"The speed is astonishing, ten years is not really a long time in investing, if you think about it. Pension funds and mutual funds would have made longer dated calls on these investments, Anglo at the time with Chinese commodity demand seemed like a far superior investment than a media company with legacy assets (and a funny pokey Chinese internet investment) in the form of Naspers, that collectively (the internet assets) was losing money. Sound familiar?"
To market, to market to buy a fat pig. What a difference a few days make. Since the bottom of the market (in the very short year to date), the S&P 500 has rallied nearly 4 percent in as many days. I remember seeing at the beginning of the week in programs on the box where the short term fellows were talking about how the bad start to a year translates to the full returns for the year being Y or X. I wonder what the consensus is today, perhaps as a result of the short term nature of the beast, those predictions would have been forgotten already. That is my best guess. Anyhow, US markets back flat for the year and the Dow Jones nearly back at 18 thousand points, a cracking day for the local market yesterday, other than for Sasol, which was routed again on weaker energy prices. Ironically, on a day where energy prices are recovering.
Industrials and in particular Naspers led the charge yesterday, the overall index was up 1.3 percent after all was said and done. I looked at the ranking tables, by market capitalisation yesterday. And then this morning. And noticed what I had suspected, Naspers is now in third place on the ranking tables, by market capitalisation. On the local market of course, and now makes up 6.5 percent of the total market. Naspers has a market cap of 704 billion Rand, Anglo American 289 billion. For interests sake, FirstRand is nearly a bigger business than Anglo, less than 2 billion Rand separates them.
It is amazing how little time this takes to happen, in the bigger context of investing. Ten years ago (just over), at their respective year end period, Anglo American had a market cap (December 2004) of 190 billion Rand. Naspers at March 2004 had a market capitalisation of 11 billion Rand. A definite tale of two companies, one that made spectacular investments in companies that changed the internet landscape in China, another that made poor investment choices in Brazil, equally poor buyback timing.
The speed is astonishing, ten years is not really a long time in investing, if you think about it. Pension funds and mutual funds would have made longer dated calls on these investments, Anglo at the time with Chinese commodity demand seemed like a far superior investment than a media company with legacy assets (and a funny pokey Chinese internet investment) in the form of Naspers, that collectively (the internet assets) was losing money. Sound familiar? Right now their ecommerce businesses are losing huge money, I am not suggesting that there is a pattern here, they may run into many more obstacles before succeeding (if at all), the being early to the landscape is the point I am making. And Anglo? What next? The aforementioned FirstRand, Standard Bank, Aspen and Vodacom could eclipse them in the next five years, if of course the current trajectory remains. And then Anglo would no longer be inside of the top 10 companies by market capitalisation. Do not be sad, that is how capitalism works.
Today is the biggest single talked about event in markets, the non-farm payrolls report, this would be for the month of December. As I write this, I do not have a clue what the expectations would be, I had to check it up. Mr. Market had penciled in 240 thousand new jobs for the month prior, we will know closer to 15:30 local time here. Obviously the unemployment rate and hourly earnings are important too, we can have a quick review on Monday. Expect that to have a bearing on where the markets will end up today, ironically if it is a super number the markets might be anticipating rates going up sooner. I guess inflation has to remain in check in order for the Fed to move aggressively. And wages need to move higher too, the middle classes in America are still (almost as ever) struggling.
Company corner snippets
Tencent. Yes, I know you are getting tired of the same news day after day, about Tencent and the associated impact on the Naspers share price. This one however is about WeChat, the messaging app that is big in China. It is messaging in China. Whilst WhatsApp a couple of days back might have clocked 700 million users, as a result of the nature of the Chinese internet landscape (censored media), I suspect that WeChat will struggle to get many more users from here. The application is international, we are encouraged to use it here on the DSTV platforms, makes sense for them to punt that.
Of the 438 million active users of WeChat last year (according to the BusinessInsider email that I received) 22 percent used the app to browse the store and 19 percent made mobile payments. I think that for folks buying Chinese companies, the penny is starting to drop that TenCent (and their extended subsidiaries) are real money making machines. The Tencent share price is closing in on the 52 week high, year to date the share price is up a whopping 10.4 percent. It should come as no surprise then to hear that Naspers is up 11.36 percent year to date, that year comprises of only 5 (6 today) trading days. Yowsers.
Things we are reading, we think that you should read them too
A leap second. Yes, this year will have an extra second in it - 2015 is getting an extra second and that's a bit of a problem for the internet. This is something that is a real problem for computers and is something that I hadn't heard of until yesterday.
Moneyless societies is where things are going - Mobile Payments Are Poised To Explode This Year Thanks To Mainstream Adoption Of Apple Pay And Similar Apps. The trend is good news for Visa and for Apple who take a cut of everything spent - Apple Said to Reap Fees From Banks in New Payment System
The eroding power of inflation highlights the need for your money to be working for you - $1 In 1872 Is Worth $0.05 Today.
Oil, the subject that I feel has been over done but as the price keeps falling it is still relevant - Learning from the oil market. Then the question that everyone wants to know, "how far will it fall?" - How far do oil prices have to fall to throttle the US shale boom?
Home again, home again, jiggety-jog. China deflationary concerns, I remember a time a few years ago that Chinese inflation was the main concern. Ultimately it depends on what you think, whether or not the Chinese will be better off or worse off in five years time.
Sasha Naryshkine, Byron Lotter and Michael Treherne
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