FgfHpk

More documents

Recommendations

Info

Contents Contents .................................................................................................................................... 2 Newsflash .................................................................................................................................. 3 Market Comment ........................................................................................................................................................... 3 How about Bonds and SA Listed Property? .................................................................................................................... 4 Other Commentators ...................................................................................................................................................... 4 Economic Update ....................................................................................................................... 6 Weekly Market Analysis ............................................................................................................. 7 STANLIB Money Market Fund ......................................................................................................................................... 8 STANLIB Enhanced Yield Fund ........................................................................................................................................ 8 STANLIB Income Fund ..................................................................................................................................................... 8 STANLIB Flexible Income Fund ........................................................................................................................................ 9 STANLIB Multi-Manager Absolute Income Fund ............................................................................................................ 9
Newsflash Pessimism on world markets is rising quickly and plenty of bad news is being bandied about in the media, usually a good sign that the bottom is not far away. Market Comment Having said that there was a 60% possibility the market correction was bottoming a week ago, one acknowledges that the 40% possibility that it had NOT bottomed then is certainly winning, as the JSE All Share Index continued its correction with gusto on Friday, although today looks better. This has been a serious clean-out/correction and it is global, with very few shares spared. The US S&P 500 Index is down around 5.3%, while the MSCI World Index is down a heftier 7.8% in dollar terms, back at its November 2013 level. The weaker non-US currencies, relative to the dollar, have aggravated the fall in this index. The MSCI Emerging Markets Index is down 10% in dollars, while the JSE ALSI in dollar terms is down 13.5% from the recent high. At time of writing on Monday morning before the pickup, the All Share Index in rands is -10.4% or 5,426 points below its record high of 52,323, while the previously powerful Industrial Index is -9% and the strong Financial Index is -9.4%. As mentioned, very few shares are escaping, with the biggest share Billiton (9.9% of the ALSI) down some 23% from its record high in rand terms, back at 2008 prices, while Anglo American, now only the 6 th biggest share at 5%, was on Friday down about 20% from its recent high and down a massive 55% from its record high in 2008, trading now at 2006 prices! Both Anglo and Billiton are bouncing today as the day progresses. Even Woolies is down 19%, trading at November 2012 prices, i.e. almost two years ago! Clearly some of the big rand hedges are hurting, apart from Billiton and Anglos. Richemont is down 22%, back at 17-months ago levels, while Sasol is down 15% and the mighty SA Breweries is down 15%. One of the previously great shares that actually went up during the 2008/9 crash, Shoprite, is down a whopping 36% from its record high in late 2012, trading at the same price as around three years ago - down 19% so far in 2014. The share is, however, still trading at 19 times earnings of the past 12 months (the PE ratio) and on a dividend yield of 2.6%, is still below the 3.1% dividend yield of the JSE All Share Index, which by the way is almost its highest dividend yield in 5 years (the ALSI dividend yield), partly because companies are paying more of their profits in dividends. One of the more extraordinary moves today is the 4.4% jump in the share price of Capitec, to yet another record high, 28% above its low of two months ago during the African Bank issue. The JSE’s ALSI PE ratio is now around 16 (trading at 16 times earnings of the past 12 months), still higher than the 14.6 times average of the past 20 years, although arguably still affected on the high side by some of the big rand hedges, like Naspers and SAB. If the US stock market correction extends to 7% from the current 5.3%, then the JSE correction could extend to, say 12.5% or so. Pessimism on world markets is rising quickly and plenty of bad news is being bandied about in the media (very little good news). It could reach a peak quite soon, which usually represents an excellent buying opportunity; exactly when, no-one knows. It could even be there now. However, if one wishes to up-weight one’s equity allocation, gradually buying into this downturn should prove rewarding.
Page 1: 13 October 2014
Page 5 and 6: BCA RESEARCH Conventional wisd
Page 7 and 8: Weekly Market Analysis Currencies/
Page 9 and 10: STANLIB Extra Income Fund Effective
Page 11 and 12: Equity Financial Markets Fixed Inte
Page 13: Disclaimer The price of each unit o

FgfHpk

Create successful ePaper yourself

Delete template?

Save as template?