Cannon Asset Managers: Making cents of SA’s trade balance

Compiled by Samantha Pauwels & Rynel Moodley

Highlights

South Africa’s trade balance improved dramatically from a revised R5.27bn deficit in November to a R6.8bn surplus in December. This improvement is largely due to the lower oil price and fuels optimism that the benefit may help narrow the current account deficit this year.

Kagiso purchasing managers index (PMI) rose four points to 54.2 last month, supported by a pick-up in business activity, new sales orders and seasonal factors. Exports of locally built cars shot up 84.4% last month, compared to January last year.

Eskom, the country’s electricity supplier, may very well limit the positive effect of lower oil prices as load shedding continues to cripple production in the country. It is expected to take more than 5 000MW out of service on planned maintenance, which will likely hurt local businesses.

Graph of the Week

Chinese Control

China’s rapid economic growth during the past 15 years significantly boosted the country’s commodity imports, whereby today, China dominates numerous commodity markets globally.

As of last year, the country accounted for about 66% of global iron ore trade, 64% of global soybean trade, and more than 50% of global copper ore trade.

 

Untitled

China accounts for about 11.8% of global oil consumption, far lower than its share of most other commodities. Also, in terms of per-capita use, China’s oil consumption is significantly lower than the world average. This is likely to increase in 2015, especially if prices remain close to current levels. As China’s growth slows from double-digit rates to 7.4% last year and 7% this year, we will see increasing divergences in Chinese commodity trade.

 

IndexIndex valueYTD1 year3 year5 yearCurrent

PE

LT Avg. PE (10yrs)CAPE (7yrs)
JSE All Share51,6893.9%19.8%65.8%131.9%17.615.017.9
Resources (Resi 10)43,8664.6%-14.6%-14.1%10.3%11.115.512.1
Financials (Fini 15)16,3524.5%46.0%104.0%177.6%15.813.015.0
Industrials (Indi 25)64,2573.1%29.2%131.3%256.5%23.216.929.0

 

Top 10 Gainers – across the JSETop 10 Losers – across the JSE
Company/Stock% Chg.Company/Stock% Chg.
1TRUSTCO GROUP25.51AQUARIUS PLATINUM-8.9
2HUDACO INDUSTRIES13.22BARCLAYS AFRICA GROUP-6.0
3LONMIN PLC11.93HOSPITALITY PROPERTY FUND-6.0
4IMPALA PLATINUM11.14FOUNTAINHEAD PROPERTY TRUST-5.7
5ASSORE10.75ACCELERATE PROPERTY FUND-5.3
6ANGLOGOLD ASHANTI10.16DELTA PROPERTY FUND-5.2
7FORTRESS INCOME FUND9.87ADCORP HOLDINGS-4.9
8SASOL9.88OCTODEC INVESTMENTS-4.5
9NORTHAM PLATINUM9.89WOOLWORTHS-4.4
10ANGLO AMERICAN PLATINUM9.510RAUBEX GROUP-4.2

 

Performance Period: 30/01/2015 – 05/02/2015

Quote of the Week

“Inefficiencies – mispricing’s, misperceptions, mistakes that other people make – provide potential opportunities for superior performance. Exploiting them is, in fact, the only road to consistent outperformance. To distinguish yourself from the others, you need to be on the right side of those mistakes.”                                                                                                                                                                                                         ~ Howard Marks

Did you know?

Construction of South Africa’s most expensive apartment, a 2100m² penthouse situated in Sandton will start this year. The price of the apartment located in the Leonardo hotel development is priced at R180 million and surpasses Sol Kerzner’s One&Only Waterfront hotel’s record where an apartment sold for R110 million back in 2008. The Leonardo hotel will include 200 apartments, a triple-story penthouse and nine office floors belonging to Nedbank. The prices for the apartments will range from R45, 000/m² to R80, 000/m².

Source: Finweek

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