MORE ON GDP

GDP stands for gross domestic product. 

It places a value on all the goods and services created within a country’s borders in a particular period. The GDP tells us how an economy is doing – whether it’s growing or not. It’s probably the most important economic indicator in the world. It’s measured every quarter. 

You can compare how the economy fared from quarter to quarter, or you can look at how the GDP value compares to the same period in the previous year. (This is the one we really care about.) 

If the GDP value is bigger, it means the economy grew. If not, the economy shrank. If the GDP growth rate decreased for two successive quarters, the economy is thought to be in recession. 

The GDP measurement was invented in 1937. The US government commissioned economist Simon Kuznets to devise a single number that reflected the state of the economy. The government, trying to help the economy out of the Great Depression, was getting increasingly frustrated that it had to base policies on sketchy data. 

The formula is quite simple. First private consumption is measured – that means everything we’re buying – for example, cars, property, doctor’s services and food. Information is collected from thousands of shops, manufacturers, service providers and other companies. 

Then all the gross investments are measured. This includes all the money that foreign companies invest in South Africa. 

Next: Government spending, everything from infrastructure to salaries. Then all the imports are deducted from exports. This is very important. Imported goods are not manufactured in a country and can’t be considered as being part of the GDP. 

This “balance of trade” numbers are an important indicator about what’s going on in the economy.

Why is the GDP important to investors? First, a weak economy means companies probably won’t deliver fat profits. This means the companies won’t grow by much and therefore their share prices should also languish. The GDP is also a key indicator of where interest rates may be heading. While the SA monetary authorities officially focus on keeping inflation manageable, a weak GDP number may help to convince them to cut interest rates to support the economy.

Source: Finweek 2 August 2012 Page 35

GDP

GDP FACTS

• SA contributes less than 1% of the world’s GDP. Africa’s contribution was 3.5% in 2011.

• SA has the 29th biggest economy in the world.It’s GDP is bigger than that of Denmark and Thailand, but smaller than Argentina and Austria.

• In terms of GDP, California is the ninth biggest economy in the world and bigger than Spain and  Canada. Texas is bigger than Australia, and Massachusetts is larger than SA’s economy.

• According to IMF projections, the Chinese GDP will exceed the US’s by 2016. However, the average Chinese person will only have an annual income of $13 000, compared to the projected American income of $57 200

Source: Finweek 2 August 2012 Page 35

WHAT ARE THE MARKETS UP TO?

Johannesburg - The JSE struggled to find clear direction at the opening on Wednesday‚ with escalating eurozone concerns weighing on market sentiment. 

“The overriding theme is still Europe‚ although we also had disappointing second-quarter results from Apple‚ which added to the negative undertone‚” said Ryan Wibberley‚ an equities dealer at Investec Asset Management. 

Market participants are still anxious that Spain might need a full sovereign bail-out after one of its regions asked for financial help last Friday. Meanwhile‚ there are also reports that Greece is likely to miss its debt reduction target. 

At 9:43‚ the All Share [JSE:J203] index was up 0.11% to 34‚037.30. 

Big movers in the early session were Anglo Platinum [JSE:AMS]‚ which gained R4.39‚ or 1.08%‚ to R412.50;Lonmin [JSE:LON]‚ which lifted 95 cents‚ or 1.09%‚ to R88.45; and Harmony Gold Mining Company [JSE:HAR]‚ which added 88 cents‚ or 1.16%‚ to R76.56. 

Among industrials‚ British American Tobacco [JSE:BTI]lost R5.08‚ or 1.16%‚ to R431.02. The company reported a 5% rise in basic headline earnings per share to 98.8 pence for the six months ended June 2012‚ from 94.5 pence a year ago. The group declared an interim dividend of 42.2 pence – up 11% on a year ago’s 38.1 pence. 

Chemicals and explosives company AECI [JSE:AFE] was down R1.75‚ or 2.03%‚ to R84.50. The company reported a decline in diluted headline earnings per share to 103 cents for the six months ended June 201‚ from 264 cents a year ago‚ as HEPS were affected by an empowerment transaction.

Sources: news24.com

Standard Bank Online Share Trading

MNAZI BAY TO DAR ES SALAAM GAS PIPELINE PROJECT

On Saturday 21 July the government of the Republic of Tanzania inaugurated the pipeline project. This pipeline will be approximately 532km long. Wentworth Resources discovered the Mnazi Bay gas field in 1982. Executive Chairman of Wentworth Resources said "This is the beginning of Tanzania's future as a significant gas producing country and we are proud to be a partner in this endeavour ."

But who is Wentworth Resources? And are they listed on any stock exchanges?

Wentworth Resources is an independent oil and gas company with gas production and a committed exploration programme in the Rovuma Basin of southern Tanzania and northern Mozambique. The Company and its concession partners own a gas processing plant and a gas receiving plant, and a 27 km pipeline system in Mtwara, Tanzania. Wentworth Resources is publicly-traded on the Alternative Investment Market of the London Stock Exchange (AIM: WRL) and the Oslo Stock Exchange (OSX: WRL). The first chart is Oslo Stock Exchange and the second chart is the shares' performance on the London Stock Exchange.

Resources: http://www.wentworthresources.com/

http://www.mbendi.com/

LITHA HEALTHCARE GROUP LTD

Litha Healthcare was founded in 2006 and is a diversified healthcare business providing services, products, and solutions to public and private hospitals and government healthcare programmes in Southern Africa. The group comprises three divisions, namely Litha Biotech (biotechnology/vaccines), Litha Medical (medical devices) and Litha Pharma (pharmaceuticals).

Major shareholders at 3 July 2012: 
Paladin Labs - 44.52%
Visio Capital - 13.79%

Blackstar Investors Plc - 12.75%

Current share price: R3.60

P/E ratio: 11.3

Rock Capital's recommendation: BUY

Target R5.15

EPS growth 29%

Sources:

PSG Online

Standard Bank  Share Trading

SA FACTORY OUTPUT

South Africa's factory output grew above expectations in May compared with last year, backing the case for interest rates to stay unchanged at next week's policy meeting, although the central bank may cut them later this year to buoy the economy.

The Reserve Bank has kept rates at three-decade lows since late 2010 but some analysts believe it might have to give domestic growth more stimulus as a global downturn hurts exports while inflation is seen staying within target until 2014.

Growth in manufacturing production, which accounts for about 15 percent of GDP, outpaced forecasts at 4.2 percent year-on-year in volume terms in May, after rising by 1.1 percent in April, Statistics South Africa said.

May's increase in factory output was mainly due to higher output in food and beverages, vehicles and accessories, transport equipment, and petroleum and chemical products, the statistics agency said.

The rand recouped some of its earlier losses against the dollar, and was trading at 8.3450 compared with 8.3545 prior to release of the data at 1100 GMT.

For more information visit: 

http://af.reuters.com/article/investingNews/idAFJOE86B04H20120712