In this Issue:
- The hunt for yield in an upside-down world
- A tax efficient way to invest in property stocks
The hunt for yield and aversion to risk is causing something we have never seen before.
Interest rates and bond yields are falling globally and have turned negative. You can get a home loan in Denmark at an interest rate of -0.50% per year fixed for 10 years. While we are still far away from that with real rates in positive territory. Investors must be tactical in deploying capital.
Our stock screener has highlighted Redefine as one of the property stocks to kick up higher from oversold territory. Its bounce from below R8 co-insides with a support level that sees buyer come in a snatch up the high yield it pays. On a rolling twelve months, RDF is on a dividend yield just above 12%. For investors looking for income now is the time to be accumulating, it’s also trading at a steep discount to its Net Asset Value of over R10.
Should you be buying if you don’t need the income?
Investors looking for a tax efficient way to grow your capital, should look to the little-known corner of the stock market called Property Plus warrants. These aren’t your normal run of the mill warrants, these are lower risk, longer term structures that provide a tax efficient geared vehicle for investors that want property exposure.
Redefine Property Plus warrant (RDFIVD) created by Investec, gives you the ability to buy RDF and not pay dividend withholding tax. It trades below R3 and the dividends pay off the difference (between todays price of RDF and the warrant price), so you don’t pay any dividends tax. At expiry you will be given the choice to pay a final amount, which could be as little as 1 cent and receive your shares in RDF.
Buy RDF below R8.50 and RDFIVD below R2.95 for the long term
The week ahead:
- Local: Consumer Price Index, Retail trade sales (18/09); SARB rates decision (19/09)
- Local Results Due: Afrox, Heriot (16/09), Sasfin, Tex (17/09); Elbgroup, Pan-Af (18/09); Comair, Remgro (19/09); Granprade (20/09)
- LDT (17/09): AIP, BVT, CFR, CLI, CPIP, DSBP. HIL, KAP, MTH, OMU, PGFP, SNT, TFGP, TWR, WHL
- Futures Closeout: Stocks that could be significantly volatile are MRP; SHP; SOL; BHP; CPI; BID; FSR; SBK; IPL; AGL; REM; DSY; SLM
- International Earnings: Oracle (16/09); Adobe, FedEx (17/09); General Mills (18/09); Sasol, IG Group (19/09)
Other Economic data releases of interest…
- Monday: Industrial Production (CNY)
- Tuesday: German ZEW Economic Sentiment (EUR); Monetary Policy Meeting Minutes (AUS); Manufacturing Sales (CAN)
- Wednesday: CPI (UK); FOMC Economic Projections, Federal Funds Rate, FOMC Statement, Crude Oil Inventories (USA); CPI (CAN)
- Thursday: Monetary Policy Statement, BOJ Press Conference (JP); Unemployment Rate (AUS); GDP (NZL); SNB Monetary Policy Assessment (CH); Retail Sales, MPC Official Bank Rate Votes, Official Bank Rate, Monetary Policy Summary (UK); Philly Fed Manufacturing Index (USA)
- Friday: Core Retail Sales (CAN)
Retirement Solutions
Do you have an RA policy? Are you nearing retirement? Do you know how your investments are performing? Are you still paying high fees on your long-term savings?
As a leading provider of new generation investment solutions for pre and post retirement, we can reduce your fees by 60% or more!!
To ensure you have the best solution contact Gavin McCarter to set up a free review.
Local Market:
The JSE rallied last week on global optimism around trade wars, additional stimulus by central banks and Naspers unbundling its Tech assets into Prosus N.V. And Moody’s sparing us a downgrade to junk status
New tranches of structured products with guaranteed minimum returns are open. If you’d like to get our latest structured product note, ask your Finova advisor for details.
Local Market:
The JSE rallied last week on global optimism around trade wars, additional stimulus by central banks and Naspers unbundling its Tech assets into Prosus N.V. And Moody’s sparing us a downgrade to junk status
New tranches of structured products with guaranteed minimum returns are open. If you’d like to get our latest structured product note, Please reach out to us via email.
