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Interest Rate Hike

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Frequent Contributor
But is that the correct medicine for "this" inflation? Seems to me that the man in the street is just going to pay more.
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Super Contributor
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Super Contributor
So who wants to take a stab at when banks are going to bottom out, and more precisely - African bank?
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Valued Contributor
African Bank going to zero (or a cheap buy out), their business model is broken with no repair possible ..
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Super Contributor
This interest rate thing doesn't look that bad. The typical income for a R1 mil bond is around R35k. If you just got your increase at about inflation, you're getting about R1700 more out after tax. A 1 mil bond repayment at 8.5% was costing about R8700, now at 9% it costs about R9000. Still got another R1400 of after tax increase to cope with e-toll etc.
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Super Contributor
Why is this thing still the largest constituent of the Satrix Divi basket?
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Super Contributor
The effects on corporate borrowings is more damaging, and less corporate income tax going into the fiscus.
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Super Contributor
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Super Contributor
Sjoe, Bold statement Simon. Not a fan of African Bank either (mostly personal ?ethical reasons and I may be 100% wrong) But: In the last 30days Coronation increased holding of ordinary shares to 20%, PIC = 15%, Old Mutual 6% and SANLAM 5% and who else also?
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Contributor
Increasing productivity faster than wage increases tends to pull down inflation. Think more goods / services being produced and not (too much) more money available to purchase them. You can achieve this through many ways e.g. reducing corruption, waste, etc - i.e. it's not just cutting wages or capping increases. Of course this tends to depend on things like improving the education system, hiring people on merit (and being able to fire them for lack thereof), training or up-skilling, automation, becoming more capital intensive, increasing government efficiency, etc. Not having above inflation increases of your input costs e.g. electricity (well run Eskom), imported materials and equipment (strong Rand), etc obviously help. On the monetary side you can increase the cost of money by putting the interest rate up which dampens demand for goods and services.
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Super Contributor
I have asked myself this also, only came up with 2 possibilities, it's a protection racket or they are incompetent, look at gold - they got rid of it and brought in a retailer! For the win!
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Valued Contributor
sure bold and like most bold statements likely wrong .. CML and rest buying more is just that, buying more AKA averaging down .. as Investec did with GIJ and many others with others .. just because they buying does not mean it'll end well
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Valued Contributor
no man people understand how ETFs work .. they have a pre defined mandate on how they invest with rules an all .. they follow those rules, nothing to do with rackets, preferred anythings, bribes or the like .. purely mechanical ..
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Super Contributor
Simon, I saw on Friday that you are of the opinion that WHL could possibly be bought at R52 level. I am interested in how you arrived at that conclusion?
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Super Contributor
Ok, sure, that was my of the bat thoughts after suffering a drawdown of >150% for this tax year in abl because i hold stxdiv. The next 2 years upside was eaten by this 1 share. It is at moments like this that theory goes out the window. Is there anything in there about protecting capital?
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Super Contributor
Then something seriously wrong with Satrixdiv. mechanical system (ha,ha) as they added most of there ABL shares in last 6 months? Seems as if also their highest financial weighting.? Correct, the fact that they have them does not mean it will end well, but mind boggling for sure.
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