Archive for September, 2012

Fundies ‘hypocritical’, says AODP

Fundies 'hypocritical', says AODP

Some of Australia’s largest institutions have been labelled “hypocritical” by the Asset Owners Disclosure Project (AODP) after rejecting the proposed disclosure framework on climate change risk management.

In July this year, AODP presented proposals to global investor groups, including the Investor Group on Climate Change (IGCC) for Australia and New Zealand, to create an independent framework on how the asset owners manage climate risk.

IGCC, along with its European and USA counterparts, has rejected the proposal.

“How is it other than hypocritical for these groups to demand independent disclosure of the companies they invest in, but when it comes to their own transparency, to want to play by a different set of rules?” said AODP chairman and former leader of the Liberal Party, Dr John Hewson.

“These are the same groups that have been working with the successful and important Carbon Disclosure Project that seeks independently managed disclosure from companies on similar issues,” Hewson said.

Some of Australia’s largest institutions are members of IGCC, including asset management arms of the big four banks, AMP Capital Investors, Perpetual, a number of investment banks and industry superannuation funds.

They will now be lobbied by the AODP to individually adopt the disclosure framework.

“Pension and superannuation funds need to begin by being absolutely transparent about how they manage climate risk and to admit to the carbon intensity of their investments, and their plans to survive a possible forthcoming carbon crash,” Hewson said.

“They may have escaped scrutiny over the sub-prime crisis, but we have to ensure they don’t remain inactive over an even bigger systemic issue.”

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Thursday, September 27th, 2012 EN No Comments

Liontrust roars to asset success after Walker Crips boosts funds

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Thursday, September 27th, 2012 EN No Comments

Morgan Stanley ends Smith Barney

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City A.M. Bespoke

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Wednesday, September 26th, 2012 EN No Comments

Credit Suisse eyes shake-up

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Wednesday, September 26th, 2012 EN No Comments

CFTC claims Wis. man operated commodity Ponzi scheme

The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a civil enforcement action against Cedarburg, Wisconsin resident Eric N. Schmickle and his company, Q Wealth Management Inc. The CFTC complaint charges Schmickle and Q Wealth Management with operating a commodity futures Ponzi scheme. The complaint alleges that the defendants made misrepresentations to induce investment, misappropriated customer funds, and created and sent false account statements, invoices for commission, and tax forms.

Specifically, the complaint, filed on September 24, 2012, in the U.S. District Court, Eastern District of Wisconsin, alleges that from at least May 2009 through approximately April 2012, Schmickle operated his fraudulent scheme through Q Wealth Management, a commodity trading advisor, and Aquinas SF LLC, a commodity pool operator. Defendants allegedly solicited at least $5.3 million from at least 10 customers and, in their solicitations, made misrepresentations as to their trading performance. The defendants lost $3 million in trading, and Schmickle misappropriated approximately $1.7 million of customers’ funds for his own business and personal purposes and to pay purported returns to at least one customer with funds of other customers, according to the complaint.

To conceal the trading losses and the misappropriation, the defendants allegedly fabricated and sent to customers numerous false documents, such as fake account statements, invoices demanding commission payments for fake gains, and false Internal Revenue Service forms showing gains.

In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, trading and registration bans, and preliminary and permanent injunctions against further violations of the federal commodities laws, as charged.

On July 18, 2012, in a related criminal action brought by the U.S. Attorney’s Office, Eastern District of Wisconsin, Schmickle was charged by information with one count of wire fraud, and that same day Schmickle entered into a plea agreement admitting the fraud. The CFTC appreciates the assistance of the U.S. Attorney’s Office, Eastern District of Wisconsin, and the Federal Bureau of Investigation, Milwaukee Division.

CFTC Division of Enforcement staff members responsible for this case are David Chu, Mary Beth Spear, Ava Gould, Scott Williamson, Rosemary Hollinger, and Richard Wagner.

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Wednesday, September 26th, 2012 EN No Comments

CBN, AMCON send confusing signals on N275bn debts

Central Bank of Nigeria (CBN) and Asset Management Corporation of Nigeria (AMCON) on the N275 billion debts of Zenon oil, Seawolf and Geometric, whose directors were included on the list of those barred from accessing loan facilities from banks.
AMCON had last year regarded the loans by the three companies as ‘performing’, but took them over from the banks due to what it described as their possible ‘systemic risk’.

Some analysts told BusinessDay  yesterday that the inclusion last week , of the three companies and their directors, on the list of those barred from accessing loan facilities, as well as the tone of the circular from the Central Bank of Nigeria (CBN) which admitted that the loans were not being serviced, seems contradictory, and raises more concerns for the investing public.

To them, it was an indication that the previously issued loans were not performing, contrary to AMCON’s insistence that they were indeed performing.

However, Mustafa Chike-Obi, AMCON managing director, told Business Day at the weekend, that while Geometric’s loan was performing and therefore should not have been included on the list, a settlement agreement plan had been reached by both Zenon and AMCON, which would be presented to the board of the corporation for approval on Thursday. Chike-Obi further said discussions were going on between Seawolf and AMCON.

The CBN stated that the restriction would apply to individuals, organisations, companies, as well as principal shareholders and directors of companies where the outstanding value of loans purchased by AMCON amounted to N5 billion or above, as at the day of purchase, without regard to the actual amount paid by AMCON.

For Zenon Petroleum, owned by Femi Otedola, whose initial debt of N192.423 billion was priced by AMCON at N140.999 billion, the memo showed that “negotiations are ongoing and with fairly clear roadmap”.
Geometrics Engineering, owned by Barth Nnaji – N19.76 billion and Seawolf’s debt of N98.328 billion, which AMCON priced at N88.496 billion, were explained as “negotiations ongoing”.

CBN’s circular released on its website at the weekend, said:
“It has become necessary to stop debtors who failed to repay their loans to banks, and had these loans subsequently transferred to the Asset Management Corporation of Nigeria (AMCON) from further enjoying credit facilities from Deposit Money Banks (DMBs), until they fully repay agreed outstandings to AMCON.”

Mustafa Chike-Obi, AMCON managing director, had said last year, that the need to forestall any likelihood of further crisis in the banking industry, and the fact that large sums were involved, with the possibility of posing potential systemic risk, made  AMCON to compel the banks to purchase the loans of Zenon Petroleum of N150 billion, with about five banks involved; Seawolf Industries (First Bank), N100 billion and Geometric Power Industries (Diamond Bank) worth N25 billion, from the balance sheet of the banks.

According to analysts at Renaissance Capital (Rencap), which gave the analysis of the Zenon loans, “Zenith, UBA, GTBank, FCMB and Access banks have on average, about 16% of their capital and 6% of their gross loan books exposed to Zenon Petroleum Gas Limited. The cumulative exposure of these banks is $1.1bn and it is not a syndicated facility.”

The analysts are saying that the list has confirmed their fears that the reasons advanced for the takeover were not convincing enough, even after the banks flouted the single obligor limit, arguing that what the banks needed to do after venturing into such large exposures, was to syndicate the loans to other banks, thereby spreading the risks.

Besides, they argued that rather than forestalling the potential risks, the action was aimed at shielding some personalities who own the firms, and also protecting the banks.

They queried why AMCON was still insisting that the loans were performing, when some of the projects for which the facilities were gotten had not commenced operations, as to commence servicing the loans, and also the fact that issues surrounding some of the facilities were in the public domain and in some cases, subject to judicial interpretation.

Chike-Obi said about Zenon, “There is a settlement agreement at restructuring the loans that will be presented for the board’s approval on September 29, and if that is approved, then that will be settled.”

For Geometric, “There is a correction to be made. Geometric loan is performing and the name should not have been there.” Sea wolf, “We are discussing.”
Chike-Obi insisted that there was a possibility that loans that were performing before they were taken over by AMCON, could have gone bad by now. “Are you saying that there is no possibility that loans that were performing that time, could have gone bad by now?” he queried.

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Tuesday, September 25th, 2012 EN No Comments

Listeners’ questions (1): Hilton Tarrant (Moneyweb), Magnus Heystek (Brenthurst …

Listed property’s amazing run; should investors absolutely include property in their portfolios?


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HILTON TARRANT: Well, it’s seven minutes after six o’clock, joined in studio by Magnus Heystek of Brenthurst Wealth, Wayne McCurrie of Momentum Asset Management on his way in as we take your calls this evening on 011 684 2770. Any share or investment related questions you have we’ll put them to our panel of experts. Let’s start with a discussion, Magnus, listed property up 35% this year, it’s had an amazing run, it’s been a bull market for three, five years. We’ve had a lot of analysts coming out and being rather cautious about where listed property is right now, why has listed property run so much?

MAGNUS HEYSTEK: Well, good afternoon, Hilton, it’s been an asset class that has surprised many people, including top fund managers for many years now. I recall four, five years ago where very, very good fund managers like Allan Gray got up and said the bull market in listed property is over, we’re selling, we’re getting out. We had guys like Piet Viljoen, who’s well known on this station, saying get out of property and even the property guys, Marriott, Simon Pearse, Dr Pearse, three or four years ago said the bull market is over. Yet over the last three years your top funds have given you in excess of 90% return. The top three funds, it’s just a coincidence that it’s a Momentum fund of Wayne McCurrie, property up 90%. Investec Property Equity 85%, Stanlib Property Income, which has been a great performer over many years, 90%. In fact, I did a study yesterday for a talk I’m giving soon, that had you put in nine years ago in the Stanlib property fund you put in R1m and you left it, dividends reinvested, the amount you get back today is R9m. It’s been a phenomenal period for listed property. A lot of reasons, you had a lot of…the economy was good until about 2007, 2008, there was a big dip in 2008 like everything else but then the yields started rising again and also there’s a correlation between the yields on listed property and South African corporate bonds, and the market watchers they’re not sure whether listed property should be treated as an equity or as a bond. So it’s a kind of a hybrid thing and as the bond yields starting coming down this year after South Africa was included in the Citi World Global Bond Index because the bond yields are dropping the yield that you could get on listed property looked more and more attractive and that’s why it got 35% to 40% this year. It’s been a phenomenal, phenomenal run in the market but you had to be in the good preforming funds. I mentioned Marriott just now, their stance on the market has been negative for a while, over the same three year period in the Marriot Property Equity Fund you only got 34% and with Stanlib, for instance, you got 90%. So you had to be in the right fund, the one who had the conviction of we’re going to make money in the property sector. The danger is that it’s been overdone, now the retail investor will look at the three year returns, the one year returns and make the mistake we all make, we project forward. If I had put my money in I would have got 35%, now I’m going to try it again. The fund managers say fair value, maybe a little bit overpriced but very careful of looking forward. But property has shown to be a very good building block of an investment portfolio, especially for people at or close to retirement who start looking at predictable returns that you can get as you start drawing down on your capital to survive. It’s been phenomenal; your income growth on property has been around about 13%, 14% per annum. So if you take inflation at 6%, your disposable income has increased over time and that’s what you look for in an investment when you start retiring. So yes, it’s been a very nice instrument in things like living annuities, preservation funds and so forth, and even a discretionary portfolio. But be careful, don’t go overboard, the good prudent sense would be to start taking some profit if you were lucky enough to be in property, take some of your profits, put it under the table, under the bed, put it somewhere else, maybe global equities, global property has also done very well – I should have added that – it was a global phenomenon where the property funds globally have been phenomenal performers. So if you’ve been in global property you’ve done extremely well and yet a lot of fund managers are totally, totally underweight listed property and, in fact, one or two outright said to us in the last week or three we’re totally out of property, we don’t see the value in property. Well, we’ve heard that before, we’re just saying be very careful looking forward.

HILTON TARRANT: I know Piet Viljoen and Regarding Capital Management have started looking a lot closer at property now in recent months versus that call that they made a couple of years ago.

MAGNUS HEYSTEK: Yes, it was perhaps unfortunate they said this is not the way we invest money, this is our style and one should respect them for that. It worries me when a fund manager starts changing his tune because the markets have changed. It’s like Warren Buffet saying I’m value style one year, next year I’m growth, the third year I’m momentum, that’s not what you want from your fund manager, you want a predictable investment approach.  

HILTON TARRANT: Magnus, you mentioned property as a building block of a portfolio, should investors who are constructing portfolios for themselves absolutely include property?

MAGNUS HEYSTEK: Yes, I believe so, I’ve had property in my own portfolio and for my clients for many, many years going over the benchmarks, at some point up to 15% and that’s been a tremendous kicker for performance. So if you got a market that went up, say, 15% the equity market and you had 15% in property your return went up to about 17%, 18%. So that 2% or 3% might not sound like a lot of money but compounded over time it’s been a very smart move. It can work against you when you’re over a benchmark but I still like property, it’s driven by retail growth in South Africa. You look at the strikes that we spoke [about] off air and you say, well, all the money, the wage increases it goes back into the market. There’s a school of thought saying, well, I want to buy the bricks and mortar that will receive all that cash coming back, which will be spent at the shopping centres.

HILTON TARRANT: Taking your calls on 011 684 2770. Continuing our chat about listed property, interesting to have seen in the past I think it was 12 or 18 months where we’ve seen a number of funds coming to the market or a number of companies coming to the market specifically focused on semi-urban property, properties, shopping centres, government buildings, etc, etc in areas outside of the metros.

MAGNUS HEYSTEK: Well, I think all the big prime shopping centres have all been taken up, they’ve all been bought by the big funds. If you look at the Sandton City’s and the East Gate’s and the Canal Walk’s down in Cape Town, Waterfront, all being bought. So what do you start looking at? You start looking at the outlying shopping centres, perhaps need a bit of paint and a bit of a revamp and on the basis that there will be some growth coming from consumers, especially in black markets where there’s a lot of disposable income as a result of wage increases, government support, social grants and the like. I’ve seen some presentations by Keillen Ndlovu who runs the Property Income Fund for Stanlib where he’ll show you the most profitable Shoprite in the country, it’s somewhere in Ekurhuleni, where the percentage of feet coming through the door is just enormous. So yes, smarter fund managers have started moving in search of better yields, they’ve gone to the non-traditional areas and they’ve found some very, very good value there.

HILTON TARRANT: Let’s take our first call for the evening, a regular caller to the programme, Val in Northcliff go ahead.

VAL: Good evening, can you just please define what you mean by listed property, is that individual companies? Is it a unit trust operation? What actually do you mean?  

HILTON TARRANT: Thanks a lot, Val. That call coming through on 011 684 2770, keep those calls coming in. A very good question there from Val, specific companies, exchange traded fund, unit trust?

MAGNUS HEYSTEK: Well, I prefer the collective investment, the unit trust route, where the fund manager will go and buy and do the research and put it on a portfolio. But they go and buy their stock on the Johannesburg Stock Exchange. Buying into…you can, of course, go and buy your own stock on the markets, it’s a little bit cheaper but you can then, of course, buy a bummer like we’ve seen the Quantum Property Fund, which has been an absolute dog, hospitality, you lost a great deal of money if you bought the wrong stock. So I take the view that I’m not the smartest guy so I go and buy the best brains I can and they must do the selection, it’s easy for me to track it. So I prefer the fund route, you can also buy the ETFs that are listed now or a combination of the above.

HILTON TARRANT: Magnus, you also mentioned something earlier when we were talking about this performance and if you take it back three years and you use that as the growth and you try and project forward, a lot of people try and do that with stocks and sectors as well. There’s obviously a big danger in trying to do that, in trying to say, well, X stock has gone up 40% in the past two years, there’s a very good chance we can try and repeat it.

MAGNUS HEYSTEK: That’s very dangerous, as you point out, you might just get in at the end of the cycle and off the cuff I can think of like, for instance, five, six years ago and I clearly remember front pages of business magazines talking about the AltX that had a fantastic year or two and the market was up 66% and they’re all punting the AltX. Now if you put a lot of money into the AltX based on that kind of coverage and that kind of looking back at the returns you’ve lost about 70% of your capital. You’ve got to be a bit smarter than that in the investment markets.

HILTON TARRANT: Taking your calls on 011 684 2770, your share and investment related questions. We’ll be back with some of those questions after this.


The SAfm Market Update with Moneyweb is broadcast on SAfm 104-107fm, weekdays at 18:00 to 18:30.



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Tuesday, September 25th, 2012 EN No Comments

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Anglo Platinum threatens legal action; Apple sells 5m iPhone in three days.


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HILTON TARRANT: This SAFM Market Update with Moneyweb is brought to you by Discovery Insure. Six o’clock, good evening, Hilton Tarrant with you on this Heritage Day. Coming up in the next half hour on the Market Update we’re joined by Wayne McCurrie of Momentum Asset Management and Magnus Heystek of Brenthurst Wealth taking your share and investment related questions on 011 684 2770. We’ll try our best to answer those between now and six thirty, first up here’s the news.

It’s five minutes after six o’clock in the business news tonight the world’s largest platinum producer, Anglo Platinum, today threatened to take legal action against striking workers that refuse to return to work, Amplats’ Mpumi Mnisi  said that mine management was disappointed by the situation by the poor turnout of miners showing up for work. [She] said “Anglo American Platinum continues to be disappointed with the low turnout. We encourage our workers to return to work and we require them to do so by no later than the night shift on Monday,” Mnisi is quoted as saying. Earlier Amplats workers braved the cold to meet at the Sondela Sports Ground to discuss their plans ahead of another round of wage talks with mine management tomorrow.Amplats workers went on strike two weeks ago demanding a salary increase of R17 000 but have backtracked to an increase to take their salaries to R12 500.

South Africa focused Petra Diamonds said it expected production in the year ending next June to grow by about 30%, helped by contribution from its Finsch and Williamson mines and higher output at its Kimberley underground mines. The diamond miner said profit from mining activity rose by 35% to US$103m in the year ended June 30. Production nearly doubled mainly due to the contribution from Finsch, which is South Africa’s second biggest diamond mine. Petra, which has interests in seven operating mines in South Africa and one in Tanzania, expects to produce 2.85m carats in fiscal 2013.

Apple sold out of its latest smartphone with more than 5m iPhone 5 sales in the three days after it hit stores, the company said today. That number blasted past sales of the iPhone 4 when Apple introduced it in October 2011 it sold more than 4m units in its first weekend. With the iPhone 5 Apple said that while the majority of pre-orders have been shipped to customers, many are scheduled to go out in October. On Friday Apple fans lined up around the world to get their hands on the new smartphone, which is thinner and lighter and has a bigger screen. Shares of Apple down more than 2% in premarket trading.

Well, European markets negative today, US markets slightly lower this afternoon at the start of the US trading day. The rand is at 8.27 against the US dollar, 13.35 to the pound, 10.67 to the euro, gold is at $1763.00 an ounce, a barrel of Brent is at $110.00.


The SAfm Market Update with Moneyweb is broadcast on SAfm 104-107fm, weekdays at 18:00 to 18:30.



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Tuesday, September 25th, 2012 EN No Comments

Wealth management: How to pass it on safely

September 24, 2012 12:14 am

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Sunday, September 23rd, 2012 EN No Comments

Philanthropy: The new breed of rich sees giving as a priority

September 24, 2012 12:14 am

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Sunday, September 23rd, 2012 EN No Comments