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January 2012:
2011: navigating stormy waters - Abdul Davids
Iron ore: demand fuelled by growing economies - Rubin Renecke
China’s internet opportunity - Gavin Wood
Lonmin Platinum: turnaround potential - Jihad Jhaveri
Turkey: hospitable, proud and searching - Zeenat Kalla
Performance table
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October 2011:
Prevailing headwinds from the north - Gavin Wood
MTN: a play on African growth - Aslam Dalvi
Tongaat: digging beyond the numbers - Abdul Davids
Clothing retailers seek new growth drivers - Simon Anderssen
Cash and kalamatas - Diederick Kruisinga
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July 2011:
Our business growth - Roland Greaver
Sasol: more than just an oil company - Abdul Davids
The sweet world of sugar - Abdul Davids and Rubin Renecke
Seeing the stock for the flow - Gavin Wood
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April 2011:
Turbulent times - Gavin Wood
Brazil’s agricultural evolution - Aslam Dalvi
Impala: Skilfully negotiating future challenges - Jihad Jhaveri
South African industrials: Quo vadis earnings? - Abdul Davids
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January 2011:
The World of Platinum Group Metals - Abdul Davids
Mondi: Focused on emerging market growth - Rubin Renecke
Stimulus addiction and withdrawal - Gavin Wood
» Archive
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MTN: a play on African growth: 12 December 2011
MTN: a play on African growth - Kagiso Asset Management Equity Analyst Aslam Dalvi
It is no surprise that investors are currently clamouring for access to emerging market growth. With the debt and fiscal problems in developed economies, investors have looked to emerging markets, where growth continues to be robust.
Despite key challenges - political instability, poor infrastructure and high income disparities - Africa has several fundamental strengths. Attractive demographics, high urbanisation rates and access to a large and untapped wealth of natural resources will see the continent continue to grow and eventually emerge as a key player in the global economy.
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Prevailing headwinds from the north: 11 November 2011
Prevailing headwinds from the north - Kagiso Asset Management Chief Investment Officer Gavin Wood
On a recent trip to China, we were told by an economist we met that he was seeing a trend of Western immigrants moving into Beijing. In particular, he told us of the opening of an authentic new Greek restaurant in the suburb where he lives.
This anecdote provides an interesting symbol of trends at the global economic level. Three months after the US Federal Reserve’s $600 billion QE2 stimulus program, financial markets are volatile and, as we expected, emerging market currencies and commodity prices have weakened as this flow ended.
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Sasol: more than just an oil company: 22 September 2011
Sasol: more than just an oil company - Kagiso Asset Management Head of Research Abdul Davids
The volatile oil price is the topic of many dinner table conversations, as domestic petrol prices trend back to the high levels of 2008.
The consensus view is that an investment in Sasol is somewhat of a hedge against higher oil prices, with dividends from Sasol compensating investors for the pain they feel at the pump.
Sasol and the oil price
Historically, the correlation between Sasol’s share price and the rand oil price was clear and easily depicted (see graph below). What is noticeable is the high correlation between Sasol and the oil price when oil prices are trending down or fairly stable. However, when oil prices spike to above perceived sustainable levels (as happened in July 2008 and in early 2011), the relationship breaks down.
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Seeing the stock for the flow: 3 August 2011
Seeing the stock for the flow - Kagiso Asset Management Chief Investment Officer Gavin Wood
As financial analysts, much of our energy is spent assessing current information with the objective of valuing assets. It is very important for us to think about the sustainability of recent results we observe from the economy.
For this, it is vital to maintain a long-term perspective and to identify where changes in ‘stock’ items are impacting temporarily on ‘flow’ items. As a precursor to comments on some specific market features that look unsustainable, I re-look at the basic economic concepts of ‘stock’ and ‘flow’.
‘Stock’ and ‘flow’ economic variables
‘Flow’ economic variables can be identified by the fact that a time dimension is required to give them meaning. That is: the variable has a value that is so much per unit of time. Some examples (per annum/per month/per week) are: your earnings from work, the profit achieved by a company and the budget deficit of a country. ‘Stock’ variables, on the other hand, have no time dimension - they are just so much (as measured on a given day). Examples are: the amount of petrol in your car, the amount of grain in a silo and the foreign exchange reserves of the central bank.
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Brazil’s agricultural evolution and its impact on South Africa : 10 June 2011
by Aslam Dalvi, Equity Analyst
Mentioning Brazil conjures up different ideas and emotions for people. For some, perhaps the first thing that jumps to mind is the world renowned Rio Carnival. For others, it may be the world famous “Cristo Redentor”, which overlooks the beautiful city of Rio.
Typical of an analyst, what defines Brazil for me is the story of the country’s political transition, its recent economic success and the important role of agriculture in its economy.
Brazil enjoys significant agricultural advantages relative to South Africa. We believe this has allowed downstream industries such as the Brazilian poultry producers to emerge among the lowest cost producers in the world. Given these cost and competitive advantages, we view poultry imports from Brazil as a key threat to the local poultry industry.
Brazil
Brazil, South Africa’s largest trading partner in Latin America, is known for its remarkable economic turn-around over the last ten years as well as its socio-economic policy model. It is one of the fastest growing emerging economies in the world with large and expanding agricultural, mining, manufacturing and services sectors.
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