Interesting Articles

There's never been a better time to be a behaviorist. During four decades, the academic theory that financial markets accurately reflect a stock's underlying value was all but unassailable. But lately, the view that investors can fundamentally change a market's course through irrational decisions has been moving into the mainstream. With the exuberance of the high-tech stock bubble and the crash of 2008 still fresh in investors' memories, adherents of the behaviorist school are finding it easier than ever to spread the belief that markets can be something less than efficient in immediately distilling new information and that investors, driven by emotion, can indeed lead markets awry. Some behaviorists would even assert that stock markets lead lives of their own, detached from economic growth and business profitability. A number of finance scholars and practitioners have argued that stock markets are not efficient—that is, that they don't necessarily reflect economic fundamentals.1 According to this point of view, significant and lasting deviations from the intrinsic value of a company's share price occur in market valuations. Read more

April brought more turmoil in Europe, mixed economic data and a strong change in political tides. The markets moved largely sideways as investors eyed Spain. Positive earnings reports from the US provided some badly needed support.  The US economy continued to pick up momentum as manufacturing activity came in above expectations, with the ISM index rising to 53.4. Although manufacturing accounts for little more than 10% of US GDP, it has been one of the cornerstones of the recovery. Read more

Over the first half of the month, stocks were buoyed by upbeat US economic figures and easing concerns over Europe’s debt crisis as Greece received its second bailout. However, by mid-month the rally flagged amid concerns over China’s economic growth, Spain following in Greece’s footsteps and the impact of high oil prices on global growth. Read more

If you’re like most investors, you began your investment program with the intent of achieving any number of goals, some long-term, others shorter-term—such as enjoying a comfortable retirement, sending your children to college, buying a second home or supporting your current lifestyle. You have invested in stocks and bonds to steadily build and preserve wealth over decades. Your long-term strategy did not include trying to jump in and out of themarket based on its short-term performance.  Besides, brief, explosive spurts of volatility, both positive and negative, is the norm. Despite periods of stomach-churning market activity—stocks ended 2007 with a decent return.But an impulsive investor who abandoned the market during one or more of its sharp downturns would have missed the strong, ensuing rebounds. Read more

Most large consumer-facing companies realize that they will need China to power their growth in the next decade. But to keep pace, these companies will also need to understand the economic, societal, and demographic changes shaping the profiles of consumers and the way they spend. This is no easy task not only because of the fast pace of growth and subsequent changes in the Chinese way of life but also because of the vast economic and demographic differences across the country. Read more

The upward momentum of January continued into February  as the global economic data surprised on the upside and the probability of Greece defaulting was largely discounted by the markets.  Signs of an improvement in the US, UK and German manufacturing and services sectors in January provided a welcomed boost to sentiment.  Manufacturing PMIs in the UK and Germany rose above the 50 level, a benchmark signalling expansion.  However, French, Spanish, Italian, Greek and Irish manufacturing activity contracted once again. Read more

During the past quarter century, Vietnam has emerged as one of Asia’s great success stories. In a nation once ravaged by war, the economy has posted annual per capita growth of 5.3 percent since 1986—faster than any other Asian economy apart from China. Vietnam has benefited from a program of internal restructuring, a transition from the agricultural base toward manufacturing and services, and a demographic dividend powered by a youthful population. The country has also prospered since joining the World Trade Organization, in 2007, normalizing trade relations with the United States and ensuring that the economy is consistently ranked as one of Asia’s most attractive destinations for foreign investors. Read more

The Minister of Finance, Mr Pravin Gordhan, today announced that his department had provided an amount of R9.5 billion in personal income tax relief to individuals, mostly to taxpayers in the lower income brackets. Read more

The 2011/12 Budget brought some surprises, both in what it mentioned and in what it omitted. As expected the focus was largely on the economy, job creation and infrastructure spend. There was no clarity on retirement fund reform, while the national health insurance is to be phased in over 14 years. On a negative note further re-distributive measures include a hike in capital gains tax and a 50% increase in the tax on dividends. Although hailed as a balanced budget, its success will largely depend on the government’s ability to keep costs, such as public service wage increases which have been assumed at a 5% level in the Budget, and borrowing down. Read more

The year started on an unexpectedly upbeat note as the US economic data painted a picture of steady recovery. From stronger retail sales and manufacturing figures, to rising consumer confidence, the US is looking healthier.  Elsewhere, however, manufacturing activity was subdued with the euro zone’s industrial sector suffering its fifth straight month of declines in December and Asian factories mostly stuck in a rut.  Only China and India surprised on the upside. Read more