Simon’s stock tips
African Bank took out a fair bit of debt based in Swiss francs (CHF), with recent debt amounting to almost R2.2bn in February last year. With the rand now some 20% weaker against the franc that could really hurt, except it seems that African Bank did do some things right. The Sens announcement states: “African Bank has executed a CHF/ZAR cross currency hedge.” There are no further details, but on the surface it would seem the bank has hedged the currency risk so the recent move won’t have any impact. I am a big fan of companies hedging risk such as this. Rather remove the risks beyond management control, such as commodity price moves, currency movements and the l ike. Now sure, those buying gold miners want that risk as it may result in reward, but I still think some hedging of production over the last few years would have put miners in a better position.