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The mighty dollar

29 September 2014

September has been a rough month on local markets, and last week was particularly volatile with the rand losing further ground against major currencies. The JSE is on course for a monthly loss, led down by mining shares, retailers, and telecoms. The All bond index is also in negative territory, led down by losses on the longer end of the curve. Despite these losses, all local assets are still in solid positive territory year-to-date. Listed property in particular recovered from a poor start to the year to post good returns in the second and third quarters.

Sukuk: An asset class goes mainstream

25 September 2014

Islamic finance, particularly fixed income instruments known as Sukuk, has come of age and is now an integral component of the mainstream global financial system. A decade ago, the Sukuk market was valued at US$9.6 billion, issues were generally small in nature, and the market was concentrated amongst a handful of issuers; in 2013, the market topped US$269.4 billion, with an exponential growth in the number of large deals and increasing diversification of issuers.1 The Islamic finance industry is expected to continue growing at nearly 20% per year, and the pool of investors interested in Shariah-compliant securities is expected to rise along with it. And while Islamic investors are the natural buyers of Sukuk, the appeal of Sukuk now extends far beyond the Islamic world. Some estimates suggest that conventional investors may account for as much as 40% to 60% of any individual Sukuk offering.2,3

High equity valuations require sober analysis

23 September 2014

With the JSE All Share Index (ALSI) having reached its record high on 29 July 2014, before easing off slightly and enjoying a price/earnings ratio above 17.5 times, PPS Investments CEO Nick Battersby says that from this level it’s a sobering reality - given there have been few times in the last 20 years when the market has been at that level, that there appears to be little upside to this market.

Rate hikes still loom

22 September 2014

It was a busy week for central bank watchers. The US monetary policy body, the Federal Open Markets Committee (FOMC) reduced its monthly bond-buying programme by another $10 billion, and is set to completely end this programme by October. At that point its balance sheet will have increased to $4 trillion, reflecting the massive amount of bonds and mortgage-backed securities it bought in three rounds of quantitative easing (QE) since 2008. The FOMC’s statement reassured markets that interest rates will be kept low for a “considerable time” after the end of QE.

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The strongest deterrent against FSP compliance missteps is or should be:

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