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Simon’s weekly wrap-up: A win for investors

Also, a look at investing in biological assets, hedging with gold, and Tsogo’s Seychelles resort sale.
Image: Supplied

The Financial Sector Conduct Authority has proposed a new rule for stockbrokers: best execution. This means that a broker has to find the best price for a client when buying a listed share. In other words, they can’t just trade on the JSE but will also have to integrate into the other local exchanges, most notable A2X, to ensure they get the client the best price when buying or selling. Kevin Brady, CEO at A2X, says its research shows this could save investors some R1 billion a year – equating to some 0.02% of total value traded locally. This may be a small saving in percentage terms, but importantly it’s still a saving that goes into investor pockets.

Tsogo Sun Hotels sold its iconic Maia Resort in the Seychelles for R465 million – an excellent price considering the previous year’s profit was only some R13 million. Speaking to CEO Marcel von Aulock, he commented that the sale had started ahead of the pandemic and that as a trophy asset the price was never really about returns, it was about the buyer wanting to own this amazing resort. The proceeds from the sale will go to paying down its dollar-denominated debt, which should now drop by over 30%, leaving the group with a much better-looking balance sheet even as occupancy levels remain at unprofitable 5% levels.

Agriculture is a small space in our local listed world, both in terms of the number of shares available to invest into and equally with most of these companies being small- to mid-caps. Graeme Korner of Korner Perspective says it’s a space that they like, and he helped us understand the sector as well as biological assets and their short-term impact on income statements.

Gold is having its day in the sun as it trades around $1 800 and just off the August 2011 highs. Stephán Engelbrecht from Anchor Capital has not been a long-term gold bull over the last few decades. But he has many compelling reasons to have some tactical gold exposure in a portfolio during a pandemic, with either direct gold miners at around 5% or gold exchange traded funds holding at some 10%.

Also:

Mia Kruger of Kruger International on the start of US earnings season, medical stocks and Sun International selling assets. Magda Wierzycka CEO Sygnia on the Sygnia Oxford Sciences Innovation Fund offering VC-type investing in an endowment structure. Omnia CEO Seelan Gobalsamy on managing a turn around.

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