“You will remember that something similar happened last year when they released a trading statement that was also heavily impacted by currency moves. I think the company missed a trick by not giving more information on the impact of the currency, the SENS leaves a lot to the imagination which makes the share price move today understandable.”

To market to market to buy a fat pig. Yesterday China was the topic that ‘everyone’ was talking about again. The Shanghai Index was down 6% and is down a further 1% today. The best reasons that I can find online for the drop are because of Yuan fears (again) and the bomb blast in Thailand. Both reasons don’t sound like real reasons to be selling a stock, here is a graph of the Yuan over the last month. You can see that it has been very stable over the last few days:

Found on

A more likely reason in my opinion, are the sales from insurance companies who are going to have to fork out large sums to cover the damage from the blast earlier in the week – China’s Tianjin blasts will cost billions. Here’s the tally so far. The problem in Chinese markets at the moment is that people are still operating under a state of fear, so as soon as the market starts to fall, traders continue to sell. The result is that the market falls further than it should. We saw a similar, albeit smaller impact on markets from the Japanese tsunami and earthquake in 2011 where the Nikkei dropped as well as US stocks. Why the US stocks? Probably a mix of traders just selling on negative news but also because the insurance companies operating in Japan had assets in the US that needed to be liquidated in order to pay out claims.

Company corner

Lower commodity prices have come through in the Glencore Plc – 2015 Half Year Report. The lower prices resulted in their revenue dropping 25% and last years net gain of $728 million swung to a net loss of $676 million. Over the period they managed to pay down debt and are keeping their dividend inline with last year’s, both signs that management are putting on a brave face. If you read about Ivan Glasenberg and his team running the company, they are all tough as nails. The results highlight the perils of operating in the mining sector, you have no say about the price that you sell your product at. The stock is currently down 5%.

Massmart at the moment is down 11% due to a negative Trading Statement For The 26 Weeks To 28 June 2015. HEPS are likely to be down 29.8% to 22.4% but if you strip out the negative impact of currency moves Earnings may be up by 0.9%. You will remember that something similar happened last year when they released a trading statement that was also heavily impacted by currency moves. I think the company missed a trick by not giving more information on the impact of the currency, the SENS leaves a lot to the imagination which makes the share price move today understandable.

Linkfest, lap it up

Given how much spending power Millennials have you defiantly need to be giving them attention when it comes to making investment decisions – How trillion-dollar millennials are spending their cash

Given the strengthening of the US Dollar and the weakening of the Brazilian Real luxury products in Brazil are looking cheap – Luxe for Sale as Cartier, Prada Become Bargains in Brazil. Maybe this will spur a new type of tourist to Brazil. Why not go have a holiday and then add to your watch collection at the same time?

Building more cognitive style competing chips will makes computers more useful in the future, with the ability for computers to ‘think’ for themselves. The offshoot of the technology is to better understand how brains work, so significant resources are going into this technology which will no doubt have medical benefits as a byproduct. – IBM has built a digital rat brain that could power tomorrow’s smartphones

Changing Energy

There is no doubt that information is power, which allows us to make rational decisions and decisions that maximise the benefit for ourselves. Google have set up a website to help tell you if your roof is conducive to solar, how much you can save and then connect you with someone who can help out – About Project Sunroof. If people are able to reliably see what they can save by using solar there is a higher chance that they will use it. At some point critical mass will be reached and putting solar on your roof is just something that is done in sunny areas. No one wants to be that odd one out who isn’t saving the environment and who isn’t saving themselves money. – Google’s ‘Project Sunroof’ Aims To Put Solar Panels On Top Of Everything. . . Eventually

I didn’t realise the impact of being more efficient has been so big. Lessons that can be learned for the power problems in RSA. There has already been a big push in the light bulb arena but a bigger push probably needs to be made in the appliances department. “Americans’ energy-conservation efforts, from switching bulbs to upgrading washing machines and air conditioners, have done more to reduce carbon emissions than the increased use of solar, wind and natural gas. . .”The Lowly Lightbulb Outshines Solar and Wind on U.S. Power Grids

Buying renewable energy companies can be risky given that the barriers to entry are low and it relies on other sources of energy become more expensive than solar – Solar is having a great year, except on Wall Street. While oil looks like it will remain at these levels for the foreseeable future, shares of companies linked to alternate energy have had a tough time. This might be a buying opportunity if your time horizon is long enough.

Home again, home again, jiggety-jog. Our market is currently down by over 1% lead by the commodity linked stocks. Our Rand has strengthened slightly today, trading under the R/$ 12.90 mark. The big data out today was our CPI coming at the 5% mark, which falls nicely in the target range from the SARB of 3-6%. With the fuel price probably going down next month lets hope that the result is not another rate hike from the SARB. The market moving data out of the US later is their CPI data and then the FED minutes from their last meeting. You can be sure that interns all over the place will be tasked with going over the minutes to find “key” words or phrases about when the next rate hike will come. I don’t even think the FED themselves know when exactly they will be raising rates, so not sure how much value scrutinising the minutes will result in.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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