October 2005 by gyvwpsjkko

VIEWS: 4 PAGES: 4

									                                                                                                                           October 2005

                                                      equities appear better positioned for an oil
         Market Overview                              shock and we remain comfortable with our
                                                                                                                   Contents
                                                      underweight US view.
                                                                                                                      Market Overview
The oil impact
                                                      From a South African point of view we have a                    Wealth Column
Driven primarily by demand, an average oil            partial buffer against high oil prices. As long                 Portfolio News
price in excess of $55 per barrel is now fore-        as the oil price is primarily demand driven                     Liberty International
cast for 2006. These high prices should how-          commodity prices will also be well supported                    BJM Managed Income
ever increase supply and cut demand with              when the oil price is high. High commodity                      Portfolio
equilibrium panning out between $40-$45               prices support the currency and this in turn
                                                                                                                      Corporate Action Highlights
per barrel from around 2007 onwards. High             mitigates against the impact of high oil prices
                                                                                                                      Profile of Riana Kotze
oil prices and increasingly higher prices for         to some degree. Our balance of payments is
                                                                                                                      Change of Bellville Contact
refined fuel products is negative for econom-         also not as badly affected as other oil import-
                                                      ing nations as a large part of our fuel needs                   Details
ic growth, however, not dramatically so. US
GDP growth forecasts have been pulled back            are supplied by Sasol.
to 3.5% for 2005 from 3.8% previously.                                                                                Monthly Economic
                                                      Looking at the markets, international equities                     Indicators
One of the reasons that high oil prices are           were generally positive over the period. Ja-
                                                                                                                                       Monthly   YTD %
not expected to have a dramatically negative          pan in particular (+9%) excelled on the back             Indicator      27 Sep
                                                                                                                                       change    change
effect on the world economy is improved en-           of an improving economic outlook and the
                                                                                                               Rand/US$        6.44     -0.6%     13.7%
ergy efficiency. The developed world has be-          very real prospect of economic reform. Lo-
                                                      cally the market continued to move ahead.                Rand/GBP       11.43     -1.9%     5.4%
come increasingly less oil intense. Oil inten-
sity, as measured by oil consumed per unit            The resources sector performed particularly              USD/EUR         1.20     -2.3%    -11.4%
of GDP, has declined by 45% since 1970. The           well supported by higher gold and platinum               Gold           $463      5.1%      5.6%
flipside to this is that developing countries         prices.
                                                                                                               Platinum       $915      2.1%      6.2%
have become increasingly energy hungry
with oil intensity increasing by 20% over the         We continue to favour equities over other as-            Oil Price      $62.06    -7.6%     54.2%
same period. Overall though, the world has            set classes over the medium and long term                JSE ALSI       16453     6.6%      30.0%
become more energy efficient.                         and currently regard industrials & financials
                                                                                                               FTSE100        5447      3.3%      13.1%
                                                      as the better value proposition.
                                                                                                               S&P500         1216      0.5%      0.3%
It is interesting to note that the inflationary
impact of higher fuel prices is a little higher       Contact Mark Appleton on mappleton@bjm.co.za             R153 Bond      7.87%     3.7%      0.7%
in the US than Europe due to the fact that
fuel is heavily taxed in Europe and therefore
                                                         70                                          Brent Oil Price
the higher oil price has a smaller percentage
impact on the pump price. Europe is also bet-
ter off when considering the positive trade
spin-offs when exporting to the increasingly             50
wealthy oil producing nations. Europe’s ex-
port ratio to the Middle East (exports as a
percentage of nominal GDP) is 0.8% com-
pared to the 0.2% of the US. Japan’s export              30
ratio is 0.3%.

While high oil prices diminish the relative at-
traction of risky assets to some degree, global          10
equities are not regarded as expensive with               Sep-01                   Sep-02                 Sep-03             Sep-04              Sep-05
forward PE’s at relatively low levels. Non US                                                   Brent oil closing price


                                                  1
                                                                                                               Investing with people you know
                                                               Wealth Column

                                                  Fortune Favours the Forward Thinking
Over our lifetime we learn to manage various forms of risk. These would include real
and perceived risks in all areas of our life. Some risks are personal and as individuals
we have different levels of risk we are willing to take for the perceived reward. The risk
of bungee jumping may seem completely crazy to one person while to another the
rush of adrenalin makes it worth while.
Intrinsic to wealth management advisory services is the management of risk while still
attempting to maximise returns. An investor who invests all his money in a single share
is taking a big risk, as the portfolio return is totally dependant on the performance of
that stock and the level of risk could be far higher than the possible upside. However
investing purely in cash, will in most instances disappoint and not provide returns
sufficient to meet expectations or adequately grow the capital base. Therefore, for a
portfolio to maximise returns a certain amount of managed risk must be accepted.
The closer an investor is to retirement the more risk averse they should become. Like-
wise, the smaller the amount of capital available, the less open to risk an investor
should be. On the other side of the coin we have all heard the story of investors, who
in the 1970’s, put $1000 or so dollars into Berkshire Hathaway or Microsoft, and are
now multi millionaires. What risks are acceptable and manageable? When should an
investor show initiative, forward thinking and take an “acceptable” risk?
There are a number of key principles that should be adhered to when considering the whole aspect of risk within wealth management:-
    Age: The younger an investor, or the further they are from retirement, would significantly increase the investor’s ability to take on increased
    risk.
    Quantum: An investor with assets in excess of retirement funding needs is able to take on increased risks.
    Tax: It is important to take tax effects into account and to measure like with like when comparing investment returns.
    Asset Allocation: It has been statistically proven that the appropriate asset allocation is the biggest contributor to reducing risk and maximising
    returns.
    Compulsory Savings: By this we mean contributions to pension, provident and retirement annuity funds. These funds are by their nature con-
    servatively managed and a high level of contribution to these funds will allow an investor to take on increased risk in respect of other discre-
    tionary savings.
    Core & Tilt: Every portfolio should have a core element that is primarily aimed at providing for basic retirement needs. Any excess capital could
    then be applied to a tilt aspect of the portfolio whereby increased risk can be assumed.
    Currency: A retiree should always invest retirement funding capital in the currency in which they intend to spend their retirement. This elimi-
    nates exchange rate risk and ensures that the income stream is to some extent protected.
    Head & Heart: Investment strategies and decisions should be taken with the head and not the heart. We are all prone to sentiment so we need
    to avoid falling in love with a share, asset class, investment product or style. Investment decisions should be based on sound research and fun-
    damental analysis and implemented in terms of a chosen strategy.
    Costs: Over time costs can go a long way to eroding the growth potential of the investment. Obtain full details of all costs, commissions, rebates
    etc that will erode the performance of the investment. However, be prepared to pay a fair fee for the value added services rendered.
    Professional Advice: Obtain sound independent professional advice and then decide on an appropriate strategy that meets
    relevant needs. The large amount of choice available, together with the complexity of the legislative and tax environment,
    makes it extremely difficult for the layman.
    Compound Growth: This is often described as the 8th wonder of the world. It is not market timing but rather time in the
    market that allows a portfolio to grow and accumulate.
Unfortunately, in life we only get one opportunity at accumulating wealth and building a retirement nest egg. This opportu-
nity cannot be wasted and mistakes often prove costly. We believe that our independence, transparent policy, professional
skills and track record enables us to offer clients a unique value added proposition. We encourage clients to discuss these and
other relevant issues with their BJM Private Client Services relationship manager further.
Contact Tony Barrett on tonyb@bjm.co.za




                                                                Portfolio News

                                                Continued positive returns from Equities
Equities continued to perform positively over the past month. Core portfolio stocks that performed particularly well, over 7%, included Anglo Plc,
BHP Billiton, Impala Platinum, Sasol, Murray & Roberts, Tiger Brands, Massmart, Sun International, Barloworld and Imperial.
Naspers was the only share to record a negative performance. This portfolio remains unchanged.
Our high dividend yield portfolio also remains the same. The portfolio offers an estimated forward dividend yield of 5.3%.
We have increased the earnings projections of Investec substantially, which has subsequently been reflected in a rising share
price.
Our prudential portfolio maintains a portfolio allocation of 64% local equities, 15% offshore (made up of 60% equities with
the balance in bonds and hedge funds), 7% listed property, 6% local inflation linked bonds, 5% local bonds (both medium
and short duration) and the balance in the money market.
Contact Mark Appleton on mappleton@bjm.co.za




                                                2
                                                      (non-regional shopping centres) and com-                 to the Board and in the capacity of President
      Liberty International                           mercial property business, increasingly                  for Life.
                                                      concentrated in Central London, the south-
                                                      east of England and California in the USA.               All the directors have been with the company
 Share Statistics (24/08/2005)                                                                                 for at least 17 years and the two managing
                                                          Investment activities - where Liberty                directors of Capital Shopping Centres have
 Share Price        (SA cps)       10990
                                                      International looks to use the substantial               been with the company for 31 and 32 years
 NAV (02/08/05)     (UK cps)        1096              capital resources at its disposal to access prof-        respectively. The management displays both
                                                      itable financial opportunities in real estate.           industry experience and stability.
 Market Cap          (Rm)        35,706,846
                                                      Liberty’s premier shopping centre focus                   While we strongly believe in the long term
 Dividend Yield       (%)           2.84
                                                      through CSC gives the company the advan-                 investment merit of this company, low bond
 PE ratio              (x)          34.48             tages of high scarcity value and high barriers           yields and the Central Bank’s dovish-to-
                                                      to entry.                                                neutral tone towards interest rates suggest
                                                                                                               that there is still scope for low double-digit
Liberty displays experience and                       The management of the properties is not out-             returns from direct property and mid-to-high
stability                                             sourced, with management instead taking a                single digit returns from listed property in the
                                                      ‘hands-on’ approach and actively managing                United Kingdom over the next year. In ad-
Liberty International (Liberty) is the third
                                                      the properties.                                          dition South African investors are expected
largest UK listed property company with
                                                                                                               to benefit from Rand weakness against the
property assets valued at approximately
                                                      Donald Gordon founded Liberty International              Sterling.
£6.2bn.
                                                      in 1981. He is recognised as a successful busi-
                                                      ness leader for his role in both Liberty Group           Source: BJM Securities and www.libertyinternational.co.uk
The company is engaged in three principal
                                                      Limited in South Africa (which he founded
activities:
                                                      in 1957) as well
                                                      as with Liberty
    Capital Shopping Centres (“CSC”), a
                                                                                14000                     Liberty International
                                                      International. He
100% owned subsidiary, is the leading
                                                      retired as Chairman       12000
company in the UK regional shopping centre
                                                      at the end of June
industry. Centres include Lakeside, Thurrock,
                                                      2005 but will be
MetroCentre, Gateshead, Braehead, Renfrew,                                      10000
                                                      continuing his as-
Glasgow as well as six major in-town regional
                                                      sociation       with
centres. CSC has a substantial development                                        8000
                                                      the company, in
programme, involving both new centres in
                                                      which his family
Norwich, Cardiff and Oxford, and extensions                                       6000
                                                      has a substantial
to existing centres.
                                                      22%      sharehold-
                                                                                  4000
                                                      ing, as an adviser
   Capital & Counties is a 100% owned                                                Sep-00       Sep-01        Sep-02         Sep-03          Sep-04          Sep-05
subsidiary that operates a successful retail
                                                                                                                Liberty closing price




                                     Enhance your yield with BJM’s Managed Income Portfolio
 South Africans’ have not had it this good in a very long time. Consumer and business confidence is flying high; inflation is relatively stable and low;
 the equity market is at an all time high on reasonable ratings; the currency is strong and relatively stable; house prices have rocketed; the industrial
 commodity boom looks like it still has some legs and even the gold price is finally going up!

 One group of investors however, is not laughing to the bank. With 3-month NCD rates currently at around 7% (at a prime rate of 10,5%), it is a
 far cry from the 14% you received towards the end of 2002 and even further away from the 23% you could have received in 1998. Income yields
 are scarce and cash investors (typically retirees and corporate investors) are feeling the pinch. To compound the problem, our medium-term view
 is that yields are expected to remain low on the back of a relatively stable currency, low inflation and good domestic growth prospects. This forces
 risk-averse investors to revisit their investment plan, if they have not done so already. It is with this challenging backdrop in mind that BJM PCS
 launched the BJM Managed Income Portfolio as part of its “best-of-breed” portfolio range. The underlying unit trusts within the portfolio are
 managed by the best, large fixed-income teams in SA. Where available, the portfolio accesses the institutional class of each underlying manager,
 to reduce the total cost to the client and thereby enhance returns.

 Investors currently invested in or considering the BJM Managed Income Portfolio typically fall into one of three camps. Firstly, annuitants who are
 investing the proceeds of a pension fund upon retirement through a living annuity structure with an income requirement. Secondly, an investor
 currently in either a retirement annuity or preservation fund with a low tolerance for risk. Thirdly, the smaller discretionary investor, with a short to
 medium-term investment horizon, seeking yields in excess of cash who is prepared to take on a modicum of risk.

 The benchmark against which the BJM Managed Income Portfolio is managed is relatively conservative, comprising a composite made up of 40%
 SA property, 40% SA bonds and 20% SA cash. BJM PCS, being active managers, will tilt the allocation to these asset classes depending on market
 conditions and prospective returns in order to enhance the total return of the portfolio. The portfolio will however from time to time, have limited
 exposure to high dividend yielding equities when they appear to be offering particularly good value. The same goes for international assets that
 have competitive yields although this will be fairly rare.

 The portfolio is relatively low risk in nature, with risk being defined as the volatility surrounding returns. The portfolio should be considered riskier
 than bank deposits and money market funds but less risky than a traditional balanced portfolio or a pure equity mandate. The portfolio is suitable
 for investors who have an investment horizon in excess of three years.


                                                                                                           3
           Corporate Action
                                                                                                                                                   Contacts
              Highlights
                                                                                                                                   JOHANNESBURG
                                                                                                                                   Barnard Jacobs Mellet House
 Shares                                     Distribution (cps)/ Last day to trade                  Record date
                                            Corporate Action                                                                       5 Sturdee Avenue
                                                                                                                                   Rosebank
 Most recent Corporate Actions                                                                                                     PO Box 3359
                                                                                                                                   Parklands 2121
 Glenrand M.I.B.                                       4                    30.09.2005                 03.10.2005
 Johnnic Communications                              650                    30.09.2005                 03.10.2005                  Telephone (011) 778 0000
                                                                                                                                   Fax (011) 778 0010
 Kagiso Media                                         24                    30.09.2005                 03.10.2005                  Tony Barrett
 Metropolitan Holdings                                24                    30.09.2005                 03.10.2005                  e-mail: tonyb@bjm.co.za

 Pangbourne                                          50.5                   30.09.2005                 03.10.2005                  CAPE TOWN - Bellville
 Sasfin Holdings                                      89                    30.09.2005                 03.10.2005                  5 Tijger Park
                                                                                                                                   Willie van Schoor Avenue
 Forthcoming Corporate Actions                                                                                                     Bellville
                                                                                                                                   PO Box 3334
 Murray & Roberts Holdings Ord.                       30                    07.10.2005                  10.10.2005
                                                                                                                                   Tyger Valley 7536
 Sasol Ltd                                           310                    07.10.2005                  10.10.2005
                                                                                                                                   Telephone (021) 943 5000
 Venfin Ltd                                           50                    07.10.2005                  10.10.2005                 Fax (021) 943 5010
 Avi ltd                                              37                    14.10.2005                  17.10.2005                 Jan van Staden
                                                                                                                                   e-mail: jvanstaden@bjm.co.za
 Ceramic Industries Ltd                              150                    14.10.2005                  17.10.2005
 Consol Ltd                                           39                    14.10.2005                  17.10.2005                 CAPE TOWN - Constantia
                                                                                                                                   Seardel House
 Firstrand Ltd                                      28.50                   14.10.2005                  17.10.2005                 Alphen Park
                                                                                                                                   Constantia Main Road
 Old Mutual Plc                                      t.b.a                  14.10.2005                  17.10.2005
                                                                                                                                   Constantia
 RMB Holdings Ltd                                     52                    14.10.2005                  17.10.2005                 PO Box 615
                                                                                                                                   Constantia 7848
 Please note that this is not a comprehensive list but merely a snapshot of some of the more important corporate actions
 that have taken place or are taking place shortly. For further details on the dates of corporate actions and the release of
 economic indicators please refer to the Market Diary on www.bjmdirect.com.                                                        Telephone (021) 794-4863
                                                                                                                                   Fax 086 613 7023
                                                                                                                                   Grant Rossiter
     Profile of Riana Kotze                                                                                                        E-mail: grantr@bjm.co.za

                                                                                                                                   DURBAN
Client relationship manager joins                                                                                                  98 Armstrong Ave
our team                                                                                                                           La Lucia 4051
                                                                                                                                   PO Box 4020
Riana Kotze joined us as a client relationship                                                                                     The Square 4021
manager in August focusing on private and
wealth clients. Before joining our team she                                                                                        Telephone (031) 566 4230
was the marketing director at NOSTiC Asset                                                                                         Fax (031) 566 4162
Management for two years and entered the                                                                                           Tim Jillings
financial industry thirteen years ago when                                                                                         e-mail: tjillings@bjm.co.za
she joined Old Mutual as a financial advisor.
Riana is a keen horse rider and enjoys bundu
bashing in a 4x4. Apart from her outdoor ac-                                                                                       Sharecall number for your local office:
tivities she also enjoys singing.
                                                                                                                                   0860 001 652
                                                                                                                                   website: www.bjmdirect.com

                          Change of contact details notification
                                                                                                                                   The information and opinions contained in this document
                                                                                                                                   are recorded and expressed in good faith and in reliance on
                                                                                                                                   sources believed to be credible. However no representation,
     The telephone and fax details of our Bellville branch will be changing from                                                   warranty, undertaking or guarantee of whatever nature is
   1 December 2005. Please note the new contact details for our office located at                                                  made or given concerning the accuracy and/or completeness
                                                                                                                                   of such information and/or the correctness of such opinions.
                                                                                                                                   Neither BJMH nor BJM PCS will accept any responsibility
                                                                                                                                   for any investment decisions based on the information and
                                          1st Floor, 5 Tijger Park,                                                                opinions contained in this document.
                                         Willie van Schoor Avenue,
                                            Bellville, Cape Town

                                              Tel: (021) 943-5000
                                              Fax: (021) 943-5010



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