To market, to market to buy a fat pig. The ratings agencies are still taking some flak, perhaps rightfully so. But when Fitch, a ratings agency, cuts the credit rating of the parent company of Standard & Poor's, another ratings agency, one couldn't help but chuckle -> Rater vs. Rater? Fitch Cuts S&P Parent on Lawsuit Worry. It was not just me that had a fat laugh, many a business anchor decided this was fairly funny too.
Horsemeat. This is really poor. But then again, we asked the question in the office here, should people be so precious about what they eat? I know horses are more cuddly and cuter than cows (not for everybody), and you can ride them, but they keep themselves cleaner, and they are essentially seen as pets and working animals, so you can't eat them. Personally I don't eat cow, so I can't exactly say, one should eat this or that. But check this out: Horse meat. But you can't sell one thing as another Paul said, that is problematic. I doubt whether horse meat is bad for one's health though, as livestock they are just not great at converting one energy into another. Phew, I have my flak jacket on already, but my two main points are in a world with fewer resources, should we be less precious about what we eat and two, what fines should be imposed on the sellers of the meat that they thought was beef? You can't lie like that.
I figured to myself that I am never going to see the Angel Falls in the Canaima park in Venezuela, unless I want to watch the movie "Up" again. But this is the very reason that I do not like government interference in the economy, this FT article: Venezuelan devaluation sparks panic. The core of the story is on how multi-national companies and ordinary Venezuelans lose in all of this. Their Dollar purchasing power plunges. But the government wins. And seeing that 94 percent of exports is oil, as the story points out, that is all that the socialist government care about. Talking about who is nuts and who is not, here is the best example.
I was gutted when I read this news: Goldman Sachs Asset Management Chairman Jim O'Neill to Retire. That was the middle of the last week. I could not even bring myself to write about it until now. But, as was discussed in the office, having been a partner at the company for nearly two decades, he must be just OK as far as money is concerned. What next? Sports administration (big Man U fan), politics or central banking? We will have to wait and see, I certainly do not think he will fade into the background.
Jozi, Jozi 26o 12' 16" S, 28o 2' 44" E Stocks closed out the last trading day of the Chinese lunar calendar with another record here. Thanks, the year of the dragon was good, but enter the snake. I mean exit the dragon. Oh well, you Bruce Lee fans will forgive me. The Chinese trade data on Friday was enough to push resource stocks across the board higher, a percent and a bit, but as I pointed out to a journalist friend of mine, those stocks had done poorly and actually underperformed the market over the last decade. Listen in here, Gold Fields over the last decade is down 9 percent. Despite the heroic price of the product they mine, gold. And in Rand terms it has been like watching a train wreck. The GLD ticker, the Rand gold price since the middle of October 2004 is up nearly 450 percent. In the same time Gold Fields has only managed a 17.5 percent gain.
And Sibanye Gold, the company spun off today, what will "investors" think of that? If there is such a thing as a gold company investor. Well, time will tell. At the get go this morning, if you add the two up, they are greater than the price Friday. But of course the full proof will be over the longer term. You would be forgiven for thinking that this was a complete separation of South African and non South African assets, but if you recall when we wrote about it: Gold Fields announces that they are splitting their business. See that line in bold: "Will the new Gold Fields part get a higher valuation? Especially when you think that 62.5 percent of their reserves are still actually in South Africa." This is just to get a higher rating for Gold Fields, what is now the core of the group, whilst the "legacy" assets will trade separately. I think this is a test. You want to own these shares, then you must. But I wouldn't touch them.
Having said that though, I suspect that few people "own" gold company shares. I had a very quick look at the Freeport-McMoRan Copper & Gold company. Shares in issue, 1 billion. Daily volume 11.77 million. What? So in less than 10 sessions nearly 10 percent of the company swaps hands. The whole company shares in issue turns over in 85 days. Nearly three times the shares in issue trade each and every year. Nuts. But, the NASDAQ turns over nearly twice a year, should we be surprised? Trading crazies going to and fro. High blood pressures and all that.
Impala Platinum have released a trading update. It looks bad, and Mr. Market has also marked the stock down. In part because it was worse than consensus. This is of course for the six months to end December, the first half of their year. The going has been really, really tough. The company has pointed to rising costs and lower production as the main culprits, but have also taken a charge of 603 million Rands on long-term receivables. I wonder if this relates to any autocat or motor vehicle manufacturer that fell on hard times. I wish I knew. It could also be related to Zimplats I guess, but it sounds small. Not sure, I am sure that all will be revealed this Thursday. No chocolates and flowers for management.
I am starting to wonder what sort of dividend Impala are going to pay in the first half, perhaps a small one, but if the second half dividend was a mere 60 cents, and this last half was worse than the second half last year, it is making me wonder. In fact the 60 cent dividend paid in the second half of last year was the worst half yearly payment since their interim dividend in the year 2000. And to think that there was a special dividend paid back in 2006, adjusted for the split that was 687.5 cents per share. The dividend in 2008, for the full year, was 1475 cents. At current levels that would have meant a dividend yield of close to 9 percent. BUT, Mr. Market is expecting around 170 cents for the full year, those expectations might have to be ratcheted back somewhat. Still, that is an awful yield of just over one percent.
- Byron beats the streets. On Friday news hit the wire that the National Credit Regulator (NCR) lodged a complaint against African Bank for making reckless loans, predominantly in KwaZulu-Natal. The complaint states that Abil granted loans to at least 700 consumers who could not meet the instalment requirements and that the tribunal should impose a fine of R300 million.
This goes back to November 2011 when the bank found out three Abil employees who were colluding with clients in order to give those clients loans they wouldn't normally qualify for. The capital value of this fraudulent activity came to R15.5 mil or 0.01% of loans granted that period for the group. This activity which took place in the Dundee branch is what the NCR are specifically targeting.
Before reading any responses from African Bank it is immediately obvious that R300 million is completely excessive for the extent of the irresponsible loans. It is also clear that this was as a result of fraudulent activities against the organisation which there security system eventually picked up on. There was no intent on behalf of the bank to make these loans.
On the news the share price dropped 6% but as people started to see the facts behind the allegation the share price came back all the way to close flat. This is not the first time the NCR have hauled African Bank in front of the tribunal and it won't be the last.
Leon Kirkinis the African Bank CEO was on CNBC late Friday afternoon with his side of the story. Here is what he had to say. ABIL to Face R300mln Fine for Fraudulent Activity.
I understand that Abil are responsible for their employees at the end of the day but because they were in collusion with clients it is not as though the clients taking out the loan were oblivious to what was going on. These clients knew that they did not qualify. Well that is the way I see it. Regardless the amount is excessive and I am sure Abil will come out of this allegation intact.
The biggest issue I can see is that it is shining a dim light on an industry that is already in the dog box. People see the headlines that an unsecured lender has been irresponsible and immediately an even more negative picture is painted. Like I have mentioned before, the company has grown earnings but the share price has not followed suit because investors are scared of the industry. At this stage, when the company's image is tarnished, this can only bring negative publicity.
Crow's nest. Year of the snake, happy new year to all of you following the Chinese Lunar calendar. An estimated 200 million people are set to travel to their families to spend time with loved ones. That is the single biggest human migration on the planet, think of the noxious fumes as a result of that. This is amazing, check this out: Quotation of the day: Capitalism has lifted humanity out of the dirt and is greatest value creator in history of the world. Makes you think not so?
Sasha Naryshkine and Byron Lotter
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