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 The Sharenet Daily 
Wednesday, 24 June 2015 - 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 - Why China?

We invested a portion of Seed’s multi asset unit trusts into a Chinese fund 8 months ago. At the time we received many questions about our decision. Some concerns included, “the Chinese economy is slowing down, surely this will result in poor returns?” and “China is also an Emerging Market (EM), why ‘waste’ your global exposure in another EM?” While, on the face of it, these are valid concerns I will discuss some of the thinking behind our decision.

Naturally there were (and continue to be) concerns about a slowing economy, but study after study has shown that there is no link between economic growth and stock market returns. Even if economic growth was a good predictor of returns, Chinese economic growth (despite slowing) is still far in excess of most other economies. As China moves from being a production lead to a consumption lead economy, there will be many bumps in the road, but that doesn’t diminish the opportunities to investors.

Further, the global research that we subscribe to from well renowned BCA Research had indicated for some time that Chinese equities were offering good value. The chart below comes from BCA’s quarterly Global Asset Allocation report at the end of Q3 2014. A similar picture had been painted a quarter earlier. Ultimately, starting valuation and growth in earnings are the biggest drivers of returns to investors.

With regards to the argument of not getting diversification benefits by investing into another EM may seem valid at face value, when digging deeper one can understand why this observation is, in fact, not true. There are a few factors that need to be taken into account.

Firstly, South African listed companies generate the majority of their returns outside of the country. While some of this is in other EMs, simple geographic listings no longer suffice when looking to classify market exposure.

Secondly, Chinese (Mainland listings) retail investors dominate trade (over 80%) compared to the local market that is dominated by institutional investors (probably close to 90%). These different types of investors invest in vastly different ways and therefore offer a level of diversification. As a result of this anomaly, there is also good opportunity for an investor with a well-defined process to outperform the market over time.

Finally, China is a net importer of resources, while South Africa is a net exporter of resources. Changes in resource prices therefore affect each economy in the opposite direction. Falling resource prices help to spur Chinese consumption, while in South Africa they negatively affect profitability, and put a dampener on growth.

With the arguments given above, it is no surprise that Chinese equities have a low correlation with South African equities. The chart below shows the correlation of South African equities versus a range of other markets (including China – CSI 300 Index). China is clearly the least correlated market with South Africa

Source: Prescient Investment Management

Make no mistake, Chinese equities are volatile and that is why position sizing is important when constructing a Fund. With a return in excess of 100% over this 8 month period, the position size (4% of Fund value) was, with hindsight, too low. We console ourselves that any position is better than no position though!

Such a large return over such a short period naturally brings questions of whether the Chinese market will still be able to generate acceptable returns going forward. It is interesting that this performance has only brought the market’s valuation in line with South Africa and US markets. The chart below shows the forward PEs of the three markets. While we have taken some profits to return the allocation to its target weighting, we continue to expect acceptable, uncorrelated, returns from this investment.

Source: Prescient Investment Management

There are other arguments in favour of this investment, such as the liberalisation of the market bringing a host of new market participants, and we therefore expect (subject to valuations not moving to high) that this allocation will form part of our Funds for some time to come.

Take care,

Mike Browne

Tel 021-914-4966
Fax 021-914-4912
Email info@seedinvestments.co.za

Seed is hiring: Click through to our LinkedIn page to see available vacancies.


Wed, 24 Jun 2015
Top News
Local markets The JSE closed 0.36% higher today, offsetting a 0.86% loss in gold mining shares.  Full story

Nigeria's central bank has curbed access to the interbank currency market for the purchase of foreign currency bonds as well as a range of goods to tighten liquidity and conserve reserves. The bank said importers could no longer get hard currency from the interbank market to buy it  Full story
International creditors demanded politically sensitive changes to Greek Prime Minister Alexis Tsipras' tax and reform proposals on Wednesday, adding fresh uncertainty to talks aimed at unlocking aid to avert a debt default next week.  Full story
Parents of the dead and some of the scores wounded in the 2013 attack on the Boston Marathon defiantly confronted bomber Dzhokhar Tsarnaev, calling him "cowardly" at a hearing where he was to be formally sentenced to death.  Full story
Austria said on Wednesday it might be forced to re-instate border controls with Hungary after Budapest refused to take in asylum seekers sent to it by other European Union states.  Full story
Global equity markets and the dollar slipped on Wednesday as skittish investors sought the safety of less risky assets as the possibility of. . .  Full story
Gold edged lower on Wednesday as the dollar pared earlier losses versus the euro, while traders took to the sidelines to await news. . .  Full story
Hong Kong stocks rose for a fourth straight day, drawing support from stabilizing mainland shares, as well as buoyant global markets on hopes. . .  Full story
China stocks gained for a second day on Wednesday, aided by liquidity unlocked from recent IPOs, as some investors took advantage of last. . .  Full story

Japan's Nikkei share average vaulted to the highest level since 1996, ramping up the gains to around 20 percent since the start of. . .  Full story
Australian shares rose 0.2 percent, trading narrowly on Wednesday as some investors picked up banking shares after a heavy sell-off in previous sessions.. . .  Full story
Optimism that a deal could still be at hand to stave off a Greek default lifted European shares and kept a floor under. . .  Full story
Gold eased on Tuesday as the euro slid sharply against the dollar, and as stock markets rallied on hopes that Greece would reach. . .  Full story
SA Business
South Africa's rand was slightly on the back foot against the dollar on Wednesday, with little scope for gains as investors remained nervous about the global fallout from a possible Greek debt default.. . .  Full story

The family businesses that make up the global diamond trade have seen their profits wiped out over the past five years, hit by shaky financing, increased costs and uncertain demand from customers who prefer hi-tech gadgets to bling.. . .  Full story
China's parliament has taken its first step towards ratifying an agreement with the world's largest emerging nations to create a developmental bank, state news agency Xinhua said on Wednesday.. . .  Full story
Company News
Shareholders are referred to the renewal of cautionary announcement released by the company on SENS on 8 May 2015 and are. . .  Full story
Shareholders are advised that Ms Xoliswa Mpongoshe Makasi has resigned from her position as company secretary of Telkom with effect from. . .  Full story
Shareholders are advised that, at the General Meeting of Lewis held on 24 June 2015, all the resolutions, relating to the. . .  Full story
Notice is hereby given that the CompanyĂs thirty-second annual general meeting of shareholders will be held at Neethlingshof Estate, Stellenbosch on. . .  Full story

Further to the cautionary announcement published by Compu-Clearing on 17 June 2015, Compu-Clearing shareholders are advised that on 23 June 2015. . .  Full story
Santam shareholders are referred to the announcement published on SENS on 25 May 2015, regarding the posting of a circular (˘Circular÷). . .  Full story
Shareholders are referred to the announcement published on SENS on 22 June 2015 regarding the option agreement (˘Option Agreement÷) that has. . .  Full story
ImperialĂs management team will be hosting members of the investment community at its Investor Day in Johannesburg on, 24 June 2015.. . .  Full story
Company Results
Revenue increased by 4% to R16.8 billion (R16.3 billion). Gross profit rose to R3.9 billion (R3.6 billion) and operating profit improved. . .  Full story
Revenue shot up to R1.7 billion (R1.1 billion) and gross profit grew to R219.6 million (R125.5 million). Operating profit decreased to. . .  Full story
Revenue for the year fell to R1.4 billion (2014: R1.6 billion). Loss attributable to equity holders of the company narrowed to. . .  Full story
Revenue grew to R140.4 million (R119.6 million). Profit before investment revenue, fair value adjustments and finance costs jumped to R104.9 million. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0052783.85191.850.36%
JSE Top 4017:0047231.90229.600.49%
JSE Gold17:001004.64-8.72-0.86%
JSE Financial17:0043783.2081.340.19%
JSE Industrial17:0075698.33341.050.45%
JSE Indust 2517:0067684.07394.510.59%
JSE Resource17:0042282.43139.510.33%
DJ Futures19:5817914.00-153.00-0.85%
DJ Ind19:5817998.73-145.34-0.80%
SP 50019:582111.36-12.84-0.60%
FTSE 10017:356844.809.930.15%
All Ords08:395672.701.300.02%
NZSE 5008:285775.493.360.06%
NameTimeRPMove% Move
Gold $19:591174.64-3.52-0.30%
Gold R19:5814235.63-98.63-0.69%
Gold R/kg19:58457566-3148-0.68%
Silver $19:5915.9080.08100.51%
Platinum $19:561072.709.200.87%
Palladium $19:55694.70.700.10%
Brent Crude19:5863.44-1.01-1.57%
USD / ZAR19:5912.1215-0.0480-0.39%
GBP / ZAR19:5518.9945-0.1157-0.61%
EUR/ ZAR19:5513.5854-0.0034-0.03%
NZD/ ZAR19:588.35750.01630.20%
AUD / ZAR19:559.3477-0.0692-0.73%
USD / JPY19:59123.8120-0.1060-0.09%
EUR / USD19:591.12090.00460.41%
GBP / USD19:591.5700-0.0026-0.16%

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 LABAT  1201413.21.%2711929
2 PRESCIENT  10388.42.%24792
3 SYCOM  29502208.06.%8399
4 FAIRVEST  180137.78.%200075
5 AMECOR  220157.32.%5400
6 TELKOM  59003005.36.%4204985
7 PETMIN  16585.10.%188355
8 KIBO  10555.00.%6013
9 INTEWASTE  12665.00.%118330
10 CASHBIL  3045711573.95.%58760
11 ACCELERAT  700253.70.%239115
12 ASTRAPAK  375102.74.%8043
13 ENX  20552.50.%98200
14 Cognition  21052.44.%40000
15 CALGRO  1790402.29.%269996
16 NVEST  23552.17.%36000
17 NASPERSN  19449640402.12.%1155176
18 BRIMST-N  1550312.04.%35277
19 PNR-FOODS  182053541.98.%116092
20 HOSP-A  1360251.87.%6748

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Major Moves Down
SharenameSaleMove% MoveVolume
1 BEE-SASOL  35000-5000-12.50.%1333
2 HOWDEN  2995-305-9.24.%53039
3 ASCEN_B  265-23-7.99.%882
4 ITLTILE  1100-85-7.17.%179205
5 MARSHALL  1651-99-5.66.%10000
6 NUWORLD  2250-130-5.46.%7916
7 RAUBEX  2000-109-5.17.%325522
8 GROUP-5  2765-134-4.62.%74934
9 ARGENT  420-20-4.55.%32205
10 CLIENTELE  1625-75-4.41.%14705
11 THARISA  650-30-4.41.%2108
12 DCENTRIX  451-19-4.04.%28383
13 AEEI  250-10-3.85.%55519
14 NET1UEPS  22600-900-3.83.%2868
15 PAN-AF  183-7-3.68.%2099994
16 ATLATSA  140-5-3.45.%9601
17 NIVEUS  2899-101-3.37.%2862
18 MEDCLIN  10200-329-3.12.%2126407
19 ALEXANDER  825-25-2.94.%1300523
20 CSG  170-5-2.86.%7265

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New Highs
SharenameSaleHighMove% MoveVolume
1 CAPCO  810081491251.57.%688667
2 PERGRIN  30503180150.49.%3504955

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New Lows
SharenameSaleLowMove% MoveVolume
1 PAN-AF  183181-7-3.68.%2099994
2 AVENG  580574-15-2.52.%4763641
3 WBHO  1000010000-250-2.44.%144810
4 AQUARIUS  139138-3-2.11.%5999250
5 HULAMIN  617585-13-2.06.%273297
6 GRINDROD  14361432-27-1.85.%1434689
7 HARMONY  15691532-16-1.01.%1605139
8 CML  82308140-70-0.84.%1145309
9 GRANPRADE  5905710.396558
10 ARCMITTAL  13601333100.74.%800401
11 HOSP-A  13601250251.87.%6748

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Index Summary
Index NameRPMove% Move
Top 4047,231.90229.600.49%
Mid Cap68,756.25-99.12-0.14%
Small Cap59,049.12-492.14-0.83%
Resource 2042,282.43139.510.33%
Industrial 2567,684.07394.510.59%
Financial 1516,661.5140.240.24%
Financial & Ind. 3072,377.23361.150.50%
All Share52,783.85191.850.36%
Oil & Gas 62,644.80.000.00%
Mining 25,433.5767.860.27%
Gold Mining1,004.64-8.72-0.86%
Platinum Mining28.63-.39-1.34%
GENERAL MINING7,694.5743.250.57%
Oil & Gas Producers 33,682.95.000.00%
Basic Materials 23,854.3238.420.16%
Chemicals 22,540.48174.410.78%
Forestry & Paper 44,245.88-630.95-1.41%
Industrial Metals 8,578.15-164.03-1.88%
Industrials 44,374.5562.970.14%
General Industrials 157.13.790.51%
Consumer Goods 66,328.85200.310.30%
Automobiles & Parts 8,066.00-83.79-1.03%
Household Goods523.0861.15%
Health Care 9,827.91-4.00-0.04%
Beverages 224.081.420.64%
Index NameRPMove% Move
Food Producers 8,294.0556.380.68%
Personal Goods 1,024.93-3.80-0.37%
Consumer Services 17,018.53206.291.23%
General Retailers 85,166.2239.440.05%
Travel & Leisure 5,893.14-60.10-1.01%
Media 423.948.752.11%
Support Services 3,340.37-53.25-1.57%
Telecommunications 11,024.9322.850.21%
Financials 43,783.2081.340.19%
Banks 78,165.3992.180.12%
Non-life Insurance 54,311.26-1225.06-2.21%
Life Insurance 40,905.53165.370.41%
General Financial 4,440.841.670.04%
Technology 61,426.49-19.65-0.03%
SHARIAH TOP40 3,694.47110.31%
FTSE/JSE SHARIAH ALL3,883.8880.20%
COAL MINING11,311.84-15-0.13%
FTSE JSE Fledgling 6,765.79-11-0.16%
FTSE/JSE Alt X 1,308.72-13-0.96%
RESOURCE 23,091.82620.27%
DIVIDEND PLUS223.76-1-0.26%
FTSE/JSE RAFI 409,822.86280.29%
Capped Top 4025,187.041130.45%
Capped All Share26,772.93970.36%
JSE TABACO 8,791.4320.02%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
25/06/2015PRIMESERVMarch 2015 (Final)
25/06/2015SACOVENMarch 2015 (Final)
26/06/2015HUDACOMay 2015 (Interim)
26/06/2015SEPHAKUMarch 2015 (Final)
26/06/2015TRUSTCOMarch 2015 (Final)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
OMNIA23/06/1510/07/1520/07/15ZAR 3.0000
INVICTA22/06/1510/07/1520/07/15ZAR 1.1199
NAMPAK 6.522/06/1517/07/1527/07/15ZAR 0.0650
NAMPAK 6%P22/06/1517/07/1527/07/15ZAR 0.0600
ACCPROP22/06/1510/07/1520/07/15ZAR 0.2521
Ex Div**
Share NameDec-DateLDTPay-DateAmount
BRAIT PREF01/06/1519/06/1529/06/15ZAR 4.7968
VODACOM18/05/1519/06/1529/06/15ZAR 4.0000
TIGBRANDS20/05/1519/06/1529/06/15ZAR 3.3900
RMBTOP4001/06/1519/06/1530/06/15ZAR 0.4650
STANLIB4001/06/1519/06/1510/07/15ZAR 0.3539

Upcoming AGMs**
CodeCompany NameDateStatus
ADHADvTECH Ltd.24/06/2015Confirmed
ISAISA Holdings Ltd.24/06/2015Confirmed
ISBInsimbi Refractory and Alloy Supplies Lt...25/06/2015Confirmed
GIYGiyani Gold Corporation25/06/2015Confirmed
ESREsor Ltd.26/06/2015Confirmed

Stock Exchange News Service
24/06/201517:41PRESCIENT LIMITED - Audited Summary Financial Results for the year ended 31 Marc...
24/06/201517:35SAPPI LIMITED - TRP121 : Notification of acquisition of beneficial interest in s...
24/06/201517:31WORKFORCE HOLDINGS LIMITED - Dealings in Securities by Directors
24/06/201517:12CONDUIT CAPITAL LIMITED - Change of Year End
24/06/201517:00ALLIED ELECTRONICS CORPORATION LTD - Renewal of Cautionary Announcement
24/06/201517:00TELKOM SA SOC LIMITED - Resignation of Company Secretary
24/06/201516:35A E C I LIMITED - Update: Sale of surplus land in Cape Town by Paardevlei Prope...
24/06/201516:32MASONITE (AFRICA) LIMITED - Change to the board of directors
24/06/201516:32TOWER PROPERTY FUND LIMITED - Acquisition of an interest in VMD KVART and introd...
24/06/201516:25RESILIENT PROPERTY INCOME FUND LTD - Dealings in securities by a director and as...
24/06/201516:20PSG KONSULT LIMITED - PSG Konsult Credit Rating and Outlook Unchanged
24/06/201516:09PINNACLE HOLDINGS LTD - Dealing in securities
24/06/201516:02REDEFINE PROPERTIES LIMITED - Posting of notice of general meeting
24/06/201515:51CAPITEC BANK HOLDINGS LIMITED - General Repurchase Of An Additional 3% Non-Redee...
24/06/201515:50OLD MUTUAL PLC - Public Opening Position Disclosure/Dealing Disclosure by a Pers...
24/06/201515:50enX GROUP LIMITED - Detailed cautionary: Purchase of business of Galeprops 2661 ...
24/06/201515:48GRINDROD LIMITED - Notification in Terms of Section 122(3) of The Companies Act ...
24/06/201515:20LEWIS GROUP LIMITED - Results of the general meeting in relation to the Lewis Sh...
24/06/201515:15EFFICIENT GROUP LIMITED - Dealing in securities by an associate of directors of ...
24/06/201515:15OLD MUTUAL PLC - Public Opening Position Disclosure/Dealing Disclosure by a Pers...
24/06/201515:15AFRICA ETF ISSUER LTD (RF) - Summarised Annual Financial Statements
24/06/201515:00ISA HOLDINGS LIMITED - Results of Annual General Meeting
24/06/201515:00THE STANDARD BANK OF SA LTD - New Financial Instrument Listing Announcement
24/06/201514:49ZEDER INVESTMENTS LIMITED - Results of the General Meeting of Capespan Sharehold...
24/06/201514:20INGUZA INVESTMENTS (RF) LIMITED - ING114 - Full Capital Redemption
24/06/201514:14NEW GOLD ISSUER LIMITED - NGPLT-Additional Listing of NewGold Platinum Debenture...
24/06/201514:00NEW FRONTIER PROPERTIES LIMITED - Changes to the board of directors
24/06/201513:49NEW GOLD ISSUER LIMITED - NGPLT-Additional Listing of NewGold Platinum Debenture...
24/06/201513:40FIRSTRAND BANK LIMITED - FRX26 and FRX31 - Listing of Tap Issue
24/06/201513:30MEDICLINIC INTERNATIONAL LIMITED - Notice of annual general meeting and no chang...
24/06/201513:07Transnet SOC Limited - Short Term New Issue
24/06/201513:00Transnet SOC Limited - Bond Tap Issues
24/06/201512:54NEW GOLD ISSUER LIMITED - NGPLD-Additional Listing of NewGold Palladium Debentur...
24/06/201512:45BASIL READ HOLDINGS LIMITED - Results of Annual General Meeting
24/06/201512:28SOUTH AFRICAN COAL MINING HLDGS LTD - Trading Statement
24/06/201512:20COMPU-CLEARING OUTSOURCING LIMITED - Joint Announcement of the Firm Intention of...
24/06/201512:13SANTAM LIMITED - Results of the General Meeting and Fulfilment of Conditions Pre...
24/06/201512:00CLOVER INDUSTRIES LIMITED - Dealing in securities by directors of the company
24/06/201511:35BSI STEEL LIMITED - Dealing in securities
24/06/201511:34THE STANDARD BANK OF SA LTD - Tap Issue Announcement
24/06/201511:10CoreShares Index Tracker Managers (RF) Proprietary Limited - Listing of 248 000 ...
24/06/201511:03TRUSTCO GROUP HOLDINGS LIMITED - further voluntary announcement regarding the op...
24/06/201511:00THE DB X-TRACKER COL INVEST SCHEME - Listing of Additional Securities - DBXEU
24/06/201510:59AFRICAN MEDIA ENTERTAINMENT LIMITED - Repurchase of Additional Shares and Waiver...
24/06/201510:35SA CORPORATE REAL ESTATE FUND - Dealings in securities by a director
24/06/201510:30SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Indi Portfolio -...
24/06/201510:30SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Swix Top 40 Port...
24/06/201510:30SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Resi Portfolio -...
24/06/201510:30SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix 40 Portfolio - S...
24/06/201510:30SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Fini Portfolio -...
24/06/201510:30SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Rafi Portfolio -...
24/06/201510:27STANDARD BANK OF SOUTH AFRICA LD - SCIB: The Standard Bank of South Africa Limit...
24/06/201510:00MAS REAL ESTATE INC - Dealing in securities by a director of MAS
24/06/201509:54STANLIB COLLECTIVE INVESTMENTS LTD - Distribution Announcement - STANSX
24/06/201509:53STANLIB COLLECTIVE INVESTMENTS LTD - Distribution Announcement - STPROP
24/06/201509:30GLENCORE PLC - GLN - Sale of Glencore Stake in Sagittarius Mines Inc and Tampaka...
24/06/201509:30KEATON ENERGY HOLDINGS LIMITED - Reviewed provisional condensed consolidated res...
24/06/201509:10VODACOM GROUP LIMITED - Vesting and sale of forfeitable shares
24/06/201509:00SAFARI INVESTMENTS (RSA) LTD - The audited abridged consolidated annual financia...
24/06/201509:00IMPERIAL HOLDINGS LIMITED - Trading Update and Pre Close Brief
24/06/201508:50ASTRAPAK LIMITED - Voluntary announcement - significant investment and business ...
24/06/201508:33GIYANI GOLD CORPORATION - Material change report
24/06/201508:01OLD MUTUAL PLC - Appoints Albert Essien as Non-Executive Director of Old Mutual ...
24/06/201508:00EASTERN PLATINUM LIMITED - Eastern Platinum Limited Financial Results For The Ye...
24/06/201508:00OLD MUTUAL PLC - Old Mutual Completes the Acquisition of Further Stake in UAP Ho...
24/06/201508:00SG ISSUER - Publication of quarterly financial results - SGI002/SGI003
24/06/201508:00KIBO MINING PLC - Haneti Nickel Project- Airborne Geophysical Data Interpretatio...
24/06/201507:05SENTULA MINING LIMITED - Audited Summarised Consolidated Financial Results for t...

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