“Here is the official release from MakeMyTrip – MakeMyTrip Limited and ibibo Group Announce Transaction to Consolidate their Indian Travel Businesses. The current makeup of the shareholding of Ibibo is 91 percent Naspers and 9 percent TenCent. In the combined entity, this holding company for Ibibo will hold 40 percent of the MakeMyTrip Limited. Naspers will have an effective 36.4 percent stake in this new combined business.”


To market to market to buy a fat pig On the local front, stocks as a collective ended the session three-quarters of a percent higher on the day. A consumer price index (inflation) read saw the band (3-6 percent) breached, 6.1 percent was the read (fruit inflation came in at 25%!). This was however marginally below expectations, and with retail sales looking sloppy (growth of only 0.2 percent year-on-year in August), the chances of the rates policy being changed are pretty slim for the time being. Slim. Not up and not down, just enough to offer fixed income investors the “right” yield. I was checking the Daily Shot email yesterday and was amazed to see that the Brazilian yields this year had plunged. Check this out, obviously as a result of the impeachment of Dilma Rousseff having removed some uncertainty, also much improved commodity prices are more the reason (Courtesy of TradingEconomics):

Wow, that is some move, for an economy of that size, you would have to say. They are paying much cheaper rates for debt, and that is a good thing. Although, 11 percent, that is still wildly expensive. Talking of which, the Saudi’s were raising a bucketload of cash yesterday. In fact, as Bloomberg reports – Saudi Arabia Raises $17.5 Billion in Record Sovereign Bond Sale, this is a emerging market record. Depending on who you are (if you read the article), some think that the country managed to “do well” and get away with a good outcome.

Some bond investors were not enticed and reckon that the risk premium was too little. Either way, Saudi is going to have to jumble through the lower oil price environment. The Exxon Mobil chief reckons that with improved technology that oil prices are likely to be more stable – Exxon CEO Doesn’t See Supply Shortage Pushing Up Oil Prices. Good for Mr. Consumer.

A quick roundup of the local markets, industrials ramped up 1.11 percent (stand on your one leg Dickie Bird), Naspers enjoying a fine day in the sun, it was AngloGold Ashanti that was at the top of the pile, nearly 4 percent up during the session. At the bottom end of proceedings it was Intu and Reinet, BATS and Hammerson having a bad time of it. Read into that, stronger Rand and weaker Pound Sterling. I saw some politicians in the UK parliament having a to-and-fro yesterday, the parliament is likely to vote on any exit final agreement. What happens if they say no thanks? This may well be a protracted deal and may never happen. In the meantime, uncertainty prevails and that almost always equals sell first and ask questions later.


It was mostly about debate time last evening. I prefer the Saturday Night Live versions with Alec Baldwin and Kate McKinnon, they have a field day. There was some spill over of relief in the Chinese GDP numbers, the thinking that earnings are starting to firm in the right direction is also pleasing. The “earnings recession”, the first of its kind since the “Great Recession” is likely to be over. Yes, if ever you wanted to know what to call the period from 2008 to 2009, Great Financial Recession is the one. At the end of the session, stocks were marginally higher, both the S&P 500 and the Dow Jones industrial average added 0.22 percent, whilst the nerds of NASDAQ squeaked out a gain, 0.05 percent higher by the end.

No thanks to the semi-conductor company Intel, that share price cratered, down nearly 6 percent by the close. The outlook is mixed. I guess. I think that more chips in more machines will mean greater chip use, I suspect that their business will be just fine. It will (and it is priced as such) be more a utility in the future and less a “technology” stock. If you catch my drift. Still, the stock trades on 17 times and has a yield close to three percent, you could do a lot worse!


Company corner

I read (thanks to Google alerts) that Aspen to appeal Italian Competition Authority fine for alleged excessive price hikes. When is it acceptable to stick up the price of a therapy? Aspen are arguing, as per the news article, that they were charging 2 Euros (30.41 Rand) per pill. A pill a day for a month is then 912 Rand, 60 Euros of course. These are blood cancer drugs and were approved for sale back in 2013.

What I find quite interesting, as per the article, is that these drugs (it must be the category) had not been subject to any price increases for 50 years. Were there blood cancer therapies around 50 years ago? And if so, how has the technology and effectiveness changed? I would think a lot. Let me be clear, I think that gouging is a horrible, no good thing for humanity, fair prices for both parties must be reached. The fine is neither huge nor small, and it is a reminder that working in multiple jurisdictions comes with their own set of legal issues. And by extension, costs. An 80 million Rand fine is a gentle reminder. If they appeal, and win, I guess they would have set some benchmark then. We shall see.


News in a couple of days ago, about Naspers, and this time on another business that the market doesn’t seem to give a value to. Michael said something interesting yesterday, he said that he thought Naspers unlocking value by selling these non core assets is great for South Africans. What he means is that many South Africans in their pension funds or in their index trackers (around 20% weighting now), own Naspers indirectly. In short, Naspers will combine their Ibibo business (Tencent also owns a stake) with another Indian travel website, MakeMyTrip. MakeMyTrip happens to be listed on the New York Stock Exchange. We will get into that in a second.

Here is the official release from MakeMyTrip – MakeMyTrip Limited and ibibo Group Announce Transaction to Consolidate their Indian Travel Businesses. The current makeup of the shareholding of Ibibo is 91 percent Naspers and 9 percent TenCent. In the combined entity, this holding company for Ibibo will hold 40 percent of the MakeMyTrip Limited. Naspers will have an effective 36.4 percent stake in this new combined business.

Before you start getting hugely excited, MakeMyTrip has a market cap of 1.71 billion Dollars as of last evening. Revenues of 336 million Dollars and still making a loss is not exactly the kind of business to get wildly excited about, for now. India is in early stages of development, even compared to many of their neighbours. Indian GDP per capita is up 6 fold in the last 25 years, back then growth rates were a stodgy 1.1 percent (1991 had a growth rate of 1.1%). Whilst growth rates have slowed to 5 odd percent, the base is set at a much higher level. The richer people are, the more they travel, the more they look for deals, the more they turn to their tried and tested platforms. Access to the internet, like most of the continent that we live on, is done via the mobile phone. I have actually booked flights on my mobile before. I felt quite chuffed after that!

According to Wikipedia entry – Telecommunications in India, there are only 24.6 million fixed lines in India, fixed line penetration is then set at 1.96 percent. Or less than 1 person out of every 50 has a fixed line. So I am guessing that the other 49 are going to use their mobile phones? Remembering that India still has a way to go with mobile subscribers, they could “have more”. I think that Naspers will for the time being still be almost totally reliant on TenCent, in terms of investors determining what the stock is worth. There are signs that their TV business is under pressure, Koos Bekker even referred to it as a legacy business a few years ago, this is not entirely unexpected. Another step in the direction of diversification over the long run.


Linkfest, lap it up

Just because it is on the internet doesn’t make it true. Knowing what is fact and what is a fiction can be time consuming, so Google is starting to help by fact checking. So if you feel that you can trust google then you can trust what their fact checker says? – Google added a fact-check feature to help you tell if news stories are accurate

Inter faith conflicts is not something that we really experience in South Africa. In other parts of the world, there is more tension between religious groups – An artist has painted mosques and churches across Kenya yellow to promote peace. The best example of interfaith cooperation I have seen was in Cairo, where a building was a mosque in the morning and evening and then a church the rest of the time.

Rumor has it that Apple is launching a new MacBook. Here is what the rumor thinks the new computers will look like – Here’s everything we know about Apple’s next MacBook Pro. We have to wait until the 27 October to find out what is what though.

An interesting look at how our minds view the past and future. Humans are hardwired to believe that the future will be better than our present, which is what drives us forward – We aren’t meant to be happy all the time – and that’s a good thing.

“Dissatisfaction with the present and dreams of the future are what keep us motivated, while warm fuzzy memories of the past reassure us that the feelings we seek can be had. In fact, perpetual bliss would completely undermine our will to accomplish anything at all; among our earliest ancestors, those who were perfectly content may have been left in the dust.”



Home again, home again, jiggety-jog. Our Rand is holding steady under that phycological level of R14.00 to the Dollar. If you are thinking of doing an international trip for Christmas, a white Christmas in the UK seems to be the cost effective option, we were trading under R17 to the pound earlier this morning. Amazing to think that coming into this year we were at the R24.50 level to the Pound. Later today we have retail sale numbers out of the UK, which could have an impact on the Brait share price and then later in the day there are the initial jobless numbers out of the US.

Sent to you by Sasha, Byron and Michael on behalf of team Vestact.

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