Instruments and Investments
Portfolio Diversification: Africa
Expectations for 2012
Impact of dividends witholding tax

Behind JSE's trading evolution

South Africa's growing public debt
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15th Edition - May 2012
In this Edition . . . .
Adapt or die When is capital not capital? 
Companies and the investors who buy shares in them can no longer afford to ignore how the earth’s climate is changing. Not only is the scientific evidence mounting, but the tangible evidence is already making itself felt in rising temperatures and changing precipitation patterns. In response, regulation is changing, consumer preferences are changing and so too are investor attitudes. Companies and investors who ignore these changes do so at their own peril. . . . . read full article
In the third quarter of 2011 a number of international banking groups reported positive earnings well in excess of analysts’ expectations, in spite of increasing credit spreads i.e., declining credit worthiness. This unexpected outcome was due to own-credit-risk adjustments resulting from banks fair-valuing their debt and recognising associated unrealised gains in earnings. Since own-credit spreads will be an ongoing source of earnings volatility, should banks consider hedging their own-credit risk? . . . . read full article
Absa Capital lists five Exchange Traded Notes
Portfolio diversification: Africa
“The ETNs listed 12 March 2012 under the NewWave ETN Programme, are designed to provide investors with an investment opportunity to access the returns of different assets or market indices, and represents the further development of Absa Capital’s overall exchange traded product offering,” said Dr. Vladimir Nedeljkovic, Head of Investments at Absa Capital. . . . . read full article
African stock markets are not integrated with each other except for South Africa and Namibia and Egypt and Morocco to a lesser extent. Because of this, there are vast opportunities for portfolio diversification for investors on the African continent . . . . read full article
Expectations for 2012 Impact of dividends withholding tax on local private investors

The introduction of the dividends tax effective from April 2012, is to an extent old news, but investors did receive a shock when the Minister of Finance, Pravin Gordhan announced (in his budget speech) that the tax would come into effect at 15%. This is 50% higher than the previous secondary tax on companies of 10%.. . . . read full article

Behind the JSE’s trading evolution  JSE Africa Strategy - Exchange broadens its Africa offering
Managing the exponential rate of technological change has become a critical challenge for the global exchange industry. Riaan van Wamelen, CIO at the Johannesburg Stock Exchanges speaks about the ‘need for speed’ driving the industry and the JSE’s plans to stay ahead of the technology curve. . . . . read full article
This past April the JSE announced that it is evolving its strategy for growing its investment offering from the rest of the continent as appetite for African investments continues to rise. The exchange already offers trade in a wide range of investment instruments focused on Africa outside of South Africa. To enhance this, the JSE’s Africa strategy will now include companies listed directly on the Main Board and AltX as well as offering depository receipts and a broader range of exchange traded funds and debt instruments . . . . read full article
South Africa's growing public debt
Could Regulation 28 drive retirement fund consolidation?
The current or initial debt-to-GDP ratio, the primary fiscal balance, the government bond yield and the growth rate in the nominal GDP, are used in fiscal calculus to predict whether a country could be heading for a debt trap situation – as has happened in some European countries of late. Although one can state with a fair degree of comfort that South Africa is not close to a debt trap situation, it would probably be prudent for government, especially in view of the concerns expressed by rating agencies, to consider establishing fiscal rules or targets which ought to be followed. . . . . read full article
“The sheer volume and complexity of work that compliance with the new Regulation 28 entails will result in increased costs and encourage further consolidation of retirement funds,” says René Swart, Head of Investment Accounting and Regulatory Reporting at RisCura, an independent analytics provider and investment consultant . . . . read full article
Collateral management for the OTC Market
STRATE explores collateral management cooperation in SA
Collateral requirements have long been routine for many exchange traded derivatives transactions, but in the over-the-counter(OTC) market they are often inconsistent, based upon non-transparent arrangements reached between the two parties.. . . . . read full article
On 18 January 2012, Clearstream and Strate, the South African central securities depository, signed a Letter of Intent (LOI) aimed at exploring a new triparty collateral management service for South Africa. The service intends to target the collateralisation of exposures in the South African market . . . . read full article
Financial Markets Bill True segregation of clients’ assets provides investor protection
The key purpose of the Segregated Depository Accounts is to provide a safe-keeping account structure for investors. Should their intermediary or custodian collapse, the client’s full-legal ownership of securities would remain undisturbed. As a result, they are designed to reduce market, price and operational risk by avoiding a situation where the investor’s securities may be trapped in the books of the failed entity, while the curator or other administrator endeavours to identify their ownership and return the securities to their rightful owner . . . . . read full article


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Editorial Committee: Ms Karin van Wyk, Mr Adam Reeves and Mr Tim Howse