Courtney Capital

Private Wealth

  • Open an Account
  • About
    • Accreditations
    • Disclaimer
    • Hedge Fund Disclosures
    • Email disclaimer
    • Sitemap
  • Invest
    • Managed Accounts
    • Sound guidelines
    • Portfolio management
    • Satrix Investment Plan
  • Trade
    • Trading Platforms
    • Technicals & charting
    • Margin requirements
    • FAQ – CFD’s
    • JSE Top 40 shares
    • Trading calculators
    • Login
  • Save
    • Saving towards Education
    • Offshore investment unit trusts
    • Tax-free investments
    • Retirement Annuities
    • Retirement Income & Living Annuities
    • Group Annuities for Staff Members
  • Partners
  • Learn
    • Articles
    • Suggested reading
    • Financial glossary
    • Presentations archive
    • Market commentary
    • Market transcripts
  • Accounts
    • How to open an account
    • Brokerage & fees
    • Sample mandates
    • Bank details
    • Offshore transfers
  • Indicators
    • World markets
    • The week ahead
    • Economic releases
    • Commodities
    • Currencies
  • News
  • Media
  • Team
  • Contact

Return of the rand hedges

18 September, 2006 By Courtneycap

MONEYWEB, David Carte, 18 September 2006

Go for earners of hard currencies that are listed offshore…

The rand has fallen some 25% from its January highs, leading to a huge movement of investment funds into rand hedges on the JSE. Arthur Buchner of Nedbank Securities told Moneyweb Radio listeners on Thursday that rand hedges already constitute 55% of the JSE’s market capitalisation. He said the fall of the rand was already giving investors protection.

Morgan Stanley figures show that SA shares are up 8% in rand terms since the beginning of the year. Meanwhile, in dollar terms, they are down 8%. That shows the protection afforded to local investors by the softer currency. Buchner advises investors to buy dual-listed shares with significant hard currency income.

He recommended Anglo American, BHP Billiton and Liberty International as the best examples of this type of investment. Buchner said even though it did not have a dual listing, MTN had become a rand hedge in the wake of its acquisition of Investcom.

Being listed in London, Old Mutual fits the bill but only 50% of its earnings are not in rands. Like Old Mutual, SABMiller is listed in London but it is still heavily rand dependent for its profits. When Miller starts to produce profits, this will change.

Sasol is dual listed in Johannesburg and New York but by far the bulk of its earnings come from SA and the bulk of its assets are also here. This might change if investments in Qatar, Nigeria, China and the US come to fruition. Because Sasol’s factory gate synfuel prices are based on the dollar price of petroleum prices offshore it is a natural rand hedge.

DiData falls outside the top 40 stocks on the JSE but is listed in London. Most of its profits are still earned in SA.

Even SA based exporting and import-replacing companies are rand hedges. Exporters receive more rands for the goods and services they sell offshore. Companies in competition with imports find their products and services more competitive as the rand shrinks.

Buchner warned that commodity price trends could offset rand gains in mining companies and commodity exporters. Importers are most negatively affected, as they pay more rands for the same imports. Sometimes they can pass on the extra costs, but, in the motor industry for instance, competition makes it difficult to pass on additional costs. On these grounds, motor and retailing shares are experiencing heavy weather.

This story first appeared in Moneyweb Business in the Citizen.

Filed Under: Market commentary

Traders’ updates

My Tweets

Subscribe via Email

Enter your email address to receive notifications of new posts by email.

Free demo account

platform
Open a free demo account and play around with 100k for 20 days in order to test the platform. Trade local and international instruments. Get it now.

Somerset West

23 Louw Ave, Natures Valley
(011) 244-2060 or 61
(086) 525-2405
admin@courtneycap

Stellenbosch

Vrede Wines
(079) 507-1231
(079) 507-1231
 nicoc@courtneycap

London

6 Tallow Rd, Brentford, UK
(011) 083-7898
+44 (771) 347-3983
 arthurb@courtneycap

Other

Lockdown contact details
Mandatory Covid-19 portal
Open an Account

  • 1,366,194 visits
  • About
  • Invest
  • Trade
  • Save
  • Partners
  • Learn
  • Accounts
  • Indicators
  • News
  • Media
  • Team
  • Contact

© 2025 · Webandmore

Scroll Up