A BIT OF BAD NEWS JUST BEFORE CHRISTMAS L
You may have heard the shocking news of Steinhoff Pty Ltd,
one of the biggest companies listed on the JSE, as well as offshore. German
regulators are busy investigating allegations of fraud and corruption and
Steinhoff’s shares dropped with almost 90%, in 1 day last week.
The underlying funds of Kanaan BCI Balanced FoF also had
exposure to Steinhoff, some as much as 5% and our fund is already down with
-1.71% luckily less than the JSE, which is already down -3.22%.
Our Kanaan Hedge FoF is down with -2.3%.
Hopefully we have seen the worst of it. Most economists
believe that the Ramapoza win will be good for the South African
market.
WHO LOST THE MOST?
Morning Star data showed that the highest holdings – above
10% - in Steinhoff International at the end of last quarter were in two index
funds. Specialist industrial funds, as well as some equity sharia and value
funds, had exposures between 5 and 10%. We have always advised against direct
investment in the share market and in Index funds. These specialist funds, where
you tend to have too much eggs in one basket with one share, usually causes bad
diversification.
The above-mentioned again underlines the importance of not
having all your eggs in a seemingly fantastic company like Steinhoff, or for
that matter, also a fantastic company like Naspers. Within literally 24 hours
you can lose 90% of your life savings! Clients who are properly diversified,
also in our offshore Moriah Global FoF did not get any of this bad exposure. The
ZAR which has already appreciated with more than 10% since Rampamoza’s election
is causing a great window of opportunity to invest in Moriah Global
FoF.
Friendly greetings
Andre Delport
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