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Money Marketing Newsletter – The length of the recovery

In today’s newsletter we take a look at the recovery and share some economic and equity investment thoughts; and we look at savings for the youth. In this exceptionally cold and yet happy time for the country we need to remember that in three weeks we will again return to the real world where financial matters need to be faced and conquered.   
We wish Bafana Bafana the best of luck in their final group stage match next Tuesday and will be blowing the Vuvuzela in support of the national side.

The length of the recovery  

In the latest Cadiz Asset Management Market View, portfolio manager Matt Brenzel provides some insightful comments.   Continue reading Money Marketing Newsletter – The length of the recovery

Estate Planning Essentials – Estate planning for farmers

Estate planning is specifically important where a family business is involved, especially when the family business is a farm. Certain practical issues are often not taken into consideration when dealing with the complexities of the estate of a farmer as a business owner. The following three-part series of Estate Planning Essentials will look at these issues and the impact thereof on the farmer’s estate. Read on…

Estate Planning Essentials – Budget 2010

This year’s pre-budget anticipation did not go entirely unrewarded. While the budget speech itself contained very little by way of change, it was a comment included in Chapter 5 of the 2010 Budget Review which has caused the biggest stir.

With regard to research proposals for possible attention in the tax proposals for 2011 and 2012 the following comment was made:  “Taxes upon death Both estate duty and capital gains tax are payable upon death, which is perceived as giving rise to double taxation. Read on…

National Budget Speech and Related Matters

For this year’s National Budget Speech and related matters Click on the links below to access the documents:
1.     National Budget speech – 17 February 2010
2.     Budget Highlights
3.     Budget Tax Highlights
4.     Budget Tax Pocket Guide
CLICK HERE to access the SARS website to download the Budget Tax Proposals, People’s Guides, National Budget Review 2010, Estimates of National Expenditure 2010 and other helpful budget documents.

Links are also available on the SARS website to view the Live Webcast of the Budget Speech on the Treasury website and the State of the Nation Address speech by our President, Jacob Zuma on 11 February 2010.


Money Marketing Newsletter – Time facts to never forget – sometimes we are just not that unique

In today’s newsletter we look at the importance of time. Today the focus has been the release of Nelson Mandela 20 years ago. It has been a privilege to share such an exciting time in South Africa’s history. Each generation has their moment of text book copy that they share in – sometimes it is more than one – the recent financial crisis would be another of our moments in the record books. 20 years can seem both a long and a short time – what does time mean in an investment and how do we view time, how do we make sure our timeframe for our investments matches our timeframe of life?  

Time facts to never forget – sometimes we are just not that unique  

We were reminded yesterday that it is always risky to say that something that is happening is unprecedented.

Investec Asset Management portfolio manager Clyde Rossouw made the excellent point that government debt to GDP ratios have been high in the past (for example World War II). Government debt has been on our minds a lot as deficits worldwide balloon and countries run into severe trouble. Read on…

Money Marketing Newsletter – Synchronised recession, desynchronised recovery; SA listed property

In today’s newsletter we take a look at the ever present topic of the global recovery and what we could expect in 2010. The recession hit everyone hard – at mostly the same time. But the recovery from that recession is significantly different across the globe. Key to how well you recover from this recession is what sort of shape you were in when it happened. We also have an article on the South African listed property sector.

Synchronised recession

Speaking at a Plexus media day presentation, Pimco’s managing director and portfolio manager Paul McCulley, said that while the recession most recently experienced was synchronised, the recovery from the recession will not be as synchronised. Plexus has been appointed as Pimco’s South African representative and distribution partner.  

How well you come out the recession depends on how healthy you were when it happened.

Read the rest of this entry …

Veerkragtige Rand ondersteun herstel van plaaslike aanvraag

Die groeiende herstel van die wêreldwye ekonomie, die gepaardgaande toename in Suid-Afrika se handelsvoorwaardes oor die afgelope jaar en die duidelike afname in die dienskostes van huishoudelike skuld deur die loop van 2009, ondersteun ? herstel van die ekonomiese groei in die jaar wat voorlê.  Lees verder …

Resilient Rand supports domestic demand recovery

The unfolding recovery in the global economy, the concomitant increase in South Africa’s terms of trade over the past year and the marked decline in household debt servicing costs through 2009 are supportive of a recovery in economic growth in the year ahead. Read more ….

Money Marketing 10 Trends for 2010

The global environment is changing faster and more drastically than we could ever have forecast and MoneyMarketing raises some very interesting thoughts to ponder. 

Continue reading Money Marketing 10 Trends for 2010

Money Marketing

In today’s newsletter we feature an article from Adrian Saville. How have we dealt with the crisis – what is the real debt situation and where are the places for investors in the future are just some of the issues Saville addresses.  

A Changed Global Fabric: Investing in the Post-Crisis Era  

Dr Adrian Saville, CIO of Cannon Asset Managers, assesses the post-crisis investment landscape and suggests the best investment avenues  

Measured by economic and financial criteria, the global economic meltdown of the past two years is unprecedented.  Commodity prices collapsed; international trade fell 10 percent between 2007 and 2009; and the world economy went into recession for the first time since the end of World War II.    

Further, the financial mess has seen many firms disappear, including former icons such as Bear Stearns and Lehman Brothers.  For many others, survivorship has required substantial adjustment by the firm.  In this turbulent environment, the world’s equity markets lost $35 trillion in capitalisation over the 15 months to the end of March 2009.   Continue reading Money Marketing

Executive Summary of Weekly Focus (by Group Advisory Services, Stanlib)

Market Comment

  • The JSE rose this Monday morning to a new 2009 high of over 27,000. The last time it was at this level was in early September 2008, before the Lehman Bros collapse.
  • As usual, our market follows offshore trends. Record low interest rates offshore (and low inflation) coupled with a change in the economic cycle (turning upwards) is a powerful combination or concoction for risk assets like shares and commodities (sweet spot); and the economic cycle seems to still be early in its upswing, despite concerns.
  • A number of asset managers in SA have openly announced that they are reducing their allocation to SA equities because they see our market as overvalued.  While one understands their reasoning, one risk they are taking is that they are cutting back very early in the economic upturn.
  • It comes down to risk versus reward.  Each investor’s risk/reward equation differs because of age, net worth, responsibilities and the ability to handle risk (stomach churn) and sleep peacefully at night.
  • The risk/reward ratio of the stock market is much higher today than it was on 9th March 2009 because of the market’s big gain.  Each person needs to make a judgement call on what his/her risk profile should be at this stage.

What are some of the other market analysts saying?

  • One risk of forecasting the future is that one’s forecasts may change as new data emerges.  This has happened with US market analyst, Elaine Garzarelli.  She has turned more positive again because of strong trends emerging from US Q3 growth numbers and the latest company earnings reports.
  • Strong cost-cutting by US companies has translated into strong cash flow and a mountain of cash, leaving US companies in a strong financial condition and competitively placed.
  • With 87% of US companies having reported profits for Q3, earnings are down 2.5% instead of the -13% forecast. So Elaine is raising earnings forecasts for 2010.
  • The broad leading indicator of the top 29 countries (OECD) has rebounded to a level that is higher than in the 1975, 1983, 1991 and 2002 economic recoveries.
  • Many positives are emerging. Korea’s manufacturing is up 47% over the past nine months, Brazil’s manufacturing is up 20% and Japanese vehicle sales rose 63% over the past seven months.
  • BCA say that although they would prefer a stock market correction or consolidation, US equity prices are not yet stretched.  They see the “cyclical bull market rally” having further to run, although the short-term risk/reward ratio has deteriorated because of the big run in the market and the uncertainty about sales growth and consumer spending.

Economic Weekly Review

  • Last week showed more evidence that the V-shaped economic recovery is in full swing; with the Euro-Area posting GDP growth of 1.6%q/q annualised; and Japan 4.8%q/q annualised. The sustainability of the recovery is still in question though, as are the appropriate policy exit strategies.
  • China had a good October with most of its key economic data continuing to show strong growth, especially the domestic economy. The economy remains on track to achieve 8% growth for 2009, and is expected to accelerate to around 9.0% in 2010.
  • Locally, manufacturing activity recorded a welcome improvement in September.
  • Ahead of the SARB interest rate decision tomorrow, STANLIB held its Interest Rate and Forex forecast meeting on the 12th November. The general consensus is that we have seen the bottom of the interest rate cycle and that the first upward movement in rates will only occur in the 4th quarter of 2010.
  • The weighted view for the currency is to end 2009 at R7.50/$; 2010 at R8.10/$ and R8.60/$ at the end of 2011.  The risk of further Dollar weakness and the positive sentiment around the world cup in the first half of 2010 could see the Rand remain strong or even strengthen over the short term. 

To see the full review, Read on…

Estate Planning – The New R3.5 million Abatement

The 2009 Taxation Laws Amendment Bill will introduce a new way of applying the R3,5 million estate duty abatement and with it, significant and unexpected estate duty savings for some estates.

In this issue of Estate Planning Essentials we look at the technical background to the amendment as well as at some of the considerations which should be taken into account when reaching a decision regarding the use of the abatement as an estate planning tool. Read on….

ZAR – A Volatile Currency

Glacier Research highlights to investors that the extreme volatility in the Rand “can translate into sizeable profits or losses over the short term and in turn increase the risk in a portfolio.  Your asset manager should essentially be able to successfully tap into offshore investing opportunities for better diversification in your portfolio, but at the same time limit the inherent currency risk.”  Read on…

Efficient Research – Events To Watch: 26 – 30 October 2009

The effect of the global economic slowdown has been felt by fiscal finances this year. An expansionary fiscal policy framework was adopted to counter the recession in South Africa. Over the past year, there have been various infrastructure development projects with an eye on the 2010 Soccer World cup and beyond. There were also significant increases in the unplanned funding to state owned institutions (ESKOM, DENEL, SAA) and social grants expenditure. The extra expenditure on state owned entities also placed continues pressure on state finances. Uncertainty about future expenditure patterns makes it very difficult to estimate the government expenditure for 2010/2011 accurately. It is however very worrying that fiscal expenditure increased substantially during 2009/2010 whilst fiscal revenue is much lower than expected. Read on….

The Weekly Focus

Market Comment

  • The JSE All Share Index gained another 2.4% last week and is trading at a new 2009 high today (Monday 19th October). The market is also back at early September 2008 levels, as well as February 2007 levels.
  • Our market continues to follow the offshore markets, with both the MSCI Emerging Markets Index and the MSCI World Index hitting 2009 highs last week.
  • JP Morgan’s highly experienced and respected SA strategist, Deanne Gordon, continues to recommend an overweight in SA equities, neutral in SA bonds and underweight cash.
  • She recommends overweighting domestic cyclical shares such as banks, general retailers, industrials and media.

BCA View (BCA is a research house based in Canada.  They have researched economies and markets for 50 years).

  • BCA’s view is that a cascading decline in global economic output is giving way to a potentially sharp rebound.
  • They continue to recommend a fully invested position in equities.
  • For equities, we remain at the “sweet” spot, where growth is strengthening while inflation is falling. “Equity investors cannot ask for anything better.”
  • There is still a large bearish/sceptical crowd out there that has not yet capitulated. Further evidence of economic recovery and additional gains in shares will likely compel the underinvested into the market.
  • BCA recommends staying overweight emerging markets and commodities, neutral in the US and Europe and underweight in Japan.  They are scathing on Japan.

Bottom Line

  • STANLIB prefers offshore equities and is overweight in offshore equities, underweight bonds relative to risk profiles and benchmarks.
  • STANLIB is moderately overweight local equities and has turned more positive on local property funds (now moderately overweight from neutral), but remains underweight bonds.

Economic Weekly Review

US retail sales fell by 1.5% m/m, which was better than expected.  Vehicle sales plunged by 10.4% mostly as a result of the ending of the “Cash for clunkers” deal.

  • Excluding motor sales, retail sales rose by a welcome 0.5% and General Merchandise, the largest single category of retail spending, rose an impressive 0.9% m/m. The latest US retail spending data is, after adjusting for the various anomalies, more encouraging.
  • Retail sales in SA fell by a substantial 7% y/y in real terms in August, illustrating that the SA consumer is still under enormous pressure. Read the full report in The Stanlib Weekly Focus. 

Read on….

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