JOHANNESBURG (Reuters) &#8211; South Africa’s Sasol warned on Tuesday it will report an annual loss after a drop in oil and chemical prices and the impact of the coronavirus pandemic hit earnings.



The world’s top producer of motor fuel from coal said its headline loss per share is expected to be between 8.72 rand ($0.4949) and 14.86 rand in the year to June 30, compared with headline earnings of 30.72 rand per share during the same period a year ago.



Sasol said lower global chemical and refining margins and a 18% decrease in the rand per barrel price of Brent crude oil had hurts earnings.



Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) is also expected to fall by as much as 37% to between 30 billion rand to 39.5 billion rand.



The company said it had recorded impairments in some of its cash generating units after a weakening economy and the fair value impact of starting discussions to find a partner for its U.S. Base Chemicals assets.



Sasol has embarked on a review of its assets and set out to find a partner at its U.S. Base Chemicals operations in an effort to avoid a potential $2 billion rights issue after a slump in the oil price and the impact of the new coronavirus weighed on the company’s ability to pay its debt.



Investors have been concerned by the company’s debt, largely due to delays and cost overruns at its Lake Charles Chemicals project (LCCP) in Louisiana, that forced its former joint-CEOs to resign in a bid to restore shareholder confidence.



Sasol is expected to release its full-year results on Aug. 17.



($1 = 17.6200 rand)

Sasol_Garage_in_Boksburg

Sasol warns of annual loss as lower oil price and pandemic weigh

ABIDJAN (Reuters) &#8211; Cocoa arrivals at ports in top grower Ivory Coast reached 2.004 million tonnes between Oct. 1 and July 31, down 6.4% from the same period last season, data from the cocoa regulator (CCC) showed on Monday.



Exporters had previously estimated that arrivals from Oct. 1 to August 2 would reach 2.043 million tonnes, compared with 2.160 million the previous year.

Cocoa_farmer_David_Kebu_Jnr_holding_the_finished_product,_dried_cocoa_beans_ready_for_export._(10687070725)

Ivory Coast 2019/20 cocoa arrivals reached 2.004 mln t by July 31 -CCC data

NEW YORK (Reuters) &#8211; Gold pushed further past $2,000 an ounce on Wednesday in the face of a weak dollar and expectations of more stimulus measures for the pandemic-ravaged global economy, while stocks in Europe and on Wall Street rallied on encouraging corporate earnings.



Oil prices rose to their highest since early March on a big drop in U.S. crude inventories and on the weak dollar, which was pushed lower by data showing euro zone business activity returned to modest growth in July.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1110" height="624" src="https://www.cnbcafrica.com/wp-content/uploads/2020/08/1571595826001_6178348203001_6178348593001-vs-1110x624.jpg" alt="" class="wp-image-378177" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/08/1571595826001_6178348203001_6178348593001-vs-1110x624.jpg 1110w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/1571595826001_6178348203001_6178348593001-vs-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/1571595826001_6178348203001_6178348593001-vs-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/1571595826001_6178348203001_6178348593001-vs-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/1571595826001_6178348203001_6178348593001-vs-696x392.jpg 696w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/1571595826001_6178348203001_6178348593001-vs-1068x601.jpg 1068w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/1571595826001_6178348203001_6178348593001-vs-600x338.jpg 600w, https://cms.cnbcafrica.com/wp-content/uploads/2020/08/1571595826001_6178348203001_6178348593001-vs.jpg 1280w" sizes="auto, (max-width: 1110px) 100vw, 1110px" /><figcaption>Gold prices hit a first time high of $2000: Is the momentum sustainable?</figcaption></figure>



The final Composite Purchasing Managers’ Index (PMI) from IHS Markit climbed to 54.9 from June’s 48.5, better than a 54.8 flash estimate, indicating significant improvement consistent with the continued easing of lockdowns, analysts said.



Gold set a new record after scaling $2,000 for the first time on Tuesday, as investors seek a store of value on fears government stimulus in response to the pandemic will trigger inflation, devalue other assets and keep bond yields low.



Spot gold prices XAU= rose 1.1% to $2,039.59 an ounce, after earlier reaching a record $2,055.10. U.S. gold futures GCv1 hit a record $2,070.30 and settled up 1.4% at $2,049.30.



The dollar standard of the past 50 years is being openly questioned because of the U.S. Federal Reserve’s enormous increase in money supply, said Ryan Giannotto, director of research at alternative ETF provider GraniteShares.



“The dollar is collapsing under the weight of $3 trillion in printed dollars, this all comes out in the wash with higher gold prices,” Giannotto said.



Gold has gained nearly 35% so far in 2020 and is one of the year’s best-performing assets.

gold-is-money-2430051_1280

Gold strides further above $2,000/oz, dollar weakens

GABORONE, Botswana (Reuters) &#8211; Trading in shares of budget retailer Choppies resumed on the Botswana Stock Exchange (BSE) on Monday after a 20-month suspension following the company’s failure to publish its financial results.



Choppies saw its shares plunge by more than 60% in September 2018 after delaying publication of its financial statements, leading to their suspension on both the local bourse and the Johannesburg Stock Exchange (JSE) where it has a secondary listing.



The results were delayed after the company’s newly appointed auditors PricewaterhouseCoopers (PwC) raised concerns with the board over accounting practices.



“The company has now published all its financials up to December 2019 bringing it into compliance with the stock exchange requirements,” the BSE said in a statement.



The resumption also follows publication on July 23 of an auditors’ report into allegations of fraud within the group which found any court action over those allegations was unlikely to succeed.



Trading in Choppies shares resumed at 0.69 pula per share, in line with their suspension price. Some 797,000 shares were traded in the opening auction.



As part of plans to consolidate its business and focus on more profitable subsidiaries, Choppies &#8211; Botswana’s biggest retailer &#8211; has since exited the South African and Mozambican markets.



The company is also divesting operations in Tanzania and Kenya, Chief Executive Ramachandran Ottapathu told Reuters on Monday, but will continue operating in Botswana, Zimbabwe, Zambia and Namibia.



“We are hoping the JSE will soon lift the suspension &#8230; they have to follow what has happened in the primary market,” Ottapathu said.



In the half-year to December 2019, Choppies’ group revenue fell by 17.5% to 2.9 billion pula due to a weakening currency in Zimbabwe against the Pula, the company said in its results released on Friday. It made a 204.7 million pula ($18 million) loss on discontinued operations.



Its gross profit margin for the half-year ended December 2019 improved to 22.9% from 22.5% a year before, reflecting a good performance in the local market.



($1 = 11.4286 pulas)

Mmolo_wa_Gabane(Gabane_mall)hhhh

Botswana retailer Choppies stock resumes trading after 20-month suspension

JOHANNESBURG (Reuters) &#8211; South Africa’s foreign direct investment (FDI) inflows rose in the first quarter of 2020, to 29.0 billion rand ($1.74 billion) compared to inflows of 10.5 billion rand in the final quarter of last year, the central bank said on Thursday.



“South Africa’s direct investment liabilities increased &#8230; mainly as a result of the foreign acquisition of a domestic manufacturer and distributor of food and beverage products,” the South African Reserve Bank (SARB) said in its quarterly bulletin.



Local competition authorities approved United States food giant PepsiCo’s $1.7 billion takeover of food and drinks producer Pioneer Food Group in February.



At the same time, portfolio investments, reflecting a record of buying and selling of securities such as bonds and shares, showed a sharp outflow, of 97.6 billion rand in the first quarter compared to inflows of 9.3 billion rand in fourth quarter of 2019.



Non-residents sold bonds worth 74.4 billion in the first quarter, while selling 23.1 billion rand in equities, the bank said in the analytical release.



South Africa saw aggressive selling of government bonds in March and April as the novel coronavirus struck, forcing the central bank to enforce emergency liquidity measures and launch a quantitative easing style purchase of bonds in the secondary market.



($1 = 16.6576 rand)

adversting-blue-can-cold-drink

South Africa’s foreign direct investment inflows rise to $1.7 bln in Q1

JOHANNESBURG (Reuters) &#8211; South Africa’s Sun International will tap shareholders for funds at 9.44 rand a share in a 1.2 billion rand ($71.48 million) rights issue, the hotel and casino owner said on Tuesday.



The owner of Sun City resort will use the rights issue funds to improve its short to medium-term liquidity and strengthen its balance sheet as the coronavirus restrictions hit its operations.



The company will offer 127 million shares at 9.44 rand each, representing a 25% discount, it said in a statement.



($1 = 16.7877 rand)

suncity

South Africa’s Sun International to issue 127 mln shares in rights offer

By Anu Shah



Covid 19 has brought unprecedented economic uncertainty across the world and tech companies think hard about the future and investments.



Especially, since the FANGs of the world are sitting on cash reserves larger than the GDPs of some countries. Infact Apple and Google are shopping aggressively for the strategic companies at a discount. For instance, Apple acquired NextVR &nbsp;for $100Mn, Amazon acquired Zoox for $1Bn. So what does the future of the tech start-ups and venture capital look like? To understand that let&#8217;s take a look at how does a venture capital works.



Typically, a venture capital firm raises money from the largest and most diversified institutional investors with a fund life of roughly 10 years. New investments are made in the first two to three years of a fund’s life. Venture capital creates a large reserve to make follow-on investments through the end of a fund’s term. As a rule of thumb, investors reserve $1 for every $1 invested in an early-stage company. The combination of long fund terms and dedicated reserves helps mitigate the effects of turbulence on funds and portfolio companies.



The United States venture capital industry has existed for 50 years. It has weathered many storms and is ready for anything. There the venture capital industry aggregated $275Bn in the last six years. Using both a fund-by-fund analysis and averages across the industry, it is estimated that the industry has $150Bn of “dry powder” of which likely $76Bn is earmarked for reserves for existing companies and $74Bn for new investments.



This present level of reserves is strong relative to any recent cycle. While one can be optimistic, albeit cautiously about a large reserve to help start-ups through this fundraising drought, venture capitalists will change their strategy drastically to advance further, here are some tips for the industry: &nbsp;



1. Be very selective about investing: Venture capitalists have invested $280bn in the last two years. In the case of backing companies at current levels, we would run out of reserves in four quarters. Hence, there will be increased scrutiny and diligence in investing, more focus on unit metrics cash flows, sustainable and profitability; over traction and growth at the expense of high cash burn; &nbsp;having said that, funding for innovative technologies, such as personalized medicine, online education, remote workforce solutions, and reliable Internet connectivity, will be bullish.



2. Prioritise existing portfolio companies for funding: Since 2014, more than 10,000 US companies in the U.S. that have been funded. Many companies have exited, found profitability, or already have strong balance sheets, but many more do not have alternatives and will need capital assistance. Venture capitalists will use the reserves to support their portfolio first.



3. Redirect focus on institutional investors for raising new funds: In good times, capital can come from a variety of sources including hedge funds, mutual funds, and wealthy individuals. When the cycle turns, these alternative sources can substantially pause their investing or exit the industry indefinitely, leaving only institutional investors as a primary capital source. Hence venture capitalists trying to close the new funds will double down on one channel, putting more pressure on the performance and exits of current portfolio companies. 4. Employ alternate investment and fund raising tools to continue funding: Alternate tools, such as fund recycling, that is, investing profits from old investments into strong existing portfolio companies, crossover investing, that is, investing from newer funds into older funds, and formal and informal co-investment vehicles.This will provide a boost to the industry’s reserve capacity to continue investing in the start-ups.

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COMMENT: How to make money from venture capital in the uncertain world of COVID-19

Content provided by CompareForexBrokers



Prior to understanding why market volatility might be here to stay for the foreseeable future, the concept must be defined and understood on a basic level. When it comes to the forex trading market, volatility is the measurement of the frequency and extent of the positive and negative changes and swings in a particular currency’s value.



For example, if the Australian Dollar deviated from its average quite frequently and the deviations were substantial, it would be known to be a highly volatile currency. On the contrary if the Japanese Yen’s deviations from average were quite minimal and very rare – the currency would be known to have low volatility.



Volatility in the Forex market might not be all so bad, the more volatile the currency, the easier for traders to make big gains as price moves are likely to be larger. However, at the same time, such volatility can hold <a href="https://capital.com/volatility-risk-definition">trading risk</a>.



<h2 class="wp-block-heading">Difference between Volatility and Risk</h2>



Many forex traders make the mistake and join the concepts of volatility and risk at the hip. When in reality, they are different, and understand that much can take a trader a long way to being successful in the currency market game.



Market volatility, currency fluctuations, price gains and losses are all elements of Forex Trading that traders cannot control. However, risk is within a traders control. An individual can choose how much to invest, how much risk to expose themselves to and whether they are able to manage risk in general.



It is accurate that trading volatile currencies carries a large amount of risk, but traders need to be aware that it is ultimately up to them how much of their investment portfolio is made up of volatile currencies, and as a consequence the amount of risk they deal with.



<h2 class="wp-block-heading">Dealing with Volatility</h2>



When it comes to responding to volatility, many will say there is no one size fits all methodology. One of the more important mindsets to adopt is the ability to mould the volatility to your trading strategy and your current ‘life stage of investing.’



Those in their twilight years, will most likely be risk averse, and would prefer to trade with currencies that offer lower volatility, as opposed to those who are younger and a hungrier for a bit more ‘bang for buck.’



As COVID-19 continues to bring uncertainty on a global scale, many countries are struggling to keep up with the health requirements and the dire economic outlook. This uncertainty brings the understanding that market volatility is here to stay as covered by <a href="https://edition.cnn.com/2020/03/14/investing/dow-stocks-worst-week-2008/index.html">CNN</a>.



<h2 class="wp-block-heading">Historical Volatility v Implied Volatility</h2>



One of the ways to understand volatility in a more wholistic manner, is by understanding the difference between historical volatility and implied volatility.



Implied volatility is when a trader is able to look at options presented to them and ascertain what the implications of those options are. This does not employ historical charts or information, and is majorly based on the ability of the option provided to succeed in the future market.



Historical volatility measures and determines the price fluctuations of a currency over time, and ascertains where a currency is tracking based on its past performance.



<h2 class="wp-block-heading">Summary</h2>



During these tumultuous times, its evident that market volatility is prevalent and will be an important facet of the trading markets in the <a href="https://www.refinitiv.com/perspectives/future-of-investing-trading/the-covid-19-crisis-brings-volatility-back-to-the-fx-market/">short term</a>. It is up to the trader to ascertain how much risk they are able to manage and have the foresight to use fluctuations to their advantage as opposed to conceding major losses on investments.



Disclaimer: Currency trading is a leveraged product which means that with an eligible FX broker you can amplify your deposit up to 500 times. This leverage means there is a real possibility of losing your money so it’s important to understand the risks involved and consider options such a practice account. For more information view the South African section of <a href="https://www.compareforexbrokers.com/best-forex-broker/south-africa/">CompareForexBrokers</a>.

101416618-rand

Is Market Volatility Here For The Foreseeable Future?

By Chris Bishop



Slender and snappily dressed Fortune Mojapelo was bent on living up to his first name when I met him at the Mining Indaba in Cape Town; his optimism left you feeling that fate, as well as fortune, would favour the brave. The young mining entrepreneur had a dream to capture a tenth of the multi-billion dollar world market for battery metals, his only concern was that Africa would not be able to keep up with demand. Weeks later, a bolt struck from the blue – COVID-19.



There is no doubt that the disruption of COVID-19 has set back the dream, but Mojapelo is far from giving up.He says his vanadium open cast operation at Bushveld Minerals, just outside Brits west of Johannesburg, has ramped back up to full production ahead of a multi-million dollar investment to supply more battery metals to the world.



More than 90% of the world’s vanadium is used in reinforced steel, but a growing percentage is used to make batteries for electric cars and energy storage. Bushveld Minerals, which listed on AIM in London in 2017, exports to the United States, China and Europe in a market that is likely to expand rapidly over the next few years. The rush for battery metals is expected to see the world market increase 122 times in the next 20 years. An expansion likely to attract $660 billion in capital expenditure to unearth cobalt, lithium and vanadium &nbsp;



“I can say, do we have a good business: yes. Are we in distress? No. We have a lot of work to do things are going to get worse before they get better,” says Mojapelo who will appear on CNBC Africa’s Business Tomorrow virtual web discussion at 1400 CAT on May 26.



“We are bullish, yet we are cautious and realistic about the short term, but we think the world will revive and still need reinforced steel. In the post- COVID-19 world we believe it will be moving even faster towards a de carbonised future and renewable energy and we think this is fairly positive.”&nbsp;&nbsp;&nbsp;



&nbsp;Mojapelo, who grew up in a township near Kwe Kwe in Zimbabwe before studying actuarial science at the University of Cape Town, wants his company to spend at least $100 million over the next four years in increasing his vanadium output through cash, debt instruments and borrowing on the money markets. The plan is to treble production to 8400 mt in the next five years to capture more of the world battery metals market. The company currently supplies 3% of world demand and hopes to expand this to 10% even in the face of COVID-19.



“The only caution is, are we going to do it in the same five year ramp up? Is this going to happen? I think it is going to be impacted especially when it comes to fund raising. We are going to go to the market at a certain point, when you need money, but you can’t bank on when it is going to return to normal. Some projects we have pushed out by up to a year.”



It is a brave man who will put his money into long term investments in the world of COVID-19. Clearly, Fortune favours the brave.

Fortune Mojapelo

How Africa can corner a tenth of the world battery metals market – if being brave favours Fortune!

The following post has been provided by SA Shares.



When considering the objectives with which traders approach trading and their end goal in trading, a lot of traders would say that profitability, whether short-, medium- or long-term is what they are attempting to accomplish.



Traders have various options when it comes to the markets in which they they can trade and often comparisons are done to find out which market would be best to trade in.



Despite the fact that both Forex and Stock markets are interconnected, there are substantial differences between them.



Before beginner traders can start trading in either of these markets, it is imperative that the trader first evaluates the trading style which will serve them better in addition to knowing the differences between the Forex and Stock markets.



Once the trader is familiar with their style of trading and what their trading objectives and needs are, the trader can look at key factors involved in trading. and seeing how <a href="https://www.sashares.co.za/forex-trading/">Forex Trading</a> differs from Stock trading.



As soon as the trader has gained more insight on the differences, the trader can decide on which market would suit their needs more efficiently.



<h2 class="wp-block-heading" id="h-forex-vs-stocks-and-trading-factors-involved">Forex vs Stocks and trading factors involved</h2>



<h3 class="wp-block-heading" id="h-volume">Volume</h3>



The Forex market is the largest financial market in the world with the daily trade value at approximately $5 trillion a day and the stock market reaching only around $200 billion a day.



There is an astronomically high volume of participants in the Forex Market and due to this high volume, traders have orders executed faster and easier with the added benefit that the prices are closer to what they desire.



<h3 class="wp-block-heading" id="h-liquidity">Liquidity</h3>



As soon as there are higher volumes in market, it results in higher liquidity which results in tighter spreads along with lower costs on transactions.



The spreads and transaction costs involved with Forex are significantly lower than that of Stocks due to the high volume and the liquidity of the Forex market.



<h3 class="wp-block-heading" id="h-24-hours-a-day-5-days-a-week">24 Hours a Day, 5 Days a Week</h3>



The Forex market is open all day and almost every day, with the exception that there is a weekend gap. Forex is not transacted over a traditional exchange, but through an OTC and Forex can be traded all over the world despite time zones and trading sessions.



Stocks, however, are subjected to stock exchange hours and even though NYSE and <a href="https://forexsuggest.com/nasdaq100-forex-brokers/">NASDAQ</a> have extended some trading hours, traders may face low trading volumes as well as lower liquidity during these times.



<h3 class="wp-block-heading" id="h-commissions">Commissions</h3>



When looking at the trading costs involved of trading Forex, traders will see that Forex Brokers often may not charge commissions on currencies traded but instead make a margin on the spreads.



Stockbrokers, on the other hand will, in most cases, be subjected to paying both the spread and commission fees to the broker.



<h3 class="wp-block-heading" id="h-narrow-and-wide-field-of-focus">Narrow and wide field of focus</h3>



There are virtually thousands of stocks that traders can choose from and it may be overwhelming in addition to requiring extensive research.



Forex pairs can be divided into major, minor, and exotic pairs with major pairs being the most traded amongst them all. Keeping track of currencies can easily done by utilizing an economic calendar.



<h3 class="wp-block-heading" id="h-leverage">Leverage</h3>



This is an exceptionally useful tool in trading and can be used as a way of boosting the account of the trader, allowing them to open larger orders despite their initial deposit and funds available in their trading account.



Brokers tend to offer a higher level of leverage on Forex than what is offered on stocks with Forex leverage ranging from 1:30 and even up to 1:1000, depending on the broker and their regulation and authorizing body.



Stocks however provide traders with a leverage of 1:2 which may go up to 1:50 depending on the stockbroker.



<h3 class="wp-block-heading" id="h-influences-on-prices">Influences on prices</h3>



Forex prices are affected by global news and these prices are subjected to the political and economic situations that emerge in other countries. It is imperative that traders keep track with developments in macroeconomic issues such as GDP, political prospects, and more.



The prices of stocks are also subjected to movements in these macroeconomic conditions, but on a much larger scale. News and earnings reports pertaining to the underlying stock of the company or the company sector result in price changes and movements.



<h3 class="wp-block-heading" id="h-regulations">Regulations</h3>



Due to stocks being traded on major exchanges, there are extremely strict regulations, and this may impose unwelcome limits, but it protects the trader to a certain degree, and it remains one of the most important factors of having chosen a regulated broker.



Forex trading is a lot less regulated than the former, but it still remains imperative to trade using a well regulated broker to avoid great losses which can be incurred and risking fund safety to stand a chance of increased gains, is not worth the risk.



<h2 class="wp-block-heading" id="h-how-do-beginner-traders-choose-which-market-to-trade-in">How do beginner traders choose which market to trade in?</h2>



Taking the differences and limitations of each market into account, it comes down to preference and trading needs along with objective, and each trader is going to differ in all of those criteria.



Deciding in which market to trade, traders will have to have a thorough understanding of the characteristics of each market and the fundamental differences between them to be able to evaluate which market will better suit their needs.



Traders will need enough knowledge of each market, their goals, trading style and their tolerance of risk in addition to their willingness and the extent to which they can be exposed to varying levels of risk.



A lot of traders choose to trade in both the Forex and the Stock market, while others only choose one. Each market has great investment opportunities, each with perks and risks.



Conclusion and Writer’s Opinion



There is no financial market that does not offer great opportunities that are accompanied by some level of risk and it depends on the beginner trader and their evaluation on what they want to attain, whether it is sustainable and what they are willing to risk.



By drawing up a trading plan that details what the trader’s trading needs are, beginner traders can then start exploring the best options which are according to their trading needs.



It is imperative that traders conduct enough research on financial markets along with the different assets that can be traded to obtain a clearer understanding of how it will suit their short-, medium- and long-term needs.

Forex trading vs Stock trading

Forex Trading versus Stock Trading – A Beginner’s Guide

By Chris Bishop



This week, on May 5 at 1400 CAT to be precise, CNBC Africa will be stepping into a new era by hosting its first ever virtual panel discussion that will not only be beamed live to 16 million households across Africa, but also will be on zoom.



It will be called Business Tomorrow and will focus on the revival of business in Africa whenever the COVID-19 pandemic lifts and allows commerce to breathe. Predictions are grim – more than a million jobs are expected to be lost and tens of thousands of companies are likely to go to the wall.



So, when we discussed in the newsroom this week the first topic for the first discussion it a no brainer – small business. These foot soldiers of the economy are likely to bear the brunt of the hard times – many were struggling long before the pandemic and the downgrade to junk status by the rating agencies.



Into this discussion will be throwing one word that is my pet topic – industrialization. I think this is a good way to create wealth on the way out of a desperate spot by making goods and parts and pieces that the world needs and can be exported to earn hard currency.



Now politicians throw the word industrialization around all the time, after all, it sounds good in speeches – I often wonder whether policy is as good.



A new generation of industrialists is scarce, but more scarce is the investment and backing from the banks to make it happen and maybe also the will among entrepreneurs to get their hands dirty.



I have been interviewing and studying entrepreneurs in Africa for more than a quarter of a century and I have often wondered whether is the lack of will on the side of many entrepreneurs to get down into the grimy world of industry. After all, it is not as sexy as IT, or the digital world, and it is less likely to get you into the glossy magazines on TV chat shows.



But it is rewarding and long term and people will always need fashioned metal until the day you can email a machine to a factory or 3D print it.



A distant part of my family is a testament to this and has been fashioning metal profitably for the nearly 200 years.



My great-great-great grandfather Stephen Grainger started out, with virtually nothing, in his poor back yard in a place called Dudley in the Black Country in the English midlands – so called because, even when I was a child, most of the buildings were blackened with industrial smoke. It was a hive of steam, tapping and welding and out of the Black Country came the world’s machines, tools, grinders, smelters, guns, cars and motorcycles



Stephen Grainger had little education, but a burning desire to make it as an industrialist and started out by dragooning his family into swinging hammers all day to make nails in the back yard. The family worked hard to build the wealth down the generations. My great-grandfather William worked as a striker – the skilled man who swings the sledgehammer for the blacksmith – in the Grainger factory.



All along the profits were invested to build small factories – one of which is working away as I write this in the Black Country nearly 200 years after the family made its first nail.



I went to see the family factory about 25 years ago and my relatives showed me proudly the many boxes full of little metal clips for shop shelves everywhere from Hong Kong to Sydney. It lacks glory, maybe, the family is never likely to make the cover of a glossy magazine, but they’re always likely to make money. The industrial enterprise has fed thousands of people in the last two centuries. Maybe many entrepreneurs and families in Africa can turn the same humble beginnings into a solid industrial base that is probably needed more now than ever.

Chris-Bishop1-e1386950379894[1]

Opinion : Could Industrialists lead the way up and out of COVID-19?

By Miyelani Mkhabela



The COVID-19 crisis is disrupting supply and demand at the same time, with severe financial consequences. To not only survive the crisis but also rebound swiftly, companies must protect their liquidity position and focus on their core competencies and businesses



Leaders can better prepare for the next shock by observing lessons emerging from the current crisis. Shutting down was hard, but opening up is going to be harder. Your workers are always your most valuable asset and it’s not the best times to lose them during the crisis, as rebuilding your operations is going to be even more difficult, you want to maintain your ability to rehire your best workers when the world is open for business again.



&nbsp;Statistics South Africa reported that Four in ten businesses feel that they cannot continue to operate: When asked about financial resources, 42,2% of respondents indicated that they are not confident that they have the financial resources to continue operating through the COVID-19 outbreak and 54,0% of respondents indicated that they can survive without turnover between one to three months. The doors of Tourism &amp; Hospitality; Sports; education, Retail; Entertainment are closed while manufacturing; Mining; Cargo and Logistics will also suffer in 2020.Small businesses based on their investments cannot manage the complexity of Covid19; large corporates are also struggling, yet risk can be minimized.



To set the scene, large numbers of small businesses have shut down and laid off huge numbers of workers; most are extremely cash strapped. The majority think they will be able to reopen by the end of 2020, but others are less certain. Small businesses disagree, a lot, about how long the crisis will last. Small businesses needs business continuity management, adaptation to technology and talent retention



&nbsp;It will be years before we fully comprehend the economic impact of the coronavirus, but one thing is painfully clear right now: Small businesses across South Africa and the rest of Africa markets are facing an existential threat. It will get a lot worse before it gets better for the African continent.



Here are a few tips for survival:



1. Carefully the prospective impacts of government plans to help small and medium enterprises (SME).



2. Help the business by deciding how to work with customers.



3. Regularly reassess credit worthiness: companies should continuously monitor the financial health of all but the safest customers.



4. Strictly monitor supply inventory through support functions to assess the cost of supplies and support functions that have access to a digital marketplace.



5. Recommendations to business on how to adjust the product offering. Companies should aim to deliver fast-selling products to priority customers for as long as possible, but they should also assess their product offering.



6.&nbsp; Investment and credit will be attractive



7. Adoption of an active operations management systems



8.&nbsp; Figure out how the needs of your customers needs have changed.



9. Don’t rush your decisions, but do make plans.



Finally, this is a time to be more client centred. Small businesses are highly required to meet customer expectations or satisfactory levels, while operating virtually has many disadvantages and misunderstandings, however, client’s service delivery standards still needs to be achieved. Generosity during a crisis can make a relationship far stronger. Small businesses are facing unprecedented struggles, and banks and policymakers must step up to help SME&#8217;s.



Miyelani Mkhabela is an Executive Director of Antswisa Transaction Advisory Services.

miyelani mkhabela

Nine ways you can try to save your small business post COVID-19.

By Chris Bishop



South African Billionaire Christo Wiese says he is an incurable optimist who believes his country will adapt to survive and rise above the COVID-19 outbreak that threatens to decimate its shaky economy. He also believes his struggling British High Street clothes stores will weather the storm.



Wiese also spoke of plans to announce his own relief fund – as many African billionaires have done- to feed the hungry rather than save small businesses.



“I think the most urgent need at the moment there are people going hungry. We forget that we have to keep small businesses going, we have to keep big businesses going,  but there are literally thousands of people who need a square meal a day. So, all of us will do things in a different way,” Wiese told CNBC Africa.  



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Wiese admitted in the interview that the COVID-19 was the biggest catastrophe he had seen in more than half a century of thick-and-thin in business.



“It is the worst I could have ever imagined. I mean if somebody had told me such a thing is possible, I would have disputed that.- I don’t think the world has seen anything like it is going through at the moment,” says Wiese.



“I am an incurable optimist and I believe that through this crisis that a lot of things may shake out correctly in a shorter space of time than they would otherwise have been. You know people talk about can the economy survive? &nbsp;I don’t know what they mean by that because there will be an economy when the dust has settled on this thing, so it is not a question of survival, but how we adapt…People are resilient, South Africans in particular, and we will adapt.”



Wiese also believes his struggling fashion store chain in the United Kingdom will weather the storm with the help of restructuring at the end of last year. He owns New Look fashion stories through his investment vehicle Brait and shut down a number of them &nbsp;as the High Street struggled. &nbsp;



“New Look has upped their game as far as e-commerce is concerned they have got their warehouses running so here and there people are managing to keep the ship afloat. People have been predicting the death of the High Street retailing in the UK for the last two or three years. I don’t think businesses just die like that, businesses do adapt and we have taken several initiatives in the last year with New Look in terms of a CVA (a cut down of store space and employees) to lessen the burden of leases and all those actions are being taken with a view to survive,” says Wiese.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



CNBC Africa also asked Wiese about when the lockdown in South Africa should be lifted. “One of the many things that I am grateful for is that I am not the person who has to make that call. We are all by now fully informed about what the risks are and the downsides are and it is not a South African problem it is a global problem. It will be a very, very, tough call that has to be made but having said that I think people have learned a lot of lessons over the past few weeks and hopefully those lessons will be properly applied so we can start with gradual relaxations as you know people are talking all over the world, in the United States and the United Kingdom, and I just hope common sense will prevail,” says Wiese.

Billionaire Christo Wiese Interview

I’m an incurable optimist!  We will adapt to survive COVID-19 says African billionaire Wiese

By Stephán Engelbrecht, Fund Management



The world is entering an unprecedented time and there is no historical playbook for what happens next. While not our base case, calamity risk is increasing (mass infections across South Africa [SA], with dire economic consequences), and nobody knows how to quantify this risk. We have many requests from clients asking for investment opportunities in this crash and we are happy to share our fundamental views. However, investors in any equities must bear in mind that, in the shorter term, cheap shares can get even cheaper and wild swings are likely. Our views are based on a 12-to 24-month timeline, with a base case scenario of the world normalising during this time period. So, risks have to be taken into account and any investment in equities should be considered in this context. Shares only become this cheap when risks are extremely high.



In times of extreme market volatility (and corrections), it is often unnecessary for investors to look far down the quality curve to find attractive opportunities that will generate significant returns in future. This is oftentimes the correct strategy as those economic uncertainties causing market volatility can have far more dire consequences for lower-quality businesses. This can make a company look inexpensive on the surface, but the upside might be limited as the business first has to struggle through an earnings trough, or raise equity to shore up its balance sheet which will, in turn, dilute current shareholder returns.



However, sometimes it is worth taking the risk. During market corrections, fundamentals are often ignored, and some market participants will sell a share at any price. It is at these prices where, we believe, the risk-return profile is so attractive that these counters deserve a small allocation in a diversified portfolio. These calculated risks may just turn out to be some of the best performers in an investor’s portfolio.



With that as background, we have scoured the SA market for some very exciting investment opportunities. We concede that these opportunities do come with some risks, whether it be debt, currency, regulation, liquidity or, in some cases, a combination of these factors, associated with them. Nevertheless, we believe that, at current valuation levels, the investor is more than compensated for such risks. So, put your hard hat on and prepare for some volatility although, at the end of the day, we are confident that a portfolio of these shares will reward investors handsomely.



MTN Group



If one were to draw up a list of countries where it is notoriously difficult to do business, and that also have extremely volatile regulatory and economic environments, the chances are that a large number of these nations will be among the 21 countries in which MTN operates. Initially, with major global mobile operators reluctant to enter these markets and regulations being fairly light, these countries held the appeal of attractive emerging market (EM) growth potential, with limited competition, for MTN. While this worked well in the beginning, over recent years MTN has appeared to stumble from one exogenous shock to the next – wars, extreme currency volatility, sanctions, exorbitant regulatory penalties and various lawsuits – but the company has weathered all these setbacks. MTN’s vulnerability to these exogenous events means that it is typically sold off, particularly aggressively during periods of risk aversion. This time around, the market sell-off was amplified by the collapse in the oil price, to which a number of MTN’s markets are vulnerable (especially Nigeria). With MTN’s share price falling below R40, the counter has now declined &gt;85% from its 2014 peak and it is currently trading at levels last seen in 2005.



In an industry where scale is critical, the significance of MTN being a top-two market share operator across all the markets in which it operates should not be underestimated. Where the telecommunications sector globally has largely been consigned by investors to the status of an ex-growth utility, MTN stands apart for several reasons. First, many of the Group’s markets still have further opportunities to increase penetration of mobile telecommunications and the potential to migrate those users to smart devices and drive data adoption. Second, while most developed market (DM) operators are confined to the provision of commoditised voice and data services, MTN is capitalising on opportunities to also add digital and mobile financial services.



Although MTN CEO, Rob Shuter has announced that he will be leaving the company at the end of his contract in one year’s time, he assembled a very competent management team during his tenure. Shuter has set the Group on a self-correction course. This includes the disposal of non-core assets, with proceeds being used to pay down debt (R14bn in sales were raised in the first year, with guidance of a further R25bn to be realised over the next few years) and paying particular attention to turning around some of the Group’s underperforming business units.



Since many of MTN’s new revenue streams do not require significant capital investment and are delivered through over-the-top platforms already in place, it has enabled the company to provide guidance of low double-digit revenue growth, margin expansion and relatively flat capital expenditure over the next 3-5 years. With the strong double-digit growth in free cash generation that this guidance implies, MTN is targeting annual dividend growth of 10%-20%.



Even at the bottom of the dividend guidance range, the prospective dividend yield is 15%, while the price as a multiple of expected earnings in 12 months’ time is 5x. No doubt, Brent Crude oil at below $30/bbl poses risk in the short term of foreign exchange availability and currency devaluation in Nigeria (MTN’s largest profit generator in FY19, accounting for c. 40% of group EBITDA). However, we are mindful of the oil industry saying, “the best cure for low oil prices, is low oil prices” and it is unlikely that the current situation will be sustained long term. At current levels, we believe there is now enough of a margin of safety in MTN’s share price to compensate for the risks it presents, with the potential for a strong recovery as current headwinds abate.



Investec



Over the past four decades, Stephen Koseff and Bernard Kantor created an institution. Built on the foundation of entrepreneurship and being agile and nimble to service its customers, the distinctive zebra logo became one of the most widely recognised symbols in SA financial markets.



In the early 2000s, Investec started to expand offshore with the UK being a key target market. Unfortunately, the UK’s highly competitive banking environment, ever more draconian and complex regulation and a global financial crisis (GFC) that hit just as Investec started to expand aggressively in the UK, made the experience far more lacklustre than the firm’s local successes. However, the company stayed the course, and, over time, Investec has built a strong UK presence.



Nevertheless, the UK remains a considerable drag on the Group’s profitability and ROE. Since the disastrous acquisition of Kensington in 2007 and the harsher regulatory environment post the 2008 GFC, Investec’s UK division has struggled to achieve a ROE greater than its cost of capital. This has resulted in Investec rightfully trading at a discount to its book value for significant periods since the GFC.



This discount to book value reached extremely low levels during the current sell-off, trading at close to 0.3x book. In addition, it coincides with some real positive changes taking root at Investec. The old guard has moved on and the new management team have taken decisive steps to improve the profitability of the bank.



Management unbundled the asset management division to make the structure less complex, committed to improving the cost-to-income ratio in the UK and promised that there were no sacrosanct segments of the business that will not be cut in the event of underperformance. We are still at the initial stages of the new regime and it will be interesting to see whether management can indeed improve the UK division’s ROE.



Although we acknowledge that Investec is not the highest-quality bank in the world and its earnings growth and ROE profile are far more volatile than its SA peers, we believe that the current share price provides an opportunity to enter at depressed multiples that more than sufficiently reflect the lower quality. And, the investor may yet benefit from an improvement in operating metrics as the new management team start their work.



Redefine



In recent years, many SA (and global) conservative investors squirrelled their savings away in property shares to earn an attractive, growing income. This bubble burst over the last few months and even the highest quality property companies have seen their value decimated. Selected YTD (to 25 March) declines among local property counters include Growthpoint (-45%), Redefine (-74%), Resilient (-46%), Nepi Rockcastle (-40%), Vukile (-63%), Attacq (-58%) and Hyprop (-60%). This follows already steep share price drops across the board in 2019.



The dire economic outlook for SA had already impacted Redefine’s share price hard when the novel coronavirus (COVID-19) hit and the whole property sector is now in crisis. These are unprecedented times and the world has changed in the last few weeks. Some tenants (especially in the retail sector) will earn little or no turnover for some time, and we have no doubt that they will want to renegotiate rentals with landlords. Some smaller tenants will go bankrupt. It is clear to us that the property sector will be reset after panic around the virus has subsided. Thus, the fate of many property companies is largely dependent on SA banks, who have very strong balance sheets and who, we believe, will be very co-operative in working with these companies to navigate the way through the current crisis. Although loan-to-value (LTV) ratio levels are all stated in the debt covenants for property companies, we think that the credit providers’ focus will turn from LTV ratios to interest cover, cash flow and sustainability. It is not in the interests of the banks to “pull the plug” on some of their biggest clients. We expect Redefine to work its way through this scenario together with the banks, with “reset” value emerging.



Management have acknowledged that they have no idea where rentals will settle, and they will largely depend on the health of the economy and the tenant. About 30% of retail turnover is from “safe” companies such as food retailers, cellphone companies and banks. Many office tenants will remain robust and industrial/logistics rentals will depend on tenant quality. So, it is not a disaster across the board, but months of hard negotiations will follow.



However, for investors, LTV ratios will remain a key metric and something which Redefine will have to address. At its last results presentation (FY19), Redefine had an LTV ratio of 43%. To highlight the spiral, if we assume the company had R100 of book value and R43 of debt – that 43% LTV is only just within its debt covenants. If the book value is written down by 25%, the LTV ratio goes up to 57%! Asset sales are usually a partial solution, but this looks increasingly unachievable. Withholding dividend payments becomes the next, and most likely, scenario. If a company can generate an 8% yield on book value (we are assuming no tax payable, which may be contentious), ploughing this back into debt repayments (as opposed to dividends), with a two-year dividend holiday, can reduce the LTV ratio from 57% to 41% – back into the covenant zone. We note that Redefine has already announced a delay in its interim dividend payment.



A big issue with withholding dividends is taxation. REIT (Real estate investment trust) legislation allows companies designated as such, to not pay tax and to distribute income to shareholders who receive the distribution as taxable income. If REITs do not distribute 75% of their income, then the current rules say they must pay tax on their income. We believe the property sector is in the process of negotiating with Treasury in an attempt to waive this rule – at least for a once-off time period.



We conclude that in a base-case scenario, the adjusted book value will be well below current book values, but higher than the share prices. We calculate that Redefine is fundamentally worth 50%-100% more than its current share price (unless Armageddon prevails!). But there is a high risk of shareholders not getting dividends for one, or even two, years. The share price is factoring in a far worse scenario than our base case. But investors should focus on the balance sheet and track closely the progress the firm makes in degearing.



There is a long road ahead, but we believe that, in the end, we will look back at this as a great opportunity to buy the share.



Northam Platinum



The platinum group metals (PGM) miners were the talking point of 2019. After being priced for bankruptcy in 2018, the price of the PGM basket recovered in 2019 resulting in the share prices of these miners rallying by 250% or more. The higher basket price helped these miners reduce their leverage with some of the mining companies going into a net cash position. It was a remarkable turnaround and highlighted just how cyclical the fortunes of these businesses are. Which begs the question, do you want to buy into such a cyclical industry in these uncertain times?



It is a fair question, and the answer very much depends on the risk tolerance of the investor. The reason why we are comfortable with a small position in Northam is due to the precarious demand-supply balance which the industry faced going into the COVID-19 crisis.



Prior to 2019, the threat of electric vehicles (EVs) caused the PGM basket price to remain below the breakeven price for mining companies and they battled to survive. Capital expenditure was cut across the board, with mining firms struggling to pay for maintenance capex, not to even mention expansionary capex.



Then, in 2019, the combination of a greater focus on carbon emission worldwide, the more enhanced testing after the VW scandal and the lack of R&amp;D in combustion engines over the preceding few years forced vehicle manufacturers to just add more and more PGMs in their respective catalytic converters as emission standards became more onerous. With the costs of PGMs &nbsp;a small fraction of the total vehicle production cost, they had the luxury to do this. Demand for these metals surged and the miners were not in a position to increase supply. This caused PGM prices to rally, with rhodium and palladium hitting all-time highs.



In our view, this situation will not change in the short- to medium-term, despite the COVID-19 outbreak and the subsequent decline in global vehicle sales. We expect demand to remain strong due to higher emission standards. Importantly, the threat of EVs, which are expected to be close to 50% of global vehicle sales by 2030, will prevent PGM miners from investing in new mines, thus keeping a constraint on the supply response.



Northam is one of the few PGM miners that will see strong volume growth over the next few years. Due to some tough decisions taken by management during the lean years, the company was able to shore up its balance sheet and it continued to invest in operations. As a result, we expect Northam’s annual production volumes to increase from c. 600k ounces this year to 1mn ounces over the next few years. Northam’s mines are also of a very high quality, operating at very low operating costs due to mechanisation. Trading at very attractive valuations and offering significant earnings (at spot PGM prices) and production growth, Northam is a high-quality operator in a very cyclical industry.



Alviva Holdings



Alviva Holdings is not an exciting company! But it is one of the Africa’s largest providers of information and communication technology (ICT) products and services. The Group has three business segments – ICT Distribution, which imports ICT hardware and software and sells it into sub-Saharan Africa via resellers, Services and Solutions, which provides system integration and ICT solution services, and Financial Services, which provides leasing finance to small-, medium- and micro-sized enterprises (SMMEs) for their ICT products.



The risks to this business are real. It is difficult to see Alviva continuing to operate in the same verticals and products as it is currently working, in five years’ time. This is due to the ever-changing industry in which it operates. For example, cloud storage and processing will, likely, fundamentally change the role ICT service providers play in the lives of their customers. To survive, ICT service providers will have to adapt their business models quickly and also ensure that they have a balance sheet strong enough to absorb any shocks.



We believe that Alviva has both these traits. It has a very experienced and conservative management team, which have navigated through some very turbulent times in the past and we maintain that management should be able to continue to do so in future. In addition, management have also been conserving cash. Over the past few years, they have adopted a very conservative dividend policy, paying out only 10% of earnings in dividends.



At our last engagement with management, they conceded that the operating environment is very tough at the moment, adding that they were very disappointed in the company’s performance but that it should improve in the second half. Management have guided that they will first look to retire around R400mn in preference shares, after which they will engage with shareholders regarding potential share buybacks. Admittedly, this was before the COVID-19 outbreak.



However, Alviva’s valuation is ridiculous – it is currently trading at a historic PE ratio of c. 2x and a normalised free cash flow yield of 50% (and we believe that we are being conservative here), so the risk-reward profile for investors is very much skewed to the upside. Liquidity is a concern and we highlight that investors should be patient if investing in this counter.

Our top share picks for the brave investor: Finding opportunities in times of adversity

Content supplied by <a href="https://www.forexbrokers.co.za/">Forex Brokers SA</a>



Financial Markets around the world and across Africa are currently highly volatile due to the effect of Coronavirus pandemic and oil price war. 



Currencies, Oil
&amp; Stocks have all been hard hit and many major companies on Wall Street,
European Indices &amp; Emerging Economies indices &amp; elsewhere including in
Africa including JSE have lost 30-60% of their value, currency pairs of major
countries &amp; emerging economies have all been affected making them highly
volatile &amp; unpredictable. 



Markets are being driven by human sentiment – fear more than ever. Fear emerging from uncertainty if the markets &amp; economies could recover soon enough has made investors sell off otherwise considered strong assets &amp; stocks.



In Africa, South Africa’s JSE 40 has lost R4.5 trillion Rand of its market cap – with most of the top 40 stocks losing almost 30% since the start of the year till mid-March 2020. 



Like many other countries, SA went on lockdown for 21 days starting on 27th March 2020, and SA economy outlook has been downgraded by Moody’s on 27 March &#8211; <a href="https://www.cnbcafrica.com/news/2020/03/30/south-africas-rand-crashes-to-its-lowest-ever-after-moodys-pulls-the-plug/">sparking more fears of the selloff on South African Rand (ZAR)</a>, which is at its all-time low.



The Nigerian economy has also been badly affected by the crisis &#8211; with Naira trading at over N500 against USD on the futures market. Most stocks on Nigeria’s NSE All-share index have fallen by close to 30% from the year’s high.



Right now, it&#8217;s important as an investor to step back &amp; control your fears amid this crisis and don’t let fear cloud your investing judgment. And look at market fundamentals, long term outlook among other factors.



What you should do?



Look at underlying factors like &#8211; financials,
risks &amp; performance:



Don’t base your decision on short term financial reports, news or based on fear, feeling or hunch. 



Look at overall
outlook &amp; factors like – risks involved, long term returns etc.



As an equity
investor &#8211; Check the company’s past financials
&amp; performance and overall outlook of the industry for the next few years. 



Review
Historic Performance of Company &amp; Sector &#8211; See
if the company has been performing well over the past 5-10 years and offering
good dividends, EPS (Earnings per share).



See if the sector is core &amp; strong &#8211; For example &#8211; sectors like Financial Services, Food &amp; Agriculture and Telecom form a core part of any economy &amp; they are expected to stay strong in the long run. 



Ask Questions &#8211; Will the sector in which the company operates, perform well in the future? Has the sector performed well in the past? Does the sector have strong fundamentals? Is the company run properly with sound management?



If the company that
you are invested in has some edge like &#8211; strong brand or innovative product/technology
or strong backing that will make it stand out even when the sector is
underperforming or even going down. 



Like – Company might have diversified interests in different sectors, or they have strong credible backing like – Government-backed firms, or they are behind some promising or revolutionary technology – like AI or Pharma, etc. Anything that will make it stand strong in tough situations.



Considering current poor economic conditions &amp; outlook – it’s important to look at if the effect on stock price is temporary &#8211; does the company have strong financials &amp; track record that will help it come back after this slowdown. How soon that stock is expected to come back? Many strong global companies with a proven track record have shown to bounce back even stronger after slowdown or recession-like – Microsoft, Amazon &amp; Bank of America. &nbsp;



Look deeply into
financials &amp; performance and don’t hurry your decision.



As a
commodity investor &#8211; 



Commodity prices like that of Oil &amp; Gold are dependent on demand &amp; supply. Investors need to study the fundamentals of the underlying commodity and only then they should invest &amp; don’t invest purely to make quick returns or based on feelings or emotions.



Gold is often considered
to be safe-haven by most investors during market uncertainty. Gold prices have
shown uptrend since 2008. And it has retained most of its value even during ups
&amp; downs. But even then, it can be risky for many investors.&nbsp; &nbsp;&nbsp;



While Oil trading is mostly done by companies &amp; funds, some individual speculators also participate. Oil prices have a very volatile history suggesting it is a very risky investment. Investors need to be cautious &amp; calculate risks before investing in Oil and use risk hedging &amp; risk management.



Oil prices normally fall when there is excessive output and demand is low. Like now – when the travel sector is affected by travel bans &amp; automobile sector is cutting back on production amid a drop in demand due to coronavirus. Oil has seen a huge drop in demand and plus OPEC (oil-producing nations) are stuck in a price war, <a href="https://www.cnbc.com/2020/03/08/oil-plummets-30percent-as-opec-deal-failure-sparks-price-war-fears.html">making oil prices fall drastically</a> and making it highly volatile and unpredictable. Trading in oil has never been riskier. 



Many investors
around the world trade oil on major exchanges worldwide. In Africa too, Oil
futures &amp; options are traded on major exchanges like – JSE &amp; NSE. 



Demand for commodities like Oil will likely come back in the future with price correction &amp; increased demand when the situation improves, but no one can predict with certainty of when or if. Making it a very risky investment. 



Investors using
proper analysis of all underlying factors know this.



As a currency trader – Currency performance is directly linked to economic &amp; geopolitical indicators of the country. If you are trading a currency pair on futures &amp; options market at JSE or with any <a href="https://www.forexbrokers.co.za/">South Africa based regulated forex broker</a> &#8211; then check for the underlying overall economic outlook of the country with a long-term perspective. 



While most speculation/trading on currencies is done on an intraday basis. It is best practice to maintain your position based on long term outlook &amp; strong technical &amp; fundamentals of the economy. 



For example – During uncertain times, US Dollar becomes safe haven for most investors, so currencies of emerging economies like South Africa, Brazil, etc. would likely lose due to risk aversion. So, it is best to base your decision based on long term fundamentals.



Also, another factor to take into note is the overall economy &amp; exports of the countries. The currencies of commodity-based economies have been especially hard hit. Forex: Nigerian Naira has been devalued by CBN due to the 2020’s oil crisis. In the past as well the Naira was affected in 2017 due to the oil price drop. 



Moreover, use proper risk &amp; money management and don’t let emotions overtake your judgment.



Think long term &amp; stick to your
investment plan



Think about your long term plan while investing in any asset class. In short or intra-day, you will likely see a lot of up &amp; down movements. 



But if you look at
the bigger chart- then the asset may actually be in a trending market. So it is
really essential to get the bigger view &#8211; research through the fundamental
factors and base your investment decisions likewise.



Once you have made
the investment decision based on your research – then stick to it unless there
is something really bad that conflicts your original long-term analysis.



What you shouldn’t do? 



Try to pick the top or bottom&nbsp; 



Many investors who are looking to make a profit from this situation or any rising/falling market make this mistake. They obsess about entering or exiting the market at the right price – the highest or lowest price. 



It is almost impossible for anyone (even the seasoned investors) to predict every market move &#8211; even with the right analysis tools &amp; news. Now, almost every investor has access to the same information &amp; technical analysis &#8211; so it wouldn’t give any extra edge to an investor. 



Plus, even if one could perfectly predict one move, he would have to time the move twice to get in &amp; out of the market at the right price. Which is near impossible to get correct all the time.



Don’t try to catch
every move of the market &#8211; tops &amp; bottoms and rely on fundamentals &amp;
think long term.



Get Emotional &amp; lose control of the situation



It&#8217;s very important to control your emotions during market volatility, and not panic. It is easier to get carried away by the flood of bad news, and the erratic market movements. 



Market ups &amp; downs are a normal things in the short term. It&#8217;s important to stick with your long-term investment strategy &amp; not let emotions change it. 



Don’t panic if the market is going against you in the short term. Think about the bigger picture – based on your strategy, that made you enter the market position in the first place. 



Use too much margin or leverage



This Is the most
common mistake that new traders make when trading currencies or derivatives or
commodities. 



Many CFD brokers offer <a href="https://www.forexbrokers.co.za/forex-trading/">forex trading</a> with a very high margin, sometimes it is even as high as 2000:1 leverage at some brokers. Also, forex &amp; equity investors trading in the JSE derivatives market has the option to use <a href="https://www.jse.co.za/services/post-trade-services/risk-management/calculators">margin while trading</a> &#8211; which puts them at risk.



Using too much
leverage to increase your position size also increases your exposure &amp;
risk. And this can multiply your losses, often higher than your original
capital. 



So, it is really important to avoid margin trading at all times, or use the leverage of no more than 1:5 if you really must.



Obsess too much with your current market position 



Many new investors
have a habit of looking at their portfolio again &amp; again &#8211; especially when
the market is going against them. This often results in panic &amp; wrong
decisions. 



Long term investors
shouldn’t obsess too much over the current market situation as it does not help.
If you are investing in an asset with a long-term view – then it is best to not
look too often at your portfolio. 



Think about – why you decided to invest in that asset &amp; what changed overtime that the asset is no longer investable. Ex: If you invested in company A – that has strong fundamentals, good future projects, growth perspective &amp; solid growth over many years, then think would the current situation affect the company in the longer term. If not – then stick to your plan &amp; don’t let every short-term market movement affect your decision.

Stock market exchange graph price drop with red numbers investment lose of business financial digital background – Candle stick charts stock crash crisis fall risk decreasing arrow down trend sell

Op Ed: Why you shouldn’t make your investment decision based on panic during market volatility?

Report by Kevin Stankiewicz



Key Points



<ul class="wp-block-list"><li>Mark Cuban said Wednesday he’s been “dipping his toes” into the market during its recent stretch of coronavirus-driven volatility.</li></ul>



<ul class="wp-block-list"><li>“I’ve been putting in 1% [to] 1.5% to work on every down day,” Cuban said on CNBC’s “Squawk Box.”</li></ul>



<ul class="wp-block-list"><li>The billionaire entrepreneur said he’s mostly been buying the ETF that tracks the S&amp;P 500 and shares of&nbsp;Live Nation.</li></ul>



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<a href="https://www.cnbc.com/id/10000348">Mark Cuban</a> said Wednesday he’s been “dipping my toes” into the market during its recent stretch of coronavirus-driven volatility.



“I’ve been putting in 1% [to] 1.5% to work on every down day,” Cuban said on CNBC’s “<a href="https://www.cnbc.com/squawk-box-us/">Squawk Box</a>.”&nbsp;



The billionaire entrepreneur said he’s mostly been buying the&nbsp;<a href="https://www.cnbc.com/quotes/?symbol=SPY">SPDR S&amp;P 500 ETF Trust</a>, the exchange-traded fund that tracks the <a href="https://www.cnbc.com/quotes/?symbol=.SPX">S&amp;P 500 index.</a>



He said he’s also buying shares of&nbsp;<a href="https://www.cnbc.com/quotes/?symbol=LYV">Live Nation</a>,&nbsp;and that he’s&nbsp;sold&nbsp;some of his put and call options because “the premiums are just incredible. It’s stunning the premiums that are in place right now.”



Cuban said he thought the market had settled into a trading range of up 5% one day to down 5% the next. “I’m not quite sure why,” he added.



“It felt like for a while we had active management doing all the work and trying to figure things out and now over the last three days it feels like we’re starting to get more algorithmic trading coming into the market,” Cuban said.&nbsp;



“I’ll act accordingly,” he added.



The “Shark Tank” investor’s comments come as U.S. stock futures were pointing to a significant loss at Wednesday’s open on Wall Street, one day after the <a href="https://www.cnbc.com/quotes/?symbol=.DJI">Dow Jones Industrial Average</a> rebounded more than 1,000 points.



<a href="https://www.cnbc.com/2020/03/12/billionaire-investor-mark-cuban-adds-to-his-twitter-stake-as-stock-market-craters.html">Last Thursday,</a> Cuban told CNBC he added to his stake in <a href="https://www.cnbc.com/quotes/?symbol=TWTR">Twitter.</a>&nbsp;“I’m a long-term holder there. I owned shares going into this decline. I don’t know what’s going to happen or when, but I think long-term we’ll be okay.”



He also said then that he bought shares in Live Nation earlier last week.



This article was first published on CNBC <a href="https://www.cnbc.com/2020/03/18/mark-cuban-reveals-what-hes-been-buying-in-coronavirus-market-swings.html">https://www.cnbc.com/2020/03/18/mark-cuban-reveals-what-hes-been-buying-in-coronavirus-market-swings.html</a> and is republished with its permission.

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