Transcript Financial Results - Insurance Gateway

Media- Equity Market
Apr 10 2013
Christopher G. Gilmour-Investment Analyst
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Global Markets
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US Equity Market-S&P 500 Index-Long series
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S&P 500 and 200-day moving average
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S&P 500 deflated by US CPI
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S&P 500 PE Ratio (x)
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US Yield Gap
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US Corporate Earnings Growth
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Nikkei 225 Index-Long series
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Local Markets
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The long term case for equities
YTD 2013 2.36%
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JSE All Share Index-Very Long Term
YTD 2013 2.36%
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JSE ALL Share Index YTD
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JSE Alsi still looking attractive in USD and in real terms
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FTSE/JSE All Share PE Ratio (x)
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FTSE/JSE FINDI PE Ratio (x)
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FTSE/JSE Resources PE Ratio (x)
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FTSE/JSE FINDI Earnings Growth ( YoY % Change)
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Alsi & its Underlying Earnings Growth
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Consumption: Real retail sales
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Conclusion
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Conclusion
In immediate future, possibility of a correction in the US equity market.
US economy grudgingly gaining traction, with China maintaining
momentum. Medium term, things looking distinctly better in the US. Much
improved home sales and falling unemployment (apart from Friday 5
April’s figure!).
But US equity market discounting far higher economic growth than is
likely to be the case.
Japanese market likely to perform well on the back of a significantly
weaker yen
Demand for commodities still remaining reasonably high, though more
subdued than in recent years. Single commodity stocks remain
vulnerable. JSE Resources index PE ratio still high historically.
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Conclusion-continued
Against this background, difficult to see how SA can maintain a high
economic growth path. Interest rates staying at current levels until 2014 at
earliest. Sluggish economic growth at best and far below that of our
African peers.
Financial and Industrial index earnings growth looking much better and
sustaining the rarefied level of the index.
But investors have bought quality stocks for the longer term, pushing
valuations up. Deep value in quality stocks increasingly difficult to find.
Retail sales growth looks vulnerable to local cost input shocks, such as a
weaker rand and higher food, fuel and administered prices. Our favourite
retail stocks remain Mr Price, Shoprite and Woolworths. The African
growth story will continue to sustain many retail shares.
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Thank You
24 Absa presentation title  Date of presentation
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