Wednesday, 27 July 2016 - 20:00
Charts
Seed Weekly - Currency Valuation
An important part of Seed’s multi management process is performing monthly asset class valuations using our in-house quantitative models. This process covers all of the local and global asset classes that are suitable for inclusion in our multi asset class funds and model portfolios. The output of these models guide our tactical asset allocation decisions, where we under- or overweight certain asset classes in the short term, compared to our longer term target weights.
When evaluating global asset classes for our funds, we try to separate the currency decision from the underlying asset class valuation. Practically, this means that if global equities show a lot of value, we might allocate even when the rand is weak. Although currency volatility might overshadow our asset class decisions in the short term, investing at attractive valuations pays off over the long term.
We look at both the trend exchange rate of the Trade Weighted Basket of currencies and the well-known Purchasing Power Parity (PPP) relationship against each of the majors on a monthly basis.
The Trade Weighted exchange rate of the rand is based on trade in and consumption of manufactured goods between South Africa and its most important trading partners, incorporating twenty different currencies. Presently, the five major currencies in the basket are the Euro (29%), Chinese yuan (20%), US dollar (14%), Japanese yen (6%) and British pound (6%).
The graph below illustrates that the rand is around 20% undervalued given the long term trend in the Trade Weighted basket of currencies:
Source: Seed Investments 26 July 2016
The PPP relationship is based on the law of one price, meaning a consumer should be able to pay the same price for a diversified basket of goods, no matter in which economy the purchase is made. In SA, with local annual inflation running at 6.1%, a consumer will see his purchasing power eroded a lot quicker than in the US, where inflation is 1.0%. Therefore, a SA consumer needs to be “rewarded” with more rand per US dollar each year - resulting in rand depreciation - if this relationship holds.
Theoretically, PPP implies that SA’s 5% higher inflation should result in around 5% depreciation per annum against the dollar. In practice, actual exchange rates can deviate from the calculated PPP estimate for extended periods. Over the last 10 years, SA inflation has been running at 6.3%, with US inflation at 1.8%, while the rand has weakened by 7.5%, quite a bit more than the expected 4.5%.
The graph below illustrates that, at a market rate of R 14.70 as at end June, the rand is around 37% undervalued vs. the calculated PPP rate of R 10.69.
Source: Seed Investments 26 June 2016
In the wake of the Nenegate sage in December last year, the rand has been exceptionally volatile, prompting many investors to re-evaluate their global exposure. At Seed, we have not traded on the short term volatility, but have maintained our global allocations at close to 25% for our multi asset class funds and model portfolios.
Kind regards,
Cor van Deventer
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Wed, 27 Jul 2016
Top News
Revenue for the year fell to R1 581 million (2015: R1 590 million). Loss before interest, taxation, depreciation and amortisation ("EBITDA") narrowed to R203.2 million (2015: loss of R255.7 million), loss for the year from continuing operations came in at R482 million (2015:loss of R308.3 mi Full story
Revenue for the interim period decreased to R17.566 billion (2015: R19.951 billion). Operating profit lowered to R5.155 billion (2015: R5.632 billion), profit for the year attributable to owners of Kumba rose to R2.974 billion (2015: R2.508 billion), while headline earnings grew to 941 cents Full story |
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Company News | On 27 July 2016, OM Asset Management plc (OMAM), the majority-owned subsidiary of Old Mutual plc, made a filing with the. . . Full story | | INVESTEC LIMITED - Transactions in Investec plc sh 27 Jul 2016
INL INP 201607270044A
Transactions in Investec plc shares
Investec Limited. . . Full story | | Shareholders are advised that all the resolutions set out in the Notice of Annual General Meeting were passed by the requisite. . . Full story | | Fortress A shareholders are referred to the Fortress Memorandum of Incorporation in which it states that the Fortress A dividend of. . . Full story |
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| Spur increased total restaurant sales by 12.9% to R6.97 billion in the year to June 2016.
Restaurant sales in South Africa grew. . . Full story | | Further to the announcements released by Investec plc (ôInvestecö) dated (i) 20 June 2016 entitled ôOffer for Purchase of Preference Shares. . . Full story | | Shareholders are advised that on 20 March 2014, the Gauteng Off-Course BookmakersÆ Association (ôGOBAö) and others lodged a complaint with the. . . Full story | | On 26 July 2016, OM Asset Management plc (OMAM), the majority-owned subsidiary of Old Mutual, made a filing with the SEC. . . Full story |
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Company Results | Revenue for the interim period went up 5% to R9.1 billion (R8.6 billion). Profit from operations decreased by 42% to R571 million (R991 million). Profit attributable to ordinary shareholders tumbled to R309 million (R658 million). In addition, headline earnings per share. . . Full story | | Revenue from continuing operations for the interim period 30 June 2016 increased to GBP58.4 million (2015: GBP52 million). Net rental income grew to GBP40.9 million (2015: GBP:38.4 million). Loss attributable to owners came in at GBP109 million (2015:profit of GBP263.9 million).. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 16:50 | 53667.49 | 29.45 | 0.05% | JSE Top 40 | 16:50 | 46791.78 | 3.46 | 0.01% | JSE Gold | 16:50 | 2770.09 | 29.90 | 1.09% | JSE Financial | 16:50 | 42212.73 | 29.66 | 0.07% | JSE Industrial | 16:50 | 79717.63 | -224.58 | -0.28% | JSE Indust 25 | 16:50 | 71644.52 | -227.73 | -0.32% | JSE Resource | 16:50 | 31954.80 | 329.86 | 1.04% | DJ Futures | 20:00 | 18379.00 | -19.00 | -0.10% | DJ Ind | 20:00 | 18465.80 | -7.95 | -0.04% | SP 500 | 20:00 | 2163.64 | -5.54 | -0.26% | Nasdaq | 20:00 | 5129.46 | 19.41 | 0.38% | FTSE 100 | 16:45 | 6744.96 | 20.93 | 0.31% | DAX | 18:08 | 10319.55 | 71.79 | 0.70% | CAC40 | 18:08 | 4446.96 | 52.19 | 1.19% | Nikkei | 08:50 | 16664.82 | 281.78 | 1.72% | Shanghai | 09:28 | 2992.00 | -58.17 | -1.91% | Hang-Seng | 10:28 | 22218.99 | 89.26 | 0.40% | All Ords | 08:41 | 5615.00 | 2.40 | 0.04% | NZSE 50 | 08:08 | 7301.90 | -8.49 | -0.12% |
| | Name | Time | RP | Move | % Move | Gold $ | 19:59 | 1326.92 | 7.20 | 0.55% | Gold R | 20:00 | 18999.90 | 57.42 | 0.30% | Gold R/kg | 20:00 | 610847 | 1846 | 0.30% | Silver $ | 19:58 | 19.9300 | 0.3310 | 1.69% | Platinum $ | 19:57 | 1120.09 | 31.85 | 2.93% | Palladium $ | 19:59 | 699.03 | 12.53 | 1.83% | R186 | 17:41 | 8.75 | 0.01 | 0.11% | R204 | 17:00 | 7.80 | -0.03 | -0.32% | R207 | 16:34 | 8.03 | -0.03 | -0.31% | Brent Crude | 20:00 | 43.59 | -1.28 | -2.85% | USD / ZAR | 19:58 | 14.3188 | -0.0412 | -0.29% | GBP / ZAR | 19:45 | 18.7971 | -0.0422 | -0.22% | EUR/ ZAR | 19:50 | 15.7424 | -0.0403 | -0.26% | NZD/ ZAR | 19:57 | 10.0991 | -0.0442 | -0.44% | AUD / ZAR | 19:55 | 10.7051 | -0.0748 | -0.69% | USD / JPY | 19:59 | 105.6200 | 0.8950 | 0.85% | EUR / USD | 19:59 | 1.0998 | 0.0011 | 0.10% | GBP / USD | 19:59 | 1.3139 | 0.0004 | 0.03% |
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Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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27/07/2016 | 164 | 172 | 58 | 394 | 263,919,327 | R21,899,749,871 | 260763 | 2057884 | 26/07/2016 | 234 | 105 | 65 | 404 | 249,816,557 | R18,264,758,652 | 238457 | 0 | 25/07/2016 | 218 | 125 | 65 | 408 | 241,380,775 | R19,478,343,616 | 224726 | 1266065 | 22/07/2016 | 182 | 142 | 51 | 375 | 219,909,114 | R16,367,681,852 | 205222 | 439943 | 21/07/2016 | 192 | 142 | 70 | 404 | 240,590,442 | R17,200,932,212 | 224998 | 2141140 |
* Includes all listed instruments on the JSE
Index Summary Index Name | RP | Move | % Move | Top 40 | 46,791.78 | 3.46 | 0.01% | Industrial | 79,717.63 | -224.58 | -0.28% | Mid Cap | 81,243.78 | 271.27 | 0.34% | Small Cap | 60,672.14 | -30.93 | -0.05% | Resource 20 | 31,954.80 | 329.86 | 1.04% | Industrial 25 | 71,644.52 | -227.73 | -0.32% | Financial 15 | 15,287.43 | 13.56 | 0.09% | Financial & Ind. 30 | 74,050.01 | -114.39 | -0.15% | All Share | 53,667.49 | 29.45 | 0.05% | Oil & Gas | 7,195.69 | .00 | 0.00% | Mining | 23,989.74 | 417.95 | 1.77% | Gold Mining | 2,770.09 | 29.90 | 1.09% | Platinum Mining | 28.31 | 1.35 | 5.01% | GENERAL MINING | 5,569.62 | 88.79 | 1.62% | Oil & Gas Producers | 38,689.88 | .00 | 0.00% | Basic Materials | 22,812.36 | 251.40 | 1.11% | Chemicals | 20,249.60 | 2.31 | 0.01% | Forestry & Paper | 50,750.70 | -567.28 | -1.11% | Industrial Metals | 9,805.11 | 574.80 | 6.23% | Industrials | 48,427.43 | 241.84 | 0.50% | General Industrials | 188.06 | .25 | 0.13% | Consumer Goods | 73,701.75 | -25.43 | -0.03% | Automobiles & Parts | 4,234.54 | -67.93 | -1.58% | Household Goods | 605.23 | 5 | 0.89% | Health Care | 10,255.32 | -145.05 | -1.39% | Beverages | 279.29 | -4.16 | -1.47% |
| | Index Name | RP | Move | % Move | Food Producers | 9,904.34 | -82.37 | -0.82% | Personal Goods | 850.55 | 30.07 | 3.66% | Consumer Services | 19,070.97 | -13.30 | -0.07% | General Retailers | 8,222.65 | 28.17 | 0.34% | Travel & Leisure | 6,281.13 | 1.49 | 0.02% | Media | 492.70 | -.10 | -0.02% | Support Services | 2,123.42 | 9.49 | 0.45% | Telecommunications | 7,857.04 | -193.05 | -2.40% | Financials | 42,212.73 | 29.66 | 0.07% | Banks | 7,058.78 | 12.10 | 0.17% | Non-life Insurance | 58,144.69 | -428.78 | -0.73% | Life Insurance | 39,415.03 | 113.66 | 0.29% | General Financial | 4,069.25 | -21.65 | -0.53% | Technology | 53,936.03 | 10.20 | 0.02% | SHARIAH TOP40 | 3,158.08 | 15 | 0.47% | FTSE/JSE SHARIAH ALL | 3,560.45 | 20 | 0.58% | COAL MINING | 10,921.21 | 49 | 0.45% | FTSE JSE Fledgling | 7,324.85 | 19 | 0.26% | FTSE/JSE Alt X | 1,462.65 | -5 | -0.36% | SA LISTED PROPERTY | 675.75 | -.26 | -0.04% | CAPPED PROPERTY | 563.80 | | 0.16% | RESOURCE | 18,201.94 | 201 | 1.11% | DIVIDEND PLUS | 211.16 | -0 | -0.17% | FTSE/JSE RAFI 40 | 9,794.04 | 31 | 0.31% | Capped Top 40 | 24,990.94 | 26 | 0.10% | Capped All Share | 27,426.69 | 28 | 0.10% | JSE TABACO | 11,342.48 | -178 | -1.55% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | EMI | EMIRA PROPERTY FUND | SELL | 26/07/2016 | SAC | SA CORPORATE REAL ESTATE ... | BUY | 26/07/2016 | KIO | KUMBA IRON ORE LTD | SELL | 26/07/2016 | HYP | HYPROP INVESTMENTS LIMITE... | HOLD | 26/07/2016 | RDF | REDEFINE PROPERTIES LTD | HOLD | 26/07/2016 |
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Results Expected** Expected | Company Name | Fin. Date | 28/07/2016 | ANGLO | June 2016 (Interim) | 28/07/2016 | ANGLO-P | June 2016 (Interim) | 28/07/2016 | INT HOTEL | May 2016 (Q) | 28/07/2016 | INTUPLC | June 2016 (Interim) | 29/07/2016 | ABSABANK-P | June 2016 (Interim) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | AECI | 26/07/16 | 30/08/16 | 05/09/16 | ZAR 1.3500 | CAPCO | 26/07/16 | 06/09/16 | 30/09/16 | GBP 0.0050 | ECSP C3 | 25/07/16 | 08/08/16 | 15/08/16 | ZAR 1.4699 | ECSP A4 | 25/07/16 | 08/08/16 | 15/08/16 | ZAR 1.0137 | ECSP A3 | 25/07/16 | 08/08/16 | 15/08/16 | ZAR 1.0137 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | INVICTA | 14/06/16 | 26/07/16 | 01/08/16 | ZAR 0.7528 | INVLTD | 19/05/16 | 26/07/16 | 10/08/16 | GBP 0.1150 | INVPLC | 19/05/16 | 26/07/16 | 10/08/16 | GBP 0.1150 | ARGENT | 29/06/16 | 26/07/16 | 01/08/16 | ZAR 0.0900 | TRUSTCO | 27/06/16 | 26/07/16 | 22/08/16 | NAD 0.0740 |
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Upcoming AGMs** Code | Company Name | Date | Status | TON | Tongaat Hulett Ltd. | 27/07/2016 | Confirmed | RACP | RECM - Calibre Ltd. | 27/07/2016 | Confirmed | RACC | RECM - Calibre Ltd. | 27/07/2016 | Confirmed | APF | Accelerate Property Fund Ltd | 28/07/2016 | Confirmed | CKS | Crookes Brothers Ltd. | 29/07/2016 | Confirmed |
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