basic Materials 22,569.00-115.00-0.51%
    Chemicals 21,824.0012.000.06%
    Forestry & Paper 22,221.00180.000.82%
    Industrial Metals 23,808.00478.002.05%
    Industrials 40,613.00404.001.01%
    General Industrials
    Consumer Goods 50,568.00-526.00-1.03%
    Automobiles & Parts 7,735.0036.000.47%
    Household Goods173.00-2-1.52%
    Health Care 69,381.001611.002.38%
    Beverages 166.00-2.00-1.44%
    Index NameRPMove% Move
    Food Producers 68,618.0040.000.06%
    Personal Goods 911.003.000.37%
    Consumer Services 89,644.00419.000.47%
    General Retailers 59,619.001085.001.85%
    Travel & Leisure 5,302.002.000.06%
    Media 164.00.00-0.18%
    Support Services 2,381.00-27.00-1.12%
    Telecommunications 85,298.00450.000.53%
    Financials 29,883.0085.000.29%
    Banks 48,847.00479.000.99%
    Non-life Insurance 49,768.00485.000.98%
    Life Insurance 28,606.00-93.00-0.33%
    General Financial 2,751.00-8.00-0.29%
    Technology 39,879.00852.002.19%
    SHARIAH TOP40 3,194.00-6-0.20%
    FTSE/JSE SHARIAH ALL3,349.000-0.01%
    COAL MINING18,496.002601.43%
    FTSE JSE Fledgling 5,519.00-15-0.28%
    FTSE/JSE Alt X 1,003.00141.42%
    SA LISTED PROPERTY 503.000.92%
    CAPPED PROPERTY 418.000.69%
    RESOURCE 23,072.00-145-0.63%
    DIVIDEND PLUS201.0021.04%
    FTSE/JSE RAFI 407,747.00-10-0.14%
    Capped Top 4018,687.00-25-0.14%
    Capped All Share20,159.00-10-0.05%
    JSE TABACO 6,813.00-125-1.81%

    Click here for the Sharenet Index Summary page
    Latest Consensus Changes**
    CodeCompany NameStatusUpdated
    Results Expected**
    ExpectedCompany NameFin. Date
    11/07/2013GLOBALMay 2013 (Interim)
    11/07/2013JOHNDANJune 2013 (Interim)

    Recent Dividends**
    Share NameDec-DateLDTPay-DateAmount
    TELEMASTR02/07/201319/07/201329/07/2013R 0.0050
    HUDACO28/06/201308/08/201319/08/2013R 1.5500
    ARGENT26/06/201327/09/201307/10/2013R 0.0700
    NASPERS-N25/06/201313/09/201323/09/2013R 3.8500
    NIVEUS25/06/201301/08/201312/08/2013R 0.1800
    Ex Div**
    Share NameDec-DateLDTPay-DateAmount
    TONGAAT24/05/201305/07/201318/07/2013R 1.9000
    CROOKES28/05/201305/07/201312/07/2013R 1.6000
    FAMBRANDS27/05/201305/07/201315/07/2013R 1.4200
    AMECOR20/06/201305/07/201315/07/2013R 0.1000
    DATATEC15/05/201305/07/201315/07/2013R 0.0900

    Upcoming AGMs**
    CodeCompany NameDateStatus
    ADRAdcorp Holdings Ltd.09/07/2013Unconfirmed
    CMOChrometco Ltd.10/07/2013Confirmed
    SLPSable Platinum Ltd.11/07/2013Confirmed
    HUGHuge Group Ltd.12/07/2013Confirmed
    ALTAllied Technologies Ltd.16/07/2013Confirmed

    Stock Exchange News Service
    09/07/201317:47LONRHO PLC - TR-1: Notification of major interest in shares
    09/07/201317:46LONRHO PLC - TR-1: Notification of major interest in shares
    09/07/201317:40BONATLA PROPERTY HOLDINGS LIMITED - Change in Company Secretary
    09/07/201317:30INVESTEC LIMITED - Director's Dealings
    09/07/201317:15INVESTEC LIMITED - Results of General Meeting - Pref Shareholders
    09/07/201317:15INVESTEC BANK LTD - Results of General Meeting - Pref Shareholders
    09/07/201317:15INVESTEC LIMITED - Results of General Meeting
    09/07/201317:05VUKILE PROPERTY FUND LIMITED - Dealings in securities by a director of Vukile
    09/07/201317:05SUN INTERNATIONAL LIMITED - Sun Internationals proposed R 3-billion investment i...
    09/07/201317:03VUKILE PROPERTY FUND LIMITED - Dealings in securities by a director of Vukile
    09/07/201317:00BEIGE HOLDINGS LIMITED - Renewal of Cautionary Announcement
    09/07/201316:19SENTULA MINING LIMITED - Change of company secretary
    09/07/201315:50OMNIA HOLDINGS LIMITED - Dealings in securities by a director
    09/07/201315:25FIRSTRAND LIMITED - Appointment of a director
    09/07/201315:14SOVEREIGN FOOD INVESTMENTS LIMITED - No change statement and notice of annual ge...
    09/07/201314:40IVUZI INVESTMENTS LIMITED - Full Capital Redemption - IVA328
    09/07/201314:24MASSMART HOLDINGS LIMITED - Sales Update for the 26 weeks to 23 June 2013
    09/07/201314:15IDWALA INDUSTRIAL HOLDINGS PTY LTD - Partial Capital Redemption - IDW002
    09/07/201314:15MUVONI TECHNOLOGY GROUP LTD - Fulfilment of the outstanding conditions precedent...
    09/07/201314:10RESILIENT PROPERTY INCOME FUND LTD - New Instrument Listing - RES22
    09/07/201314:05FORTRESS INCOME FUND LIMITED - Interest Rate Reset - FIFC03
    09/07/201314:00INDWA INVESTMENTS LIMITED - New Instrument Listing - IND341
    09/07/201313:55EQSTRA HOLDINGS LIMITED - Interest Rate Reset - EQS06
    09/07/201313:30INTERWASTE HOLDINGS LIMITED - Director's dealings in securities
    09/07/201313:06INGENUITY PROPERTY INVESTMENTS LTD - Results of general meeting to approve the A...
    09/07/201313:00INTU PROPERTIES PLC - Notification of Half Year Results
    09/07/201313:00AFRICAN BANK LIMITED - Interest Rate Reset - ABL14 and ABL15
    09/07/201312:35SEPHAKU HOLDINGS LIMITED - Notification of share dealing by a director of Sephak...
    09/07/201312:00OMNIA HOLDINGS LIMITED - Integrated report posted and available on website and d...
    09/07/201311:30STANDARD BANK OF SOUTH AFRICA LD - SCIB: The Standard Bank Of South Africa Limit...
    09/07/201311:10STANDARD BANK OF SOUTH AFRICA LD - SCIB: The Standard Bank Of South Africa Limit...
    09/07/201311:00FAMOUS BRANDS LIMITED - Dealings in securities
    09/07/201310:30FOORD COMPASS LIMITED - Unaudited interim report for the six months ended 30 Jun...
    09/07/201310:10EQSTRA HOLDINGS LIMITED - Purchase of securities by PSG Asset Management (Pty) L...
    09/07/201309:36GIJIMA GROUP LIMITED - Resignation of Chief Financial Officer and appointment of...
    09/07/201309:02RESOURCE GENERATION LIMITED - Dispatch of Entitlement Offer Booklet
    09/07/201309:00BLACKSTAR GROUP SE - Transaction in own shares
    09/07/201309:00ABSA BANK LIMITED - ACL212 - New Financial Instrument Listing
    09/07/201308:59BLACKSTAR GROUP SE - CANCELLATION OF S333858 Transaction in own shares
    09/07/201308:50RESILIENT PROPERTY INCOME FUND LTD - Full Capital Redemption - RES20
    09/07/201308:34DORBYL LIMITED - Second quarterly update regarding the suspension of Dorbyl
    09/07/201308:00BLACKSTAR GROUP SE - Transaction in own shares
    09/07/201308:00SATRIX COLLECTIVE INVESTMENT SCHEME - Listing of additional Satrix SWIX TOP 40 s...
    09/07/201307:05ANGLO AMERICAN PLC - Anglo American Share Incentive Plan SIP
    09/07/201307:05BRITISH AMERICAN TOBACCO PLC - Transaction in own shares

    Click here for more SENS news