Trying to find the upside
WELCOME TO this, the fourth edition of Investors Monthly for 2015. We are nearing the halfway point for the year, well settled into the reality that the South African economy, which is blighted by an energy shortage, is still a great place for consumer-facing companies. Retailers continue to shine, despite the threat of higher rates, if not now, somewhere in our not too distant future. While the All Share has gained 8,9%, retailers are up 18,5% this year.
Clearly the story of the South African consumer still holds some weight with international investors, as local players will only be too quick to warn of the perils that lie ahead. Or perhaps with the strong dollar not being too kind to the earnings of the bigger US firms, there’s still interest in the better-run emerging market corporate story.
Investors favour the dividend-paying stocks. Whether you are investing for income or growth, you can get a multiplier effect by reinvesting dividends received. Stephen Gunnion takes a look at companies that can make this work for you. Resources still aren’t favoured.
In our first feature, Marc Hasenfuss looks at the better turnaround bets and there are many on the local bourse. In a world of record high valuations, it may be among these troubled counters that an investor will find real value.
Award-winning economics writer Claire Bisseker returns for this edition to fill us in on the big question that has gripped markets since the end of the quantitative easing experiment in the US. When will Janet Yellen and her team raise rates in the world’s biggest economy and what will be the likely outcome of normalising rates? Recent economic data from the US suggests that we may just may find out next month. (I am in the rather small camp that says we’ll only see higher rates in the US in 2016, and more than likely if there’s a Republican in the White House.)
Another thing to look out for next month is the ratings agency comment on SA. Moody’s says SA has about 18 months to two years to sort out its problems. In “Eco-Watch”, Ntsakisi Maswanganyi takes a closer look.
In every edition of this magazine, I want a feature on an African economy or a growth story on the continent that doesn’t necessarily involve South African corporates traipsing across the plains. This month we look at Zambia and the mining law changes that the country has made in trying to placate miners. It seems to have worked, after many had said the initial changes threatened the feasibility of their operations.
Our regular contributors return, with Thabi Leoka’s “Tickling the Nerve” column and Nicky Smith’s “One Last Thing”.