MAKING CENTS
“Here’s what
happened
this week”
10 February 2017
Compiled by Tlotliso Phakisi and Jordan Weir
HIGHLIGHTS
The South African rand put on a respectable show the entire week amongst all the political volatility on the run up to the State of
the Nation address last night in Cape Town. Weakening to just over R13.50 against the US dollar last night, the rand now sits
comfortably below the R13.40 mark and looking to try test the R13.18 level again within the next week. Chinese reserves dropped
below the $3 trillion mark this week, hinting that the Chinese Central Bank may start taking steps towards controlling the outflow
of money from their Republic. The Reserve Bank of Australia left cash interest rates unchanged at 1.5%. Australian interest rates
have averaged 4.78% between 1990 and 2017 according to Trading Economics.com, making the current interest rate of 1.5% an
all-time historic low. President of the French National Front, Marine Le Pen, unveiled her election manifesto to the people of France
on Monday with a French referendum on the European Union being one of her many fighting focal points. Definitely worth a read.
CHART OF THE WEEK
Wall Street: Run by an Army of 23 Year Olds
Source: efinancialcareers
One would think that the average Wall Street bank consisted of an army of veterans who’d ‘lived and learned’ within
the financial industry collecting many a war story along the way. But one could, in fact, be wrong.
The question that Human Capital departments have more recently been grappling with is: Should we look at hiring
more expensive experienced people, or should we rather be employing less-expensive inexperienced ones?
There’s been a shift on Wall Street whereby banks are looking more favourably upon younger, driven and cheaper
resources in order to get the job done. Goldman Sachs is the frontrunner when it comes to adopting this progressive
angle of employee composition. Approximately 50% of their New York offices are made up of employees with no
more than six years of financial industry experience under their belt.
In essence, it all boils down to the culture they’d like to define their company by and, of course, the bottom line. A
younger employee composition tends to exude a progressive, driven, ‘get-the-job-done’ image, whereas an older
makeup could depict a less progressive, yet more stable and wise brand. Another major factor here is the primary
function and role that the banks operate in. Banks who thrive in the mergers and acquisitions field as well as the
trading fields may still have a few veterans running the show, whereas back office operations as well as general
customer service may be run by a younger composition. The world is slowly changing however.
On the flip side of the coin, the likes of UBS and Morgan Stanley have stuck to their roots and focussed on a more
experienced workforce. It’s no surprise that the majority of their firm’s employees have operated within the financial
industry for no less than 10 years.
It’s quite interesting to note that this mind set is the new norm. In 2017, if one were to walk onto Wall Street with
more than 15 years-worth of banking experience, the likes of Goldman Sachs, JP Morgan and Barclays would
actually recommend that one rather take a look at joining Citi Bank or UBS.
INDEX
JSE ALL SHARE
RESOURCES
(RESI 10)
FINANCIALS
(FINI 15)
INDUSTRIALS
(INDI 25)
INDEX
VALUE
YTD
1 YEAR
3 YEAR
5 YEAR
CURRENT
PE
LT AVG. PE
(10YRS)
CAPE
(7YRS)
51904
1.7%
7.4%
14.5%
51.5%
23.1
15.0
17.9
33829
3.8%
31.7%
-37.0%
-39.2%
27.8
15.5
12.1
14751
-2.9%
4.7%
23.2%
60.3%
12.6
13.0
15.0
66335
2.7%
-1.6%
27.2%
119.4%
30.0
16.9
29.0
Performance period: 03/02/2017 – 09/02/2017
TOP 10 GAINERS – ACROSS THE JSE
COMPANY/STOCK
TOP 10 LOSERS – ACROSS THE JSE
%CHANGE
COMPANY/STOCK
%CHANGE
1
MPACT
11.5%
1
ASSORE
-8.4%
2
CASHBUILD
11.3%
2
BRIMSTONE
-6.7%
3
ALLIED ELECTRIC - A
9.7%
3
SPAR
-5.2%
4
ROYAL BAFOKENG
8.7%
4
MTN GROUP
-4.8%
5
CAPITAL & COUNTIES
7.8%
5
AFRICAN RAINBOW
MINERALS
-4.7%
6
MEDICLINIC
7.0%
6
HOLDSPORT
-4.7%
7
PAN AFRICAN RESOURCES
6.8%
7
SHOPRITE
-4.4%
8
METAIR
6.4%
8
WBHO
-4.0%
9
IMPALA PLATINUM
6.2%
9
BRAIT
-3.9%
10
HARMONY GOLD
5.8%
10
BHP BILLITON
-3.8%
QUOTE OF THE WEEK
"Don’t judge each day by the harvest you reap but by the seeds that you plant."
~ Robert Louis Stevenson
DID YOU KNOW?
Mid-Oceanic Ridge is the longest mountain range in the world and quite amazingly, it is all under water. This chain
of mountains runs through the centre of the Atlantic Ocean and spans into the Indian and Pacific Oceans. The
range runs more than 56,000 kilometres long, has higher peaks than the Swiss Alps and it also comprises 23
percent of the Earth’s total surface.
(http://www.motherearthnews.com/nature-and-environment/nature/fun-surprising-facts-about-the-oceans)
WEEKLY HIGHLIGHTS
Friday, 3rd
Unemployment Rate (January) | United States
US unemployment rate rose slightly to 4.8% in January which was one-tenth of a percentage point higher than
December, when it registered 4.7%. It was also marginally above market expectations of a steady 4.7%.
Monday, 6th
GDP Growth YoY (Q4) | Indonesia
Indonesia’s economy expanded 4.94% year-on-year in the fourth quarter of 2016 compared to a 5.01% growth
in the previous quarter while the market expected a 5.07% expansion.
Tuesday, 7th
Consumer Confidence (Q1) | Switzerland
The Swiss consumer confidence rose to -3 in the first quarter of 2017, up from -13 in the previous three months
and well ahead of market expectations of -11. This represents the highest reading since the September quarter
2014.
Wednesday, 8th
Interest Rate Decision | India
The Reserve Bank of India unexpectedly elected to leave the interest rate steady for the second time despite
a slowdown in the economy. The RBI kept the repurchase rate at 6.25% which was the lowest level since
September 2010 while the market expected a 25bps cut.
Thursday, 9
th
Balance of Trade (December) | Germany
A new record high surplus of EUR 252.9 billion was posted by Germany for December 2016, surpassing the
previous high of EUR 244.3 billion in 2015 as exports rose more than imports. Exports climbed 1.2% to EUR
1.2 trillion in 2016 while imports rose 0.6% to EUR 954.6 billion.
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