Jozi, Jozi. Lots of rain. Low volumes last week. But that is usual for that time of the year. A good (if you are a bull) rally for global equity markets through December, that I guess might have caught a few folks off guard. In fact I am pretty sure that it did catch many off guard. I guess in the light of very little poor news, stock investors were ready to buy into what still looks like good value. Stick that in inverted commas if you must.
Oh yes, and I am not too big on this celebration, but Happy New Year to all. The Gregorian calendar is only 428 years old. There are lots of older calendars. The Chinese calendar for instance is over four and a half thousand years old. And because a lot of people use this in Asia (where 60 percent of the globe lives) I guess we should pay attention to that to. But, history is written by the victors and the Western World held most sway for much of the last five hundred years.
The best thing about this time of the year (other than having spent lots of time with family) is that one can use it as a time of reflection. Did I do the right job, have I done well enough, those sorts of questions that you should be asking. However, the one thing that always amazes me is the scoreboard aspect of our industry. And the use of a new calendar year to scrub this or that as it suits.
For me the same stock picks that we had last year is what we will have at the start of this year. Because, like our New Year’s message suggested, we are sticking with the same bunch of recommended stocks. BHP Billiton (JSE:BIL) did not change their strategy between Christmas and New Year. That is all. So if anyone asks me, what are my stock picks for the calendar year 2011, the answer will be pretty much the same as last year.
BUT, having said all of that, it is still *nice* to reflect on the gains made in specific sectors last year, and why one should be diversified. I can remember years gone by where all that was required was a little patience when holding some quality stocks. The problem is that when other sectors are flying and the stock that you are holding in one sector or another does “badly” then often the investor makes the mistake of selling. Provided you think that the stock/sector is still a quality one, with all the “right” credentials, stay the course. But I don’t need to tell you that, you knew it already, not so.
So, for the record, the Jozi All Share gained 16.1 percent last year, the main winners were retail, up nearly 56 percent. All majors ended in the green, the worst performer was the construction sector, which was up a paltry half a percent. The heaviest weighted index, the resource sector, added an underperforming 10.2 percent for the year. Banks did better than that, up 11 and three quarters of a percent. Industrials had a cracking year, up nearly 24 percent.
All in all, not bad for a year that had many distractions, Euro zone crisis after crisis, lurching from Greece to Ireland to Portugal to riots on the streets as austerity measures saw major pushback from citizens. Chinese inflationary concerns. US changes in government as citizens themselves lost the faith somewhat. Hey, I guess you could say awesome all things considered.
Ye olde world. Out with the Kroon and in with the Euro. Estonia enters the EU, as at Saturday morning. See that, nobody leaving. Now, if PIMCO and their prognosis of the EU debt “crisis” are right then I guess that an entry at this stage looks a little laughable, but these EU membership form application to entry take a long time. Wiki suggests that the entry to the Euro zone might have been earlier, but inflation out of the guidelines (adhered to when the going was good) was too high and as such there was a delay.
For much of the last decade GDP in Estonia grew at a staggering 7 percent and above, topping 10 percent in both 2000 and 2006, but the great pity period from 2008 through 2009 saw the economy contract sharply. But the time seems right for this small country, which numbers less than one and a quarter million people and will make up less than a quarter of a percent of EU GDP. And perhaps lay to rest the notions that the Euro is finished or floundering or whatever. I hate that, “whatever”…….
Remember that song, take a holiday in Spain by the fellows from Counting Crows? One of my favourite bands, one of my favourite songs, nice and peaceful. Yes. Counting crows. Well, Spain in focus this morning as that country adopts what look like (and are being reported as such) as the toughest smoking laws in Europe.
No more smoking in bars, restaurants, public parks, school playgrounds (I thought that happened behind the tuck shop) and basically in all public places. So what you say, smokers will continue to smoke at home. But again, if the product you sell is being restricted, is that a good or bad thing? Bad of course, imagine being told where you can drink coffee or your favourite soda. We continue to think that long term, the tobacco industry is a bad investment. That is our thesis.
New York, New York. What is Facebook worth? Book of Faces. The place where you can be friends with people who you were never even friends at school or in the real world. It is a place I guess where you can have “soft friends”. You don’t have to ever see them or ask them how they are doing. That said, over five hundred million people are users, active or not, I don’t know. The latest investor however to stick a valuation on the business is none other than the Vampire Squid itself, Goldman Sachs.
The NY Times DealBook reports: Goldman Invests in Facebook at $50 Billion Valuation. 50 Billion? Smokes!!!!And according to the piece, DST (which Naspers (JSE:NPN) own around 30 percent of) have seen their Facebook stake go up fivefold. Don’t get sucker punched into the Mail.ru (DST) listing in London versus the Mail.ru founders personal holding. They (Milner and Finger)
Austan Goolsbee, part time comedian and full time Obama administration staffer has sort of set the cat amongst the pigeons. I think. Or perhaps it is just basic politicking of sorts. In a Sunday interview with ABC he warned that if the Republican new found impetus saw themselves voting against a debt ceiling for America, then there could be a default of sorts.
Check this out: “You know, the debt ceiling is not?is not something to toy with. That’s the…the…if we hit the debt ceiling, that’s the…essentially defaulting on our obligations, which is totally unprecedented in American history. The impact on the economy would be catastrophic. I mean, that would be a worse financial economic crisis than anything we saw in 2008.”
That seems like politicking to me. Right leaning blogs have been blasting him. If you want to read more, check it out: Transcript: White House Adviser Austan Goolsbee. I guess a lot of this deficit reduction talk will die down if the US economy continues to recover and recovers quicker (more clues Friday with the big jobs report) then I guess the Washington effect might be nullified. But, as long as the economy stutters and the debt monkey remains on their backs, the questions will be asked of the current administration. Even if they say that it is not “their debt”. Nope. It is everyones, even if China has a little less of it.
Silk road, riced and diced. The first bits of real data for the year have hit the screens this morning. Chinese PMI disappointed, coming in at 53.9, below expectations that were supposed to be around 55 and a bit. The general reaction however is a Teflon one, hey, say folks, this is not so bad, this means that the efforts by Beijing central are working. All the tightening of the reserve ratios and more recently over a week ago (the Gregorian calendar “boxing” day) the Chinese authorities raised the lending rates. Do it quietly, while the rest of the world is not paying attention.
But I guess all the efforts of the authorities might be unwelcome, at least they are in a position to do it. And lest you forget rising wages in China might be bad for the inflation outlook, but from an internal consumption point of view, that is a good thing. And remember higher rates for a bunch of fierce savers isn’t all bad either.
Singapore growth numbers released this morning saw the fastest ever rate of growth. Granted that the year prior fell off a cliff and a strong manufacturing rebound helped the best year since independence, according to Bloomberg. That is almost 50 years worth of independence, 46 this year. And according to the same news network, the second fastest growing economy in the world, after Qatar.
And perhaps more astonishing than that amazing Singapore growth is that the South Korean equity index, the Kospi closed at a record high this morning. Huh? Are they not basically at war with their neighbour? Yip. AND, still the cheapest market in the region by quite some margin. So there goes, South Korea markets at an all time high. As for their neighbours, at an all time low and high. Because capital markets don’t exist. What then for the credit rating of North Korea. Standard and Poors? Moody’s? Or is it a waste of time, because there are no stats of any sort. Yes.
Commodities corner The copper price continues to post high highs, test new records, this is the third straight session of record highs. The old Dr. Copper is supposed to tell you about the state of the world slash US economy. 4.41 US Dollars per pound. Wow. The gold price is last at 1418 Dollars per fine ounce. The Platinum price is up a touch at 1773 Dollars per fine ounce. The oil price is up a touch at 91.33 Dollars per barrel. The Rand has been power over the last few weeks, 6.63 to the US Dollar, 10.28 to the Pound Sterling and 8.82 to the Euro.
Up periscope and something weird. Markets were closed out East in both China and Japan. So much for being productive. And the something wierd part, is it right to presume that this is the first trading day of the new decade? Surely not, that was reserved for 2010. Not sure. Futures are better in the US, a decent start to the year.