Some Notes On The World Around US – World Equity Markets Towards 2011

Charles Snyman of the Efficient Groep says: 

The current world equity market environment can be summarized as follows:

  • The world is in a good news environment which will probably last through 2010 to somewhere in 2011. Company and economic news in all major world centers will continue to break news better than expected or better
    than the recent history.
  • In the US stocks are not particularly expensive. This is important because the US is probably the driver of world investment sentiment. In South Africa the p/e ratio of the Alsi 40 and the All Share Index is probably very close to the 10 year average.
  • Money market funds in the US still hold many trillions of dollars that needs to be allocated to the equity market. This is likely true for most countries/economies.
  • Lots of international investment cash is being allocated to the emerging markets. This is likely to continue throughout 2010. In SA we have received ZAR55billion this year so far. This is of course one of the reasons for the strong rand.
  • International news reports and anecdotal evidence seems to indicate that many portfolio managers have missed the bull run of 2009.

The above facts may indicate that there will be many buyers if the equity markets are weaker during the next three to six months. This will translate to not much downside potential during this period. After the very strong run in world markets since early March 2009 (the Dow Jones Industrial Index increased from 6457 to 9712 as at close 30 September, an increase of almost 50%) one may expect a period of rest and very possibly some downside potential.

How much? This note proposes that there is much potential demand for equities and that downside price potential is limited. Over the longer term (six to 18 months) we have a healthy economic environment that will stimulate equity markets.

Markets will [however] remain volatile. Read on….

The Weekly Focus

I shall, amongst several other articles, be posting Stanlib’s Weekly Focus only periodically as one of several opinions available on the market.  In order to get a broad-based outlook, various opinions are obviously essential whilst avoiding unnecessary repetitive hollow-backed words.  Read on…….(For those who are not quite up to date with the everyday financial terminology will find the “Glossary of Terminology” useful at the end.)

Efficient Research

MPC Interest Rate Decision – ‘A Huge surprise’ – Report by Freddie Mitchell (Economist)

The SARB lowered its main repo interest rate by 50 basis points to 7%, as effective

from 14 August 2009. There are (also) encouraging signs that the global slowdown may have reached

its lower turning point.  Read on….

A lot of Good News

Charles Snyman of the Efficient Group is well known and never stops to amaze me by his tremendous insight, wisdom and sensitivity to matters concerning the world around us.  Charles is a sharp observer, highly skillful and intelligent, acutely in tune with global realities – pitfalls and opportunities – never over hasty though, but also not found wanting when
opportunities go begging. Charles is an optimist by nature and he revels in his daily task of managing share portfolios.

This time we take a look at what he sights as “Good News” – which, among others, he informs, that of the 70 firms that reported since July 9, only 15 had worse than expected results. This piece of very good news helped motivate markets to achieve very strong runs during the last two weeks of July 2009.  Read on…

Ekonomiese en Markanaliese 27 – 31 Julie 2009

Al meer internasionale fundamentele aanwysers toon dat die wêreldwye ekonomiese resessie sy einde nader – en die afgelope week was geen uitsondering nie. Plaaslik het Suid-Afrikaanse aandele hul stygende neiging volgehou desondanks stakings in die meerderheid ekonomiese sektore. Buitelandse belangstelling in Suid-Afrikaanse aandele en effekte bly steeds positief. Tesame met die sterk toename in die goud- en platinumpryse, het die randwisselkoers teenoor al die hoofgeldeenhede geappresieer. Eiendomsaandele het uiteindelik begin om positief te beweeg. Lees verder..

Economic and Market Analysis 27 to 31 July

More and more fundamental indicators are starting to show that the world economic recession is subsiding and the past week was no exception. Domestically, South African shares are continuing their upward rally notwithstanding the dark clouds of strikes across most economic sectors. Foreign investors remain positive on South African shares and bonds. Together with the strong rally in the prices of gold and platinum, the rand exchange rate continued to appreciate against all major currencies. Property shares finally started to move positive. Read on..

Ekonomie en Mark Analise Junie 2009

Ondanks die siening van verskeie ontleders dat die huidige styging in aandelepryse slegs ‘n regstelling in ‘n beermark is, is Dynamic Wealth van mening dat genoeg fundamentele bewyse bestaan dat die draaipunt op aandelemarkte op 3 Maart 2009 was. Dit beteken dat aandelepryse reeds weer ‘n bulfase beleef.  Lees verder……

Economic & Market Analysis June 2009

Though many analysts still hold the view that the recent increase in share markets are

nothing but a temporary correction in a bear market, we are of the opinion that there is

enough fundamental evidence suggesting that the turning point was 3 March 2009 and that the share markets already are in a bull run. Read on..

TAX DEDUCTIBLE ACCESS TO SHARES THAT PAY MORE DIVIDENDS?

In the previous “Did You Know” we gave you 10 reasons why a RA makes good sense tax wise. Come next year you can add a new reason to the list.  This article explains the present and the future position.

Also remember by having exposure to shares in a RA wrapper you do not pay any capital gains tax when shares are disposed of by the fund unlike if you had owned them in your personal capacity. Again a positive for fund returns.

Having tax deductible exposure to shares that pay more dividends is a new angle to consider going forward which could make RAs, tax wise, an even better prospect. Read on

USING TAX TO BUY FINANCIAL INDEPENDENCE WITH A RETIREMENT ANNUITY(RA)

Most people know that contributions to an RA are tax-deductible up to a certain maximum, but few people realise that an RA may actually provide them with an opportunity to save tax in 10 different ways. (The law also does not force you to retire from an RA fund before reaching age 70 anymore so you can now enjoy these tax benefits for longer. Read on

Important considerations on the death of a family member

The recent untimely death of a friend highlighted the need for an answer to the question – Joe’s just died, what do we do now?  Death is not something we like to think about but we need to make sure that our affairs are in order, so that surviving family members are not caused further undue and totally unnecessary hardship.

Here are a few practical steps to assist you…..  Read on

The Case for Optimism

by John Cassidy

It’s possible that this downturn could end quicker than anyone thinks. 

It could be to our disadvantage at the moment to get trapped in a perpetual negative mindset whilst John Cassidy has a very good case for optimism. Read on

MoneyMarketing Newsletter

Money Marketing

In today’s newsletter we take a look at some of the thoughts around cash. When is cash king and when is it not? With some rather gloomy days in the past week we have a few investment thoughts and comments on the not so pretty economic environment.

The cash and the king

In times of uncertainty and in times of change there is a flight to safety and a flight to quality. Across the globe, investors have passed on pure equity investments and there is an abundance of money sitting in cash and money market funds. Given the returns of last year this is of course hardly surprising. Cash has become safe, it has become a preserver and it has become a favoured asset class. The asset class with the least amount of risk. Continue reading MoneyMarketing Newsletter

MPC Interest Rate Decision – Be Careful for that Heartburn, Tito…

The SARB lowered its main repo interest rate by 100 basis points (1%-point) to 10.5%, as effective from 6 February 2009. Read more about the highlights of the MPC Statement.

RA’s are still a good estate planning tool

Using a retirement annuity provides a viable alternative to traditional estate planning instruments. Here are ten estate planning reasons to look at RA’s this retirement annuity season.

Traditionally, clients wanting to provide for a surviving spouse with the benefit of added estate duty relief would look at creating a usufruct as their instrument of choice. Read more

In recent years, developments on three fronts have reduced the attractiveness of a usufruct: