Wednesday, 21 September 2011

ZAR weakness and the carry trade

The rand remains vulnerable in the short term and could test 8 to the US $ later this week. The ZAR has fallen to levels last seen a year ago on perceptions that the global economy is slowing at a faster rate than initially feared.

South Africa’s MPC meets on September 22 to discuss SA interest rates. Even so, early indications in the bond markets indicate ‘no change’ in interest rate expectations.

Two external price shocks for the ZAR require careful consideration. Given SA’s dependence on the euro for 45% of its exported product, any weakness in that currency has serious implications for SA’s growth prospects. The unwinding of leveraged assets, of which the ZAR is the most leveraged, will keep the rand under pressure. To date, the ZAR has been a favourite haven for the so-called carry-trade. That might change in the next day or two with some interesting consequences for rand-hedge equity.

Friday, 9 September 2011

Investec - still at the back of the class

Some listed companies develop a personality on a stock-exchange. These perform or under-perform their peers depending on current economic conditions.

South Africa's zebra-striped Investec is the epitome of personality. You might have seen their advertisements at any mainstream sporting-ground.. Amusingly, anybody who knows the company well can attest to its reputation in the marketplace. Like the consummate host in the executive-suite at the world-cup final, guests/clients are wowed, lulled and entertained. Only the very best facilities a must.. Food & drink is free, the atmosphere's vibrant and the staff pretty.. Guests / clients drunk on fun go home thoroughly satiated. Ask the guest/client the next day who won the game and they probably wouldn't know the answer..

In the School of Investment you would probably decline any homework-help from the kid at the back of the class but you would, no doubt, invite him to your party. He's a lot of fun.

Thursday, 8 September 2011

Indigenisation - Zimbabwean stock-grab

If you own stock in Impala Platinum (Implats) and you've never heard of indigenisation you'd better google the term; quickly. You might even want to revisit your investment models and understand the reasoning behind your purchase. Granted, Zimplats doesn't currently mean much in the greater Implats scheme-of-things but it does, however, play a very important role in Impala's strategic future. For interest, the Impala executive team predicts a difficult 2012 & 2013.

I wonder if the SA government is quietly reviewing the indigenisation concept; let's hope not.