SA Rand trading in a swing

So what has happened this week. The South African Rand came under sustained selling pressure as last week moved ahead which ended up taking the GBP ZAR exchange rate all the way up to 12.2699. 


This was the pair's highest level since the middle of last month. The move represented a significant rejection of the 6-month low of 11.7624 which GBP ZAR traded down to just two weeks ago.


This movement is partly technical in nature, as speculators bought back in when it was showing signs of being over-sold following the downside move in the middle part of this month. However, there were also clear fundamental drivers behind the shift out of Rand-denominated assets over the last seven days. 


As is invariably the case with the risk-sensitive South African currency, exogenous factors, rather than domestic risk events, had the greatest bearing on the relative strength of the Rand last week. 


A survey from HSBC showed that activity in China's key manufacturing base had slowed for the fifth month on the spin, caused institutional investors to shun riskier asset classes, including the Rand. 


Meanwhile, growing concerns that the parlous state of Spain's economy might force the Iberian giant to accept a ‘Greece-style' bail-out, saw the yield on 10-year Spanish gilts rise to above 5.5%, causing a further shift into safe haven currencies by market participants.


This week's session has started on a more positive note for the Rand, as investors' confidence levels improve thanks to comments from Chancellor Angela Merkel that Germany is prepared to sign up to an agreement which will see the amount of bail-out funding made available to debt-burdened European states bolstered at the eurozone Finance Ministers' meeting in Copenhagen on Friday. Merkel's comments have caused the yields on Spanish bonds to drop, and if the eurogroup summit does indeed bring a commitment to increased funding for states such as Spain, then appetite for risk is almost certain to strengthen ahead of the currency markets' weekend close. 


The Rand will benefit from such a scenario, which would be likely to spark a renewed run at GBP ZAR's key interim floor of 11.7624 in the near-term. 


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Your Jewelery Gift Will Bring Joy Into Someone’s World

 It is not only about property being an investment, jewellery is as well.

You will not be disappointed taking the online jewellery route this Christmas or for any other occasion. This way you will receive the type of service you so richly deserve. And best of all, you will be able to find the perfect jewelery item for that special someone in your life. Select the ideal piece from all the well-known brands; think of it this way - you will now be able to give the gift of gifts.

If you are looking for a specific item of jewellery, it is often complicated and awkward to find what is in your mind’s eye. It is a myth if you feel that jewelery is a little too rich for your palate and your pocket; there are simply hundreds of items to choose from, and many that are quite affordable, too.

Give the gift of class and sophistication, and should you not be in a position to spend an untold fortune, you would be delighted to discover that many of the pieces are within every kind of budget.

Some of the better-known brands that can be sourced are Lanco, Pierre Cardin, Guess, Tomato, Citizen, Puma, Latan and Hallmark.

You will now be able to give someone a lovely watch and other items that and will only cost you from as little as R199 upwards.

If you would like to give that someone special a ring, earrings, bracelets or a lovely pendant, you will be spoilt for choice.

Perhaps you would love to give tanzanite, diamonds, gold, silver or pearls; there is something special for everyone this Christmas, and best of your gift will be delivered to the recipient’s door the very next day.

Your gift will simply bring that little extra cheer in someone’s life. Nothing quite beats the gift of giving. jewellery online simply makes a whole lot of good sense.

Should I rent or Should I Buy?

So as a matter of interest did you know that over a ten year period,  it is normally cheaper to buy our own business property, than to pay rent each month. The reason is quite simple : Rentals generally increase each year, whereas a bond repayment stays the same ( except for interest rate increases). 


So getting a mortgage or bond of up to 80 % for tenants that want to buy their own premises. If a tenant occupies more than 60 % of the premises they operate from, then a No Deposit, 80 % commercial property loan can be arranged.

So why not approach your clients and offer them 80% bonds on commercial and industrial properties ? Why not consider this for yourself ?

RENT versus BOND Example Property Value R 4,8 million

Year  Rent      Rent with   Bond            Difference          Difference

        In Rand  Escalation   Repayment  per Month          Per Annum

                       At  9%        In Rand

2012 54,500    59,405      63,450             - 8,950                  -107,400

2013 59,405    64,751      63,450             - 4,045                  - 48,540

2014 64,751    70,579      63,450              1,301                     15,612        

2015 70,579    76,931      63,450              7,129                     85,548

2016 76,931    83,855      63,450             13,481                  161,772

2017 83,855    91,402      63,450             20,405                  244,860

2018 91,402    99,628      63,450             27,952                  335,424

2019 99,628    108,595    63,450             36,178                  434,136

2020 108,595  118,368     63,450            45,145                   541,740

Rental Total = R 9,115,752        Bond  Total = R 7,614,000                 Saving: R1,501,752

In addition to the saving in rent, there is capital growth on the building as well as the fact that the building will belong to the purchaser after 10 years.

Capital Growth on building bought at R 4,8 million, at a very conservative 3% per annum growth rate, will give a value of R6,450,798 after 10 years and then there is no rent to pay from year 11 onwards !!

The owner of a self tenanted building, bought at R 4,8 million could be R 7 952 550 better off in 10 years time, if they buy their own building as opposed to renting.  

Interesting!

Home loans for the self employed!

Self employed home loans

The one sector that is grappling to come to terms with the tighter lending criteria policies adopted by the banks is the self employed.  It seems those who work for  companies are able to get loans while those who pay the salaries are not. Although this is illogical, the banks say the consumers in this sector are regarded as a higher risk. Self-employed applicants tend to be viewed as a higher risk than employed applicants, due to the perceived instability in income of these individuals, particularly in these challenging economic times. It is relatively straight forward to confirm the monthly earnings of salaried applicants; the same can't be said for those who are self-employed.

According to the banks self employed consumers are generally more exposed to negative market conditions and this may have a high impact on the sustainability of their earning ability. Recently they have seen an increased level of default in this customer segment. This has led the banks to mitigate this risk through appropriate application selection criteria.

Advice to the self employed consumers is that though the banks are now stricter than before, they are still lending.

Important things to note when making an application:

Credit Record - This is where most people fall short with their mortgage applications. Before approaching your bank for a mortgage loan always check out your credit profile before applying. You can do this at the major Credit Bureaus, ITC Transunion and Experian – they may charge you for the credit report, but it is well worth the expense. Where a creditor has obtained a default / judgment against your name you will have to pay the debt in full and contact ITC for the rescission of the default / judgment. Slow payments also have a negative impact on your credit scoring. Always pay you accounts on time or before the due date to avoid this. Second thing is affordability; speak to your bank or a bond originator to check how much you qualify for. When you do the affordability calculation it is important to be truthful about your income as this affects your application. 

Lastly but most importantly; make sure you have all the relevant documents required and do not cut corners because you will be declined. Depending on the bank, they require 2 to 3 years audited financials, 6 to 12 months bank statements (business and personal and stamped for authenticity), signed Assets and liabilities, signed income and expenditure, signed letter of income from the auditors, company docs, and projected cash flows. I would say that even though the banks are strict company's such as Global Fundi will assist you or help you find a bond originator who cares. There is still hope even under these circumstances. 

Lindy Z.

Take from the rich and give to the poor

Thanks David te Brake

PioneerFinancial Planning (Pty) Ltd