Sharenet Views - August 2017

Dear Readers

Welcome to the August issue of the Views newsletter.

While there haven’t been any major news headlines to rock the markets this month, resource shares seem to be going from strength to strength. In the following article by Capital International and Sharenet, we provide a brief health check of the three main components of the resource sector, namely energy, metals and mining, and agriculture. In addition, you’ll find companies to watch who are positioned to do well amidst current trends.

The State Of The Global Resources Sector In Q2:2017

Now that we’re firmly in the middle of the year, it’s also a good time to review the performance of our local equity market. Seed Investments offers an interesting look at the returns produced by shares and indices on the JSE for the past six months - and also beyond that, up to the past three years. The author notes that the returns have so far disappointed investors, in light of the level of risk, and the sideways price movement has not been accompanied by improving valuations. Investments remain expensive, for the moment.

Investment Returns From Local Shares

If traditional global resources or the local equity market are not attractive to you, why not consider investing in something completely different - like Bitcoin? Dwaine van Vuuren, our esteemed stock-market researcher and full-time trader, has been fairly heavily invested in Bitcoin and Bitcoin mining since 2015. He has written a number of posts on the subject (see our Crypto page) and his recent post below is proving equally popular. In it, Dwaine identifies an unusual characteristic amongst Bitcoin investors - their ability to hold fast and stay invested despite considerable volatility in the market. Find out more below:

Bitcoin Brings Out Better Investor Behaviour

Wishing you good reading and a successful month on the markets,

Natalie Mayer

Editor

[email protected]

Market Price (USD)

$4,126 USD

Average USD market price across major bitcoin exchanges.

Average Block Size

0.98 Megabytes

The 24 hour average block size in MB.

Transactions per Day

263,310 Transactions

The aggregate number of confirmed Bitcoin transactions in the past 24 hours.

Source: Blockchain.info/charts

Bond markets can predict stock market moves

Omri Even-Tov of the University of California at Berkeley, studied the bond returns that followed 19,518 quarterly earnings announcements of 770 firms from 2005 to 2014.

The assistant professor calculated a given firm’s bond price reaction to earnings from the value-weighted average of its individual bond returns and found a positive correlation with buy-and-hold stock returns 60 days after an earnings announcement, above what could be expected from the immediate earnings surprise. 

In other words, when a company's bond price moves in the aftermath of an earnings report, for example, its share price will eventually follow suit as stock investors take longer to decipher the complex financial statements.

So stock-market investors seeking an edge should keep their eyes on junk-bond prices following earnings reports.

Source: Bloomberg.com

Q: What is the difference between a pension and an annuity?

A: In short, provident funds are so-called workplace funds. The purpose of a provident fund is to pay you a cash lump sum at retirement, you can also convert it to annuity if you wish, that will pay you a regular income for the rest of your life.

A retirement annuity is a retirement fund for individuals who are self-employed, or whose employer does not offer a work place fund. Unlike a provident fund, you cannot cash in a retirement annuity before retirement (minimum age 55).

Need advice or guidance on which fund would be best suited for your needs? Contact our Wealth Planner, Rikus Odendaal, for a free consultation.

Got an investing question? Ask our friendly Financial Services Advisor

Email: [email protected]