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 The Sharenet Daily 
Tuesday, 24 June 2014 - 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)

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Seed Weekly - Property Prejudice

I recently had an enquiry from a client who is part of an “investment club”. This club only invests in Commercial/Industrial Property and are all currently held in one geographic area. The question from my client was twofold and I will be dealing with the two separate issues in two articles.

The first question was, “Is it wise to only invest in Commercial/Industrial Property, should we be looking at other investments?” The second question was, “There is large cash build up in the business whilst we are looking for properties to purchase, the time horizon for this cash build up if often in excess of a year, is there a more effective way of saving cash than a bank account?”

When dealing with the first question we need to look at the advantages and disadvantages of holding Commercial/Industrial properties and then compare them to other asset classes and to general investment theory.

A main advantage of owning properties is your income stream is generally inflation proofed through the rental escalation mechanism. Over time you also usually have escalations in the capital value of the property. From an investment psychology perspective, one of the major advantages of holding property is that the price/value of the property is not quoted in the newspapers everyday so the investor is not seeing constant volatility in the “value” of their investment. Because of the fact that most people are optimists, the fact that our neighbour sold his property for less than we purchased ours for does not usually concern us. Property growth rates also often have a low correlation to equity markets.

We frequently hear in the investment world there are no free lunches, so what are the risks of holding these properties?

The first risk is tenant risk. As the owner of a property, we first have to find a tenant, the tenant needs to pay us timeously, and we then need to hope that he doesn’t cause damage to the property and disappear. The next risk is liquidity. In order to sell the asset there needs to be a willing buyer. If the economic circumstances are not great, unpleasant neighbours move in, or there is an oversupply of property you suddenly you can’t sell the asset for what you think it’s worth. In really bad circumstances you can battle to give it away! Geographic risk is also something that needs to be taken into account when buying a property. I remember how property owners struggled to rent/sell anything in Carletonville when the gold mines closed down, and I would imagine that the platinum strike in Rustenburg is having a huge impact on the property market. If a number of mines close down because of the strike property values could de-rate permanently. The last risk that I want to look at with Property is diversification. Because of the large investment that needs to be made per unit, diversification of your risk is difficult.

Diversification is the easiest way to achieve an improved risk adjusted return. When we look at diversification in general, we generally look at diversification across asset classes (equity, listed property, bonds, cash, and alternative investments). We also look at geographic diversification where we try and spread our investments over a number of different countries. Finally, we diversify across fund managers with different investment styles, approaches and philosophies.

When looking at investment portfolios you should always try to achieve a balance between owning your own properties, listed properties, shares, bonds, cash, and alternative investments in various geographic locations. Commercial/Industrial Property can therefore form part of your portfolio, but it is wise to spread your investments. Because of the risks involved, owning your own properties should give higher returns than a diversified investment portfolio. It needs to be borne in mind, however, that when it goes wrong in property it often goes very badly wrong, with very large losses being caused by unforeseen events.

Kind regards,

Barry Hugo

021 914 4966

Tue, 24 Jun 2014
Top News
South African stocks fell for the second straight session on Tuesday, with platinum mining shares giving up some of the previous day's gains as investors sized up the cost of a wage deal that ended a crippling five-month strike.  Full story

The world's three biggest platinum firms signed a wage deal with South Africa's AMCU union on Tuesday but said that fallout from a five-month strike made job cuts and restructuring inevitable, setting the scene for more labour turmoil.  Full story
U.S. Secretary of State John Kerry urged leaders of Iraq's autonomous Kurdish region on Tuesday to stand with Baghdad in the face of a Sunni insurgent onslaught that threatens to dismember the country.  Full story
A suicide bomber blew up his car in Beirut on Monday night near an army checkpoint, killing a security officer and wounding several people watching the soccer World Cup in a nearby cafe.  Full story
Hong Kong shares on Tuesday recovered a bit of the ground lost the previous day when the index had its biggest fall in more than three months, although gains were limited by weaker Chinese gas and oil firms.  Full story
European shares lost ground on Tuesday, with Belgian retailer Colruyt among the biggest fallers on downbeat earnings, while the broader market was unable to. . .  Full story
U.S. stocks rose on Tuesday, boosted by some strong data while the Nasdaq outperformed thanks to gains in technology and biotech shares.. . .  Full story
Britain's top share index slipped slightly on Tuesday, led lower by mining stocks, as signs of economic weakness in the region and growing. . .  Full story
U.S. equities hit another record high on Tuesday after encouraging data on consumer confidence and new home sales, while sterling fell after the head. . .  Full story

European shares lost ground on Tuesday, with Colruyt among the biggest fallers on downbeat earnings, while the broader market was unable to gain traction. . .  Full story
Gold hit a two-month peak on Tuesday and silver reached its highest since mid-March as a drop in European stock prices after soft. . .  Full story
U.S. stocks inched lower at the open on Tuesday, suggesting investors continued to search for direction following a sharp rally that took indexes. . .  Full story
Britain's top share index fell on Tuesday on signs of economic weakness in the region and tensions in Iraq, with investors shifting focus. . .  Full story
SA Business
South Africa's rand remained firm on Tuesday after hitting two-week highs in the previous session as relief swept the market after the country's longest strike ended.. . .  Full story
South Africa's Woolworths Holdings Ltd offered on Tuesday to buy the 12 percent of Australian clothes retailer Country Road Ltd it does not already own from billionaire Solomon Lew for A$213. . .  Full story
Gold rose on Monday on weaker U.S. equity markets and geopolitical tensions over increasing violence in Iraq, while platinum eased as South African miners' union declared an official end to a five-month strike.. . .  Full story

South Africa's National Union of Mineworkers said on Tuesday it has rejected a 5.6 percent wage increase offer from state power. . .  Full story
Australian billionaire Solomon Lew effectively ended a 17-year standoff with South Africa's Woolworths Holdings Ltd on Tuesday with a deal that will have the. . .  Full story
The central bank's monthly leading business cycle indicator was unchanged on a month-on-month basis in April, mostly due to a. . .  Full story
South Africa footwear manufacturing union SACTWU has accepted an 8 percent wage increase offer from employers, ending a two-week strike, the. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0050890.92-167.35-0.33%
JSE Top 4017:0045871.57-182.47-0.40%
JSE Gold17:001478.161.720.12%
JSE Financial17:0037498.6139.010.10%
JSE Industrial17:0066828.13-103.24-0.15%
JSE Indust 2517:0059197.42-110.67-0.19%
JSE Resource17:0057434.91-591.21-1.02%
DJ Futures19:5816800.00-40.00-0.24%
DJ Ind19:5816894.40-42.86-0.25%
SP 50019:581961.20-1.41-0.07%
FTSE 10017:356787.07-13.49-0.20%
All Ords09:135415.10-17.60-0.32%
NZSE 5007:285121.20-4.96-0.10%
NameTimeRPMove% Move
Gold $19:591319.072.070.16%
Gold R19:5914026.2597.090.70%
Gold R/kg19:5845104142240.95%
Silver $19:5920.9740.12300.59%
Platinum $19:591464.7014.250.98%
Palladium $19:59828.909.451.15%
Brent Crude19:58114.53.410.36%
Rand / Dollar19:5910.63320.05620.53%
Rand / Pound19:5518.01840.02850.16%
Rand / Euro19:5514.45250.05100.35%
Rand / NZD19:599.23900.01270.14%
Rand / AUD19:559.9723-0.0068-0.07%
Yen / Dollar19:59101.98400.06800.07%
Euro / Dollar19:580.7348-0.0003-0.04%
Dollar / Euro19:591.36110.00060.04%
Pound / Dollar19:550.58870.00170.29%

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The JSE Today

Trading Statistics
* Includes all listed instruments on the JSE
Major Moves Up
SharenameSaleMove% MoveVolume
1 DELRAND  560335148.89.%1431
2 ASCEN_B  2642410.00.%59000
3 ATLATSA  450307.14.%4690
4 DIAMONDCP  13575.47.%9269
5 RAUBEX  21911014.83.%610068
6 AUSTRO  17484.82.%1557583
7 VALUE  545254.81.%14722
8 TASTE  385154.05.%24046
9 CULLINAN  260104.00.%45208
10 BRAIT  67492593.99.%407581
11 ACCELERAT  530203.92.%576548
12 CONDUIT  16563.77.%33905
13 METMAR  14053.70.%2570
14 HUGE  15553.33.%1300
15 TRADEH  1525493.32.%467265
16 A-V-I  62091913.17.%1251707
17 PREMIUM  1924583.11.%10312
18 WESCOAL  20063.09.%196862
19 ARB  670203.08.%28587
20 OCEANA  83822322.85.%13351

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Major Moves Down
SharenameSaleMove% MoveVolume
1 KAP  385-33-7.89.%3900596
2 SANTOVA  223-13-5.44.%240759
3 PUTPROP  735-40-5.16.%2100
4 PHUMELELA  1951-99-4.83.%19749
5 DIPULA-B  700-35-4.76.%1510
6 DCENTRIX  378-19-4.76.%243600
7 MMG  1000-49-4.67.%6670
8 PINNACLE  1314-60-4.37.%572164
9 FINBOND  269-12-4.36.%144748
10 ASSORE  36005-1458-3.89.%79092
11 GRINDROD  2664-105-3.79.%1303301
12 SYCR  2430-90-3.57.%7998
13 TRUSTCO  164-6-3.53.%19970
14 FONEWORX  220-8-3.51.%151909
15 CAMAC  864-29-3.25.%200
16 DRDGOLD  317-10-3.06.%278919
17 MAS  1960-60-2.97.%165756
18 EXXARO  13789-407-2.87.%1102199
19 PICKNPAY  5760-160-2.70.%549777
20 PERGRIN  2123-58-2.67.%303849

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New Highs
SharenameSaleHighMove% MoveVolume
1 A-V-I  620962511913.17.%1251707
2 PNR-FOODS  10311103111611.59.%366179
3 ASPEN  31810321974051.29.%1560464
4 REMGRO  2266822812940.42.%297482
5 STEINHOFF  56845844200.35.%13785744
6 SUNINT  1098411050210.19.%84685
7 ZEDER  530539-3-0.56.%2465953

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New Lows
SharenameSaleLowMove% MoveVolume
1 PSG-KST  749725-16-2.09.%1193532

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Index Summary
Index NameRPMove% Move
Top 4045,871.57-182.47-0.40%
Mid Cap64,190.9944.890.07%
Small Cap54,070.82-49.53-0.09%
Resource 2057,434.91-591.21-1.02%
Industrial 2559,197.42-110.67-0.19%
Financial 1514,479.434.360.03%
Financial & Ind. 3063,099.51-72.42-0.11%
All Share50,890.92-167.35-0.33%
Oil & Gas 47,902.00-423.02-0.88%
Mining 33,796.31-356.18-1.04%
Gold Mining1,478.161.720.12%
Platinum Mining49.44-.53-1.06%
GENERAL MINING9,806.75-114.49-1.15%
Oil & Gas Producers 25,756.02-227.45-0.88%
Basic Materials 29,956.68-310.04-1.02%
Chemicals 24,785.64-118.90-0.48%
Forestry & Paper 33,289.47-332.27-0.99%
Industrial Metals 18,845.07-157.52-0.83%
Industrials 45,775.26-70.42-0.15%
General Industrials
Consumer Goods 63,176.12-413.08-0.65%
Automobiles & Parts 8,924.2338.490.43%
Household Goods386.3510.35%
Health Care 84,938.62290.690.34%
Beverages 206.72-2.10-1.01%
Index NameRPMove% Move
Food Producers 76,920.03490.870.64%
Personal Goods 1,103.73-9.89-0.89%
Consumer Services 11,876.51126.101.07%
General Retailers 64,443.73-237.32-0.37%
Travel & Leisure 5,805.41-3.26-0.06%
Media 268.975.462.07%
Support Services 2,714.67.590.02%
Telecommunications 10,770.38-56.52-0.52%
Financials 37,498.6139.010.10%
Banks 65,794.1260.110.09%
Non-life Insurance 50,089.8879.110.16%
Life Insurance 35,762.76115.370.32%
General Financial 3,797.17-10.82-0.28%
Technology 43,149.77-82.17-0.19%
SHARIAH TOP40 4,291.24-38-0.89%
FTSE/JSE SHARIAH ALL4,408.30-32-0.72%
COAL MINING17,431.72-515-2.87%
FTSE JSE Fledgling 6,779.98240.35%
FTSE/JSE Alt X 1,244.07-19-1.54%
CAPPED PROPERTY 444.87-0.05%
RESOURCE 31,422.19-320-1.01%
DIVIDEND PLUS225.5100.07%
FTSE/JSE RAFI 4010,070.03-49-0.49%
Capped Top 4024,308.07-88-0.36%
Capped All Share25,774.96-83-0.32%
JSE TABACO 8,178.08-20-0.25%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
25/06/2014KEATONMarch 2014 (Final)
25/06/2014OMNIAMarch 2014 (Final)
25/06/2014OMNIACPMarch 2014 (Final)
25/06/2014PRESCIENTMarch 2014 (Final)
25/06/2014SAFARIMarch 2014 (Final)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
ACCPROP23/06/1411/07/1421/07/14ZAR 0.1377
NASPERS-N23/06/1412/09/1422/09/14ZAR 4.2500
NAMPAK 6.523/06/1418/07/1428/07/14ZAR 0.0650
NAMPAK 6%P23/06/1418/07/1428/07/14ZAR 0.0600
INVICTA17/06/1404/07/1414/07/14ZAR 1.8465
Ex Div**
Share NameDec-DateLDTPay-DateAmount
IVT PREF05/06/1420/06/1430/06/14ZAR 5.3372
VODACOM19/05/1420/06/1430/06/14ZAR 4.3000
TIGBRANDS21/05/1420/06/1430/06/14ZAR 3.2900
ACUCAP12/06/1420/06/1430/06/14ZAR 1.6390
STANPROP30/05/1420/06/1411/07/14ZAR 1.1827

Upcoming AGMs**
CodeCompany NameDateStatus
RBARBA Holdings Ltd.25/06/2014Unconfirmed
SOHSouth Ocean Holdings Ltd.25/06/2014Unconfirmed
BSRBasil Read Holdings Ltd.26/06/2014Confirmed
ISAISA Holdings Ltd.26/06/2014Unconfirmed
ESREsor Ltd.27/06/2014Confirmed

Stock Exchange News Service
24/06/201417:45LEWIS GROUP LIMITED - Directors Dealings in Securities
24/06/201417:40VUKILE PROPERTY FUND LIMITED - Dealings in securities by directors, associates a...
24/06/201417:37EOH HOLDINGS LIMITED - Dealings in securities by directors
24/06/201417:23PINNACLE HOLDINGS LTD - Changes to the board of directors
24/06/201417:00TELEMASTERS HOLDINGS LIMITED - Director's Dealing in Securities
24/06/201416:47AVI LIMITED - Correction - trading update and statement
24/06/201416:46AVI LIMITED - CANCELLATION OF S346037 Trading update and statement
24/06/201416:45SASOL LIMITED - Dealing in securities by a director of a major subsidiary of Sas...
24/06/201416:30SOUTH OCEAN HOLDINGS LIMITED - Appointment of Independent Non-Executive Director...
24/06/201415:45SABMILLER PLC - Annual Financial Report
24/06/201415:33ANGLO AMERICAN PLC - Anglo American update re. Anglo American Platinum
24/06/201415:19INGUZA INVESTMENTS (RF) LIMITED - ING114-116 & ING89 Partial Redemptions
24/06/201415:15AVI LIMITED - Trading update and statement
24/06/201415:12RESILIENT PROPERTY INCOME FUND LTD - Approval of amended Memorandum of Incorpora...
24/06/201414:52DELTA PROPERTY FUND LIMITED - Delta Prop Fund \Rebosis Prop Fund -Update regard...
24/06/201414:50LONMIN PLC - Lonmin signs multi-year wage agreement with AMCU
24/06/201414:50ANGLO AMERICAN PLAT LTD - Anglo American Platinum and AMCU sign wage agreement
24/06/201414:45STEINHOFF INTERNATIONAL HOLDINGS LD - Results of secondary offering of shares in...
24/06/201414:45IMPALA PLATINUM HOLDINGS LIMITED - Wage settlement reached at the Impala Rustenb...
24/06/201414:40TOYOTA FIN SERVICES (SA) LTD - TFS127-New Instrument Listing
24/06/201414:00ISA HOLDINGS LIMITED - Dealings in securities by a director
24/06/201413:46SA CORPORATE REAL ESTATE FUND - Dealing in securities by directors and the compa...
24/06/201413:30OLD MUTUAL PLC - Public Opening Position Disclosure/Dealing Disclosure by a Pers...
24/06/201413:23BSI STEEL LIMITED - Dealing in securities
24/06/201413:17THE SPAR GROUP LIMITED - Dealing in securities by The Spar Group Limited Employe...
24/06/201413:00RAUBEX GROUP LIMITED - Director's Dealings
24/06/201412:54PSV HOLDINGS LIMITED - Renewal of Cautionary Announcement
24/06/201412:42AUSTRO GROUP LIMITED - Change to the company secretary
24/06/201412:40SEARDEL INVESTMENT CORPORATION LTD - Exercise of Options by Director
24/06/201412:35CURRO HOLDINGS LIMITED - Dealing in Curro Holdings Limited Shares by Directors a...
24/06/201412:00CLOVER INDUSTRIES LIMITED - Notification in terms of Section 122(3) of the Compa...
24/06/201411:46INGUZA INVESTMENTS (RF) LIMITED - ING257-New Instrument Listing
24/06/201411:37IVUZI INVESTMENTS LIMITED - IVA426-Full Capital Redemption
24/06/201411:31ONELOGIX GROUP LIMITED - Change to the company secretary
24/06/201411:00GREENHOUSE FUNDING (RF) LIMITED - Annual Financial Statements - 2013
24/06/201410:50CAXTON CTP PUBLISHERS & PRINTERS LD - Director's Dealing in Securities
24/06/201410:50SHOPRITE HOLDINGS LIMITED - Grant and acceptance of forfeitable share awards in ...
24/06/201410:34KEATON ENERGY HOLDINGS LIMITED - Resignation of Director
24/06/201409:10DEVELOPMENT BANK OF SOUTHERN AFRICA - New Financial Instruments Listing - DVC004...
24/06/201409:10NEWFUNDS COLLECTIVE INVEST SCHEME - NFGOVI-Additional Listing of NewFunds Govi E...
24/06/201408:42EXXARO RESOURCES LIMITED - Cautionary announcement and trading statement for the...
24/06/201408:00NEW EUROPE PROPERTY INVESTMENTS PLC - Issue of Equity and Total Voting Rights
24/06/201408:00WESCOAL HOLDINGS LIMITED - Acquisition of the Muhanga plant and cautionary annou...
24/06/201407:30WESCOAL HOLDINGS LIMITED - Reviewed condensed consolidated results for the year ...
24/06/201407:05WOOLWORTHS HOLDINGS LIMITED - Proposed Acquisition By Woolworths Of The Remainin...
24/06/201407:05OMNIA HOLDINGS LIMITED - Audited results for the year ended 31 March 2014
24/06/201407:05BRITISH AMERICAN TOBACCO PLC - Transaction in own shares

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