Ghost Bites

• Rand Merchant Investment Holdings is becoming OUTsurance (full details here>>>)
• Massmart has released the Walmart offer circular (full details here>>>)
• Blue Label Telecoms has restructured the Cell C balance sheet and seems excited about its prospects
• Santova is making an interesting acquisition in the US marke t

For these stories, as well as the director dealings on the JSE and a couple of other property updates, read Ghost Bites here>>>

Fighting over fractions

Love it or hate it, Twitter is where the gloves come off. In a world where LinkedIn tends to be nauseating and Facebook appears to be full of videos from people you've never met before, it's good to know that Twitter is where people can have a solid argument.

Yesterday evening, there was all kinds of activity around fractional share rights (FSRs) and what they mean. For those investing through EasyEquities, this is very important to understand. In the interests of giving you some facts from the horse's mouth (and he's a fan of horses so he won't mind that analogy), here are some insights from Charles Savage as the founder of EasyEquities:

• EasyEquities was the first platform in the world to offer FSRs digitally and holds a patent in South Africa. Today, almost all reputable investment platforms offer fractional shares.
• What does this mean in numbers? Well, Charles claims that EasyEquities is 10x bigger than the second largest stockbroker in South Africa and that it has more than tripled the size of the retail investor base in our country.
• The FSR technology means that an investor with a tiny portfolio can have the same exposure as an investor with a huge portfolio. In my opinion, EasyEquities has genuinely democratised the investment market and created a large part of the Ghost Mail audience.
• All of the structural elements of FSRs have been disclosed on the EasyEquities website.
• Once the FSRs add up to more than one share, EasyEquities automatically converts them to a normal share and no charges are levied on the conversion.
• If you are incredibly bothered by FSRs, you can choose to only buy whole shares on the platform.

My understanding is that the value "at risk" (i.e. dependent on a derivative contract with EasyEquities) is only ever a fraction of one share. If you own 100.817 shares in Barloworld, then you own 100 whole shares and 0.817 FSRs. At a share price of around R90, this means the exposure under a derivative contract is R73.53.

If you're going to lose sleep at night over that number, then please never research banking. Your bank doesn't even have the money that you deposited with it anymore (or at least not all of it).

We operate in a regulated system for a reason. I'm proud to have EasyEquities as a partner to Ghost Mail and I have all my shares with them. If you want to understand more about where they have come from and where the business is going, the first episode of Ghost Stories was a truly great show with Charles himself as my guest.

Central banks met expectations

The South African Reserve Bank (SARB), Bank of Japan (BoJ) and Bank of England (BoE) all met the expectations of the market. Regular readers would've known from our daily TreasuryONE font> updates that this was a critical week of central bank activity.

The BoE hiked by 50 basis points and the SARB followed the US Fed and hiked by 75 basis points. It's well worth highlighting that two members of the Monetary Policy Committee (MPC) of the SARB voted for a whopping 100 basis points increase, with the remaining three in favour of a 75 basis points hike. The dovish tone in the build-up to the announcement disappeared after that bombshell was dropped.

Looking at Japan, the BoJ kept rates unchanged but has directly intervened to defend the Yen. This means that the BoJ sold dollars in the market.

Against this backdrop, the rand traded at stronger levels against the dollar, getting close to R17.60.

A podcast for the weekend

In Episode 94 of Magic Markets, Dino Zuccollo of Westbrooke joined us to reflect on what we've learnt about alternative assets in the eight previous shows with Westbrooke. It's been a fantastic learning opportunity that started back in Episode 54.

To get an update on investment flows in alternatives and other developments in the market, listen to Episode 94 here>>>

Finally, if you're keen on learning more about cryptocurrencies, remember that Jaltech is hosting a series of educational webinars this year. They will deal with the tough questions, like the large sell-off this year and the introduction of regulations by the FSCA next year. If that's your scene, make sure you register at this link>>>

Have a wonderful weekend!