Business & Finans
Finweek - English

Finweek - English 15 August 2019

Finweek is South Africa’s leading financial weekly magazine focusing on investment. With its brisk, creative and authoritative analysis of business and investment issues, it’s an essential business tool in the daily battle for competitive advantage. Today's business decision-makers have to cope with increased pressure on their time and are expected, more than ever before, to succeed in the face of stiffer competition. Finweek provides relevant information in quick bytes, along with award-winning investment advice.

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2 min.
from the editor

“you’ll know that you’ve pushed hard enough when you get slapped on the wrist.” That’s what investment manager and former trader Kweku Adoboli was told when he was pushed to drive profits at Swiss investment bank UBS. Adoboli, Ghanaian by birth, has been living in the UK since his early teens, and started as a trainee in UBS’s office in London in 2006. He admitted to having acted outside of the law to ensure bigger profits. But instead of profits, pushing “hard enough” (which included unauthorised shortfalls) resulted in a $2bn loss at the bank. Adoboli spent seven years in prison for fraud. Speaking at the recent CFA Society South Africa’s conference, Adoboli, who was since deported from the UK to Ghana, tabled a list of experiences as a young trader that…

4 min.
do financial analysts add value?

every morning I receive an email from a local financial institution that summarises the previous day’s financial market news. Included is a section on research investment ideas, where an analyst discusses the fundamentals of a stock and its expected performance. I’m often less interested in the stock itself – the consequence of a limited personal portfolio – and more interested in how accurate these analysts are in their advice. Are their forecasts correct more than 50% of the time? What about ‘trade ideas’ – expert opinions on short-term stock price movements. This could include anything – from how a change in management, to a looming trade war, may affect the value of a specific stock. Do trade ideas really change investors’ decisions to buy or sell? And do they earn positive returns for…

5 min.
in brief

“TO DATE THERE ARE NO MAJOR INFRASTRUCTURE PROJECTS FROM CHINA HERE. WHY?” – China’s ambassador to South Africa, Lin Songtian, told Reuters that while fellow African nations have been undergoing a decade-long infrastructure development boom (aided by the Chinese government), it’s a different story in SA. Lin said projects proposed by SA authorities lacked feasibility studies capable of reassuring the Chinese government and banks of their profitability and sustainability. He said China wants to see more certainty and favourable conditions, for example policies of extending incentives including tax breaks, enshrined in an investment law passed by Parliament. On Eskom’s debt issues, the ambassador pronounced the power utility a “debt trap” and said although they [China] gave loans to Eskom before ($2.5bn in 2018) they have since become “very cautious”. “We see this…

4 min.
anglo’s remarkable turnaround

anglo American’s remarkable turnaround under CEO Mark Cutifani has been rightly applauded. Now, however, there are the inevitable questions as to whether the $800m interim dividend payment announced earlier this month, supplemented by a surprise $1bn share buyback programme, represents an apogee for the firm. As asked by analysts: Is this “as good as it gets” for Anglo? Apparently not Investment banks, including JP Morgan Cazenove, HSBC, RBC Capital Markets, Morgan Stanley, and Goldman Sachs think Anglo American has more in the tank, although it does depend on the usual imponderables such as the strength of the iron ore market, and whether Anglo can tackle the 3% overall shortfall in first-half production. There are also questions regarding how long it can take advantage of technical advances born of Cutifani’s strategy to rebuild the…

2 min.
anglo’s sa assets haven’t held it back

one of the interesting aspects of the improvement in Anglo American shares relative to their peer group is the fact that the firm’s exposure to its SA asset base has not appeared to hold it back. Given the current performance of Kumba and Amplats, investors are not too concerned with “the SA discount”. Cutifani remains positive about the country in general terms. Asked what he thought of recent comments by Johann Rupert of Rembrandt Group that the country would eventually end up in the hands of the International Monetary Fund’s (IMF’s) loan committee, Cutifani said: “We don’t see that as a likely scenario. Rather, we see incremental impacts on the country and the government will have to decide what it wants to do,” he said. Cutifani doesn’t mention it specifically, but one area…

2 min.
consistent returns from commodities

Fund manager insights: Despite the tough economic conditions that are normal in cyclical industries, Investec Asset Management’s Commodity Fund – which is focused on commodity related companies primarily listed in South Africa – makes fora gripping case study to invest in resources. The fund appears to serve as a feasible investment vehicle to diversify one’s portfolio to include specific exposure to the sector. The second quarter of 2019 was very volatile for the resources sector. The fund’s performance comparison index, the SWIX Resi, fell 0.66% over the period and supply disruptions in iron ore drove bulk commodity prices higher, said fund manager Daniel Sacks in a quarterly note to investors. Weak results saw the commodity fund reduce its positions in Sasol, Harmony Gold, South32 and Exxaro. This repositioning to ensure capital growth and…