Automotive deal, Sharemax, part sales of shares, Old Mutual, Investec

ALEC HOGG: A question that was sent through to Gaylyn: "If you have shares in a private company - say, a bank - and you lose your share certificate and you are allowed to apply for a new one, and you get the new one, but then you find the old one, which one takes precedence? The company says you should return the old one."

DAVID SHAPIRO: Ja. The new one, because they would have cancelled the old one. And also you would have paid an indemnity. So I think just destroy the old one.

ALEC HOGG: They say send it back.

DAVID SHAPIRO: Just put a "Cancel" on it - scratch it out.

ALEC HOGG: Like a cheque. You know, David, years ago we were robbed at Moneyweb. Must be seven or eight years ago. And in my office I had an old cheque book, very old cheque book from a bank that I hadn't banked at for years. I hadn't put "cancelled" on it. And these buggers took that cheque and they actually almost cashed it, but it was a very smart teller at Nedbank, I still remember it well, who called me - somehow they found my number - and said "Do you know this fellow who is in the bank?" I said no, and they arrested him there on the spot. But it was probably only a kind of 50% chance to have an opportunity to catch someone like that.

DAVID SHAPIRO: There's an interesting story on those share certificates, because what often happens, Alec, is that a lot of people think they've lost their old certificate, they apply for new ones, get their new ones and then about five, six years after they sell the shares and discover these ones, and they try and sell them again - very disappointed to find they've been cancelled. So it's a regular story in our lives.

ALEC HOGG: Zig in Randburg's on the line now.

ZIG: About this special deal that the automobile industry has - they are not subject to the normal strictures and disciplines of foreign investment. Can you explain exactly what their deal is?

ALEC HOGG: Is this the automobile industry in South Africa, or America?

ZIG: South African automobile industry. I gathered on your programme and elsewhere - and they are perhaps the single biggest foreign investor that we have, the big money that they put into expansions all the time - there are special deals that are involved.

ALEC HOGG: Good, we'll try and address that one. Let's go to Peter now. Good evening, Peter.

PETER: Hi Alec, Hi David. If there's a commitment toward investment in property - not actually purchasing it - and you have R100 000, would you David, invest in Sharemax?

ALEC HOGG: Sharemax? Ai, Caramba! Don't ask me. My good fried Deon Basson went to the grave over Sharemax. Unfortunately he's not alive, because I think if he were alive I don't think they'd be operating as aggressively as they are. We'll answer your question, Peter. Let's go to Sheila.

SHEILA: I'm Sheila from Vanderbijlpark. I have a block of shares, a few thousand, and I'm wondering if I can sell part of them, or if I have to sell them all at once.

ALEC HOGG: That's a good question. I'm sure many others have got the same query. Let's go to George in Gordons Bay - hello, George.

GEORGE: Hi there, Alec. What do you think of Old Mutual shares?

ALEC HOGG: And then Chloe next.

CHLOE: Hi there Alec. I just want to ask about Investec. I've got a lot of plc, and I want to know if I must take ... Can I do anything?

ALEC HOGG: That's it for the questions. Let's start with Zig - special deals with the automotive industry - MIDP.

DAVID SHAPIRO: Ja, there was a deal to try and encourage and develop the automobile industry. I haven't got full details here, and I don't want to labour the question. But there were special deals that were rented. I think that the fact that they are here helped create employment. It's a big export industry for ourselves, etc, and I think these deals were entered into a long time ago. I can't remember the details that well.

ALEC HOGG: A lot more than that. Zig, it's not something that we can discuss in the very sort time, but where the concern would come for anybody who believes in free markets is that you have an industry that we are not really strong in, which has been subsidised over many, many years and today we still pay double the price for our cars as South Africans than we should be paying because we are subsidising the motor industry. That's the bottom line. But there is a reluctance by the politicians to unwind all these subsidies. Maybe in future they'll realise that we can't actually afford it. It's all very well that we are earning foreign exchange, but there is a major cost to the taxpayer on that one.
    Sharemax, David?

DAVID SHAPIRO: Ugh. I don't even want to go further.

ALEC HOGG: No thank you. Then on to Sheila's question?

DAVID SHAPIRO: Ja, of course you can sell part of your shares.

ALEC HOGG: So you've got 1 000 shares, easy to sell those.

DAVID SHAPIRO: First of all, just to tell Sheila, you have to de-materialise your shares. In other words, if she's got a block certificate, if she does want to sell part of it, she must send them in. What'll happen is they'll probably dematerialise the whole lot - it's in other words like converting cash into an electronic balance, and you can sell one share, you can sell two shares. You don't have to sell hundreds, as we used to in the past. So of course you can sell part of the shares.

ALEC HOGG: Old Mutual?

DAVID SHAPIRO: Ermm, it's difficult. I think Old Mutual will start to pick up as the global economy starts to pick up, and there's still a lot of obstacles ahead of that company. So it's in the financial services industry, which is probably still under pressure.

ALEC HOGG: It's not really in financial services - it's got a corporate bond portfolio in the US.

DAVID SHAPIRO: Well, ja.

ALEC HOGG: And if that goes south...

DAVID SHAPIRO: It's starting to look better for Old Mutual, but that's already in the share price. That share price has come from R4 to R14, so I think from now on we are going to watch the profit and watch dividends. We don't know when they are going to start paying dividends again - maybe this December.

ALEC HOGG: George, for me it's still very high risk. Unfortunately you've got - it's almost like British Airways, which has got huge pensions liability and they are trying to run an airline on the side. Old Mutual's got his huge outstanding exposure to US corporate bonds, and they are trying to run a financial services business on the side.
   And finally, David, the question from Chloe about Investec plc.

DAVID SHAPIRO: No, stay with Investec. I think it's a well-run bank, it was caught on the wrong side of the recession, of the downturn in financial services, in banks, unfortunately. But a well-managed company, very well capitalised. I own them. I would stay with them.

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