“The biggest story of the day was a subtle shift by Naspers in announcing something very simple, they were changing their reporting currency to US Dollars from ZA Rand. Is this a precursor to a primary listing somewhere else? Would they want to pursue a US listing at some stage, in the same way that perhaps Alibaba has/have?”
To market to market to buy a fat pig Dow 18000 again! The blue chip index closed at the highest level since the second half of July last year. Perhaps it is a northern hemisphere spring thing, although the weather in Joburg still looks more agreeable than New York, their high is 21 today, ours is 27. That is in Centigrade and not Fahrenheit. I still wonder about why everyone doesn’t use the metric system. The Americans still get one up, the US Dollar I was thinking yesterday is still the most used currency globally, no matter which country you go to, people still reference their currency against the greenback. Ordinary countries that is. Not crazy ones trying to use the budget to send 60’s style rockets into orbit.
Enough of that, stocks were lifted across the board last evening in New York, New York. This was in spite of a stalemate in the oil production talks Sunday, that filtered into an oil price falling heavily through Asian trade and into our time zone area. We are lucky enough to open and close around the same time as the Europeans, at least we have those flows. Although at last check, US Equities still account for nearly 40 percent of global value, the flows will continue to be determined by them over time.
The Dow Industrial average added six-tenths of a percent to close out at 18004, the nerds of NASDAQ added 0.44 percent, it is still 40 points away from 5000 points. And notwithstanding the recent moves, over 15 percent broadly for US markets since the lows of 11 February this year, the tech heavy NASDAQ is still down around one percent year-to-date. The broader market S&P 500 added around two-thirds of a percent to close at 2094, now up two and a half percent year to date. The Dow is having an outperformance year, up three and one-third for the year so far. I had to scratch for reasons why the market “did so well” yesterday, the WSJ cited lower chances of a global recession pulling the US into a recession (really?), recovering oil prices being good for equity markets (that portion with exposure, yes) and a dovish looking Fed, i.e. less chance of the rate cycle being ratcheted up so quickly.
Earnings drive markets, equity markets. The higher the earnings of a business, the better chance there is that their share price is likely to go up. The market as a collective does a good job in determining the share price of a specific company. And whilst in many cases the rising or ebbing tide floats and sinks boats collectively, earnings and prospects ultimately determine where the balance of investors choose to value a company. There is no secret sauce, anyone who purports to know what is going to happen next is not too dissimilar to the ancient function of the soothsayer. There are big hedge funds, high profile chaps that have made serious money in the industry that have had their pipes cleaned lately. Ray Dalio, John Paulson, Bill Ackman and the like had an awful first quarter. To catch up and stem the tides against redemptions is an uphill battle, most especially with huge egos comes little humility.
When Buffett apologised for his investment “mistake” in Tesco, he suggested (and sideswiped) that a Wall Street apology would have blamed the company, and less themselves. It is important to always recognise that in investing, you will make mistakes, and sometimes very bad ones at that. Diversification, keeping flexible and making sure that most importantly you pay attention to trends and movements in the business.
Local, let us stay with that for a moment before we wrap up here, stocks rose around one-quarter of a percent. It was only the last half an hour that pulled us through to the green, I read stories that emerging market inflows are starting to return, the strengthening Rand has seen to that. A big story yesterday was former finance minister Nene landing a non-exec role at Alan Gray, perhaps people just making it a big story as it implies the president certainly wasn’t telling the truth when replacing minister Nene with an unknown entity (who travels to Dubai for a day). I guess that is why the chattering classes are getting excited.
To me, the biggest story of the day was a subtle shift by Naspers in announcing something very simple, they were changing their reporting currency to US Dollars from ZA Rand. Is this a precursor to a primary listing somewhere else? Would they want to pursue a US listing at some stage, in the same way that perhaps Alibaba has/have? In the release it spells it out pretty well: “Coupled with the evolution of the business, the group’s shareholder base is now largely comprised of foreign investors to whom financial reporting in ZAR is of limited relevance. Internally, the board also bases its performance evaluation and many investment decisions on USD financial information.”
The evolution of the shareholder base to more international and less local means that the Dollar is more understandable. A quick look at the shareholder base from the last annual report shows that there are 65 thousand shareholders, the biggest being the Public Investment Corporation of South Africa (the PIC), who own 13.14 percent of the business. The next annual report may well break down the shareholder base by geographical area, all I can tell you from our quick analysis here is that the shares are mostly owned locally, their ADR program has no liquidity and a market cap of 65 billion Dollars. Perhaps that will change in time now, as the company becomes easier for US investors to understand, the onshore (US) ADR program could be more accessible and liquid.
Linkfest, lap it up
Giving happens when you unleash human potential. Giving does not happen in societies where ideas and innovation are suppressed, as there is nothing to give. It is excellent to see that the Chinese wealthy are starting to be great givers, benefiting education, healthcare and environmental causes in this case. Here is the chairman of Tencent pledging vast swathes of his wealth – Tencent’s Pony Ma pledges more than $2bn to charity.
How do you become financially independent? Spend less than you earn and then try make the gap between the two grow as time goes on – Saving Just 1% More. The link is to a calculator showing you what the differences would be in just saving 1% more over a 10 year period.
The trend to become healthier is gaining more traction and is something that needs to be noted when considering long investments – Charted: US consumption of bottled water has finally caught up to soda
Apple’s ‘gold mining’ activities are about the same size as DRD’s production numbers for the last quarter – Apple recovered 2,204 pounds of gold from broken iPhones last year
Home again, home again, jiggety-jog. Markets have started better here locally, US futures have improved somewhat through the after market session, even if IBM and Netflix are likely to drag the rest of the market lower.
Sent to you by Sasha and Michael on behalf of team Vestact.
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