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BW, SB release strong results

Mon, 18 August 2014 17:27
by Mr. T
Business



Investing is not for Faint Hearted………
Investing is an inherently risky business with lots of uncertainties. At any given moment, the bullets can fly from any direction, and at a bare minimum, the investor hopes to emerge unscathed from the battlefield. However, of course, the goal of investing is not just to break-even, but to earn a sizeable profit in the marketplace. In addition, for the past 5-½ years, there has been no better way to maximize gains, than sticking with the traditional “Buy-and-Hold” strategy. It requires a lot of patience, a lack of emotion, and a firmly held belief that the central bank allies will always bail you out of a difficult position.
Billionaire investor Warren Buffet reminds us that most investors are often blinded by the markets’ gyrations and the latest quotations, and foolishly listening to market pundits, rather than dollar cost averaging for the long-term. “Forming macro opinions or listening to the market predictions of others is a waste of time,” Buffet says, and warns against “letting the irrational behaviour of other investors, make you behave irrationally as well.” Instead, “Ignore the chatter about markets, the economy, interest rates, price behaviour of stocks, etc., and don’t listen to pundits and, don’t consider acting upon their comments.”
Legions of analysts have tried to predict the future trends in the marketplace, by collecting whatever information is available, connecting the dots, and making deductions about the future. However, there are so many moving parts in the equation, such as P/E ratios, central bank intervention, geopolitical events, the macro outlook, corporate revenues and profits, the direction of interest rates, terrorism, droughts, bumper crops, and leveraged trading, etc.), which makes it very difficult to accurately predict the future. The only value of stock forecasters is to make fortune-tellers look good.
Instead, computer programs have replaced human analysts and traders, and the stock market is now mostly running on algorithmic auto-pilot. New developments, including high-frequency trading, a proliferation of exchange-traded funds and free information via bloggers and social media, are behind this seismic shift. Algorithms can analyse 150 different variables at any moment in time, and fire off trades in milliseconds based on complicated fundamental and technical models and front-run the average small investors, before the human eye can read company or government news releases. This kind of trading accounts for up to 70% of volume on some days with the full support of the exchanges.

Maize meal went down in the month of July and in the month of July fuel went down for the first time this year while beverage has been very depressed

However, there are very rare events that occur somewhere around the world, otherwise known as “Black Swan Events” that can befuddle financial science and the best designed computerized models. For example, heading into 2014, few traders could’ve predicted that the Kremlin would act to seize Crimea’s territorial waters along with the region itself, and that Moscow would deploy 20,000 to 45,000 troops along the eastern and southern borders of Ukraine, thus marking the start of the biggest confrontation between Moscow and the West since the Cold War, and triggering a round of economic sanctions with Europe and the US. No one could have predicted that Hamas will offend Israel and there will be Gaza issue. So forget analyst prediction for there are false prophets
 Inflation slows down to 5.6 % on the back of lower food costs, fuel, and non-alcoholic beverages
Maize meal went down in the month of July and in the month of July fuel went down for the first time this year while beverage has been very depressed. Year-on Year inflation for July landed 5.6% retreating from 6.1% in June. On a month-on-month basis, CPI stood at 0.2 percent from 0.3 percent in June.

Standard Bank Group Results out
Lawsuit for aluminium bonded in China, and valuation of R854million expected loss on Income statement
This year marks the departure of Standard Bank CEO  replaced by one of the seasoned chartered accountant Mr. Mungunda. Of late the bank has been have been busy correcting its perception in the market. I belive the buy in of the new MD is positive.  
For the six month ended 2014 Standard Bank released results for the whole group, Namibia entity included. Standard Bank Group has its head office in South Africa and controls banks in Kenya, Angola, Botswana, Cote d`Ivoire, DRC, Ethopia, Ghana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Nigeria, South Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. This means the bank has foot prints in 20 African countries.
The headline earnings increased by 2% to R8 bn. The Group had had a collateral in form of aluminium held in China bonded warehouse. Evidence with the bank is to the fact that the bank financed a series of commodity arrangement and this might have be impacted by fraudelent activities in respect to physical presence. The group was exposed to the tune of US$167 Million  which translet to about R1.1bn . Standard has initiated a legal action to this effect and has revalued their income with R854 Million against this exposure within the discontinued operation`s line in the income statement.
We will see how Namibian entity perfomed against the group and its impact on the NSX.

Bank windhoek Holding Limited-
For the first time Interest income grew over N$1 bn
 The bank is still showing steady growth. Since the time it was listed, Bank Windhoek Holding acquired Capricon Asset Management and Capricon Unit Trus for a combined N$193 Million.
Profit after tax jumbed 26.7% from last year figure. This is commendable when one looks at inflation figure of 5.6% year on year. Income which consist of net interest income attributable to the group grew to more than N$1 bn  mainly driven by growth in interest earning.
The group exceeded forecast figures  by 8%  through what the group management believe to be  as a result of good revenue, prudent expense management and effective credit management.