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Could Your Company List on the JSE?

Insider perspectives on listing on the JSE.

Patrycja Kula

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Stock-Market

A listing on the JSE may be just what your company needs to take it to the next level, whether this entails accessing capital for growth, profile building or realising investment for its shareholders. Whatever the reason, as the economic climate improves, more companies will look seriously at the possibility of listing.

The JSE ended 2012 with eight new listings on its Main Board and four listings on the AltX. The listings trend last year has been appropriate given current market conditions. As has been the goal for some time now, the JSE is looking to attract quality listings — companies that list for the right reasons and which find strategic value in listing their businesses.

While the number of new listings is obviously closely tied to economic conditions, the decision to list should meet the long-term objectives of the firm rather than benefiting from a day’s buoyant conditions.

Markets are both cyclical and changeable and share prices move accordingly. Companies looking to list need to take this into account and have a long-term horizon in mind. The decision to list demands an in-depth understanding of a company’s management, resources, stage of development, long-term future goals and strategy.

When listing’s a bad idea

There are instances where listing is a clear no go. Listing on the JSE is not an escape route for a company in trouble looking to cash out, nor is it an opportunity for a company without clear direction seeking growth.

The JSE therefore remains strict, looking to talk to solid companies with good track records and proven management. As a regulator, the JSE takes investor protection very seriously, and it’s therefore vital that it uses its judgement to prevent inappropriate listings to avoid future problems for both the company concerned and its investors.

On some occasions a company may have both a good track record and prospects but nevertheless be poorly suited to being a listed entity. Highly entrepreneurial firms, for example, may battle with giving up some autonomy or resist having to account for decisions to a larger audience.

The pros and cons of listing must be carefully weighed up. The benefits include gaining access to equity capital rather than debt finance, enhancing a company’s status, and enabling companies to use their shares to fund acquisitions. In addition, companies enjoy greater exposure. Finally, listing could enable a company to attract and maintain good employees and may also enhance dealings with banks, suppliers, distributors and customers.

Taking the first steps

When deciding to list your company you need to consider the following:

  • Where is your business plan taking the company?
  • What are your likely capital requirements?
  • How strong is your competitive position and how can it be maintained and strengthened?
  • What is the quality and experience of the management team?
  •  Are all members of the management team working to the same agenda?
  • What outside perspectives, such as non-executive directors, does the board have access to?
  • What will attract investors to the company and are you committed to spending time communicating with these shareholders?

 Be prepared

The process of preparing for and seeing through a listing is demanding. Inevitably, as this process places additional pressure on the management team involved, if cracks are ever going to appear now will be the time. It is crucial to ensure that the board is unified behind whatever collective decisions have been taken and that all members are able to explain and promote the company’s plans.

It’s therefore not surprising that some companies considering a listing decide against it the first time but return to the idea later when they are better prepared.

The actual listing, however, is only the start of operating in a listed environment. There are a number of considerations to take into account when considering listing on the exchange. These include:

  • A reduction of control. The sale of equity would involve ceding a degree of management control to outside shareholders, especially for significant acquisitions.
  • Disclosure requirements and ongoing reporting. A much higher degree of reporting and disclosure is required, which may require additional investment in management systems, resources and more rigorous application of compliance controls.
  • Loss of privacy. Greater accountability to outside shareholders means that directors and management lose much of the privacy and autonomy they previously enjoyed while running an unlisted company. The company’s heightened profile means any under-performance is scrutinised which may have a direct impact on the share price.
  • Costs and fees. The overall costs of listing and maintaining a listing must be considered and understood.
  •  Management time. The listing process and other duties may require time.
  • Additional constraints. Directors’ responsibilities and restrictions are complex. They include a disclosure of total remuneration packages, restrictions on share dealing and the communication of price sensitive information — whether this information is to have a positive or negative impact on the share price.

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Say you have R40 000 to invest. What if your R40 000 could grow to say R200 000 in seven years or so? Read On

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1 Comment

  1. tumelo

    Jan 10, 2016 at 11:08

    Good day iam looking for a broker. Can you please email me at. Moipone.m@webmail.co.za

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Company Posts

Balancing Business And Investment Risks

It is vital that entrepreneurs develop additional revenue streams and create wealth outside of their business to ensure their financial security. Sheldon Friedericksen unpacks the benefits of including Fedgroup’s Secured Investment offering in a diversified portfolio.

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Entrepreneurs tend to have a natural affinity for risk-taking. While carefully calculated, they bet big on their businesses, often going all-in when investing financial resources to start and grow their companies.

“Given this commitment, many entrepreneurs view their business as their ultimate retirement plan. This can be a mistake, because it places all their proverbial financial eggs in one basket,” explains Sheldon Friedericksen, Chief Financial Officer at Fedgroup.

As an entrepreneur, it’s important that you consider how a diversified investment portfolio that spreads risk can offer greater financial security, while still delivering robust returns.

“Paradoxically, while most successful entrepreneurs excel at diversification – they often pursue multiple opportunities, or pivot their business to exploit new gaps in the market – their investment portfolios seldom follow suit,” continues Friedericksen.

Exposed to volatility

This inherent appetite for risk means entrepreneurs often also employ a different approach to investing. “Allocations tend to reflect this risk profile, with portfolios heavily skewed towards high risk, high return assets such as equities.”

Related: More Than Sun In Your Eyes: Fedgroup’s Impact Farming Solar Offering

However, entrepreneurs need to carefully consider their asset allocations, taking into account their business in relation to their other investments. “As the sole or majority shareholder in a business, an entrepreneur already has massive exposure to equity risk, whether the company is listed or not,” says Friedericksen.

It’s also important to insulate investment portfolios from the potential impact of stock market corrections. The recent slump in the value of shares in companies that were previously considered mainstays in the portfolios of astute investors and leading fund managers has highlighted the variability in risk inherent in a concentrated equity investment approach.

“Since the start of 2018 a range of blue-chip JSE-listed companies have shed significant value as equities shrugged off positive market sentiment and reacted to weak economic fundamentals and, in certain instances, corporate governance irregularities,” says Friedericksen.

In the face of these developments, he believes that entrepreneurs should ask if they can solely rely on stock investments, especially when the bottom drops out of heavily-weighted shares like Steinhoff?

“While investing in equities has long been considered one of the best ways to achieve above-average returns, in the context of an entrepreneur’s risk profile there is always a need to include lower-risk, secure investments in your portfolio to ensure a degree of security and certainty.”

Your capital secured

A suitable option is Fedgroup’s Secured Investment participation (part) bond offering, which combines fixed, high returns with capital security. “We created our Secured Investment product to help investors earn a higher level of income than that offered by money market funds, while protecting their capital value.”

Part bonds are a low-risk, high-yield fixed deposit investment fund backed by first mortgage bonds on a physical properties.

This type of secured investment offers predictability with a fixed, guaranteed interest rate for the full term of the investment, allowing for accurate calculations and projections on growth.

“It is also a type of collective investment, which is governed by the same strict regulations as unit trusts and is regulated by the Financial Sector Conduct Authority (formerly the FSB). This means invested capital is secure and protected by law.”

Income or growth

Entrepreneurs can choose to invest for income, as interest earned at the nominal rate of 8.75% p.a. can be paid out monthly.

“Alternatively, investors can choose to invest for growth. By reinvesting the income, investors benefit from the power of compound interest, earning an effective rate of 10.9% p.a. over the five-year investment period,” continues Friedericksen. Investors also have the flexibility to switch from the growth option to the income option without attracting penalties.

What’s more, Fedgroup charges no fees on the investment amount, or on the interest earned, so returns aren’t eroded. “Our income is earned from the properties we finance and the interest income generated.”

Since launching its Secured Investment offering in 1990, Fedgroup has experienced significant inflows from both institutional and private investors, particularly for lump-sum cash investments. “We are currently managing over R2 billion within our Secured Investment portfolio,” confirms Friedericksen.

Related: What Should I Know Before I Invest My Hard Earned Money?

“Investing in assets that are counter cyclical to the industry within which entrepreneurs operate, and including more conservative, stable investments like our Secured Investment in a portfolio, is a smart diversification strategy for any business owner. This investment approach mitigates risk and offers greater financial security, which ultimately enables entrepreneurs to pursue a more aggressive business strategy,” he says.

The benefits of investing in a Secured Investment:

  • A high-yield, no cost fixed deposit investment
  • A low-risk investment that is secured by first mortgage bonds on physical properties and is highly regulated
  • Every property investment opportunity is objectively analysed and evaluated against a strict set of criteria, with a maximum of 75% of the asset value loaned for the mortgage
  • The fund has close on double the ratio of security (value of the properties) to outstanding loans (value of mortgage bonds), ensuring that investors are well protected
  • Offers predictability with a fixed, guaranteed interest rate for the full term of the investment
  • Offers flexibility to invest for income or growth to meet specific investor requirements

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Digital Options With Olymp Trade – Online Trading Made Simple

Remember that communicating with others makes progress easier, so feel free to share with your fellow-traders any time and increase chances of your success!

Olymp Trade

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olym-trade

Innovation in trading  – is gain without pain possible?

In our modern age, trading has helped a lot of people earn handsomely. However, originally it was a complex exercise, involving a considerable investment of time and financial resources to understand the market. That has restricted its acceptance among people who wish to trade but have a busy schedule and limited budget.

The problem seems to have been solved to a great extent with digital options – a special form of a financial instrument. While it requires relatively less time to learn, it also reduces the risk exposure, which accounts for the growing popularity of digital options. With this type of trading, your investment amount doesn’t have to be equal to the underlying asset’s market price. So, even if the minimum price of a stock index unit is $100, you can take an exposure of just $1 on this.

A platform, which has achieved loyalty of over 16 mln. customers, despite being a late market entrant, is Olymp Trade. The company provides particular ease of use and a comprehensive educational kit, so we will use this example to explain how digital options work.

Related: How Investors Can Take Advantage Of The Rand’s Currency Trading Rates

Olymp Trade – a closer look at digital options

This type of trading requires an investor to anticipate the price movement of the underlying asset in a short term. On the Olymp Trade platform the asset range includes currency pairs, commodities, cryptocurrency, various stock indices and some individual stocks. A trader would then need to place an “Up” or “Down” call relative to the strike price, without having to bother about how far the price would move. You are also required to specify the time limit for keeping the trade open – it is called expiration time, and could last from 1 minute to several hours.

Since there is no need to gauge the extent of movement, analysis of parameters like where to put ‘stop loss’ or when to book profit is not necessary – and this makes the process so much simpler. Profitability per each trade is always known beforehand, and with Olymp Trade it may reach 80-90%. Another essential point is that a trade could be sold back to the market, if the trend behaviour contradicts your forecast. This flexible approach allows to recover some of the invested money, if it’s not possible to lock in profits.

online-trading-1

Developing a strategy that works

Since options is only intraday, fundamental analysis has almost no relevance. As a result, most of the trading happens employing technical charts. Yet, you cannot ignore the opportunity to trade based on news flow, which could actually generate higher returns than technical analysis. So, even if you are not connected with, say, Australia but sudden floods have caused huge supply disruption in the country, you could place a ‘Down‘ trade on AUD. However, one needs to be careful when analyzing the news. For instance, even if the employment figure is higher than last month, the currency could lose sharply – in case it is lower than expectations. Conversely, even if the GDP growth is negative, the currency could see a rebound if it has survived the crisis with minor damage.

The other benefit of news-based trading is that you can earn multiple times with the same news or insight. For instance, if you think dollar is going to rise substantially over the next few hours due to Fed’s move, you can place an ‘Up’ trade with a five-minute time frame. After this trade has expired, you can put another trade with the same ‘Up’ position if your judgment has turned out correctly and you still expect the price trend to continue.

Introducing cryptocurrencies

Another asset class that has gained lot of limelight recently is cryptocurrencies. They are highly volatile – and this is tricky on one hand, but lucrative on the other. Olymp Trade gives you an opportunity to trade in crypto while keeping your risks limited.

Related: Silver-Sphere Trading Gives Top Advice About Investing In (The Right) Precious Metal

Using Olymp Trade for crypto saves you the hassle of opening another account, which is usually time-consuming and involves several verification processes. More importantly, you would have to disclose a lot of personal information, which may not be very attractive proposition because the crypto-industry is still evolving. As for reliability and security, which is vitally important in trading (no matter crypto or traditional assets), Olymp Trade can guarantee it all – the company’s activities are supervised by the International Financial Commission.

The chart below gives an idea of Bitcoin price movement on a typical day. One can see clearly that there is sufficient volatility in the price to make money here.

olymp-trade

While you cannot own or store crypto with Olymp Trade, you can certainly earn from its price movement. The platform offers a dozen different cryptocurrencies to trade, including the top ones like Bitcoin and Ethereum. However, the returns generated for this asset class vary substantially: from 10% to 80%. You also need to note that these returns keep varying all time through. So, if you traded on an asset generating 80% return at a particular time, please confirm the offered returns when placing the next trade – as it may not be the same.

How can I really profit, if I choose trading options?

We have mentioned different trading methods – from the time-tested assets to the modern-day cryptocurrencies – and it only makes the tip of the iceberg.

In order to understand the process more deeply and start profiting, one should have a systematic approach to learning. But of course your self-study should be based on trustworthy sources. We recommend taking a look at the Olymp Trade’s “Education” section, where one can find well-structured lessons and webinars dedicated to trading. The platform provides a free demo account, so the users can put their new skills into practice straight away. The benefit here is working with platform features without depositing real money. Use virtual currency for demo trading, and take as much time as you need before getting ready to open real deals for real profits.

Online trading is a very popular kind of business nowadays. If you visit Olymp Trade page on Facebook, you will find a lot of proof to that, meeting people for whom trading has become one of the main pursuits in life. Remember that communicating with others makes progress easier, so feel free to share with your fellow-traders any time and increase chances of your success!

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11 Things You Need To Know About Bitcoin

The cryptocurrency has had a tumultuous existence so far.

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Gold Bitcoin Coin

11 Bits about Bitcoin

Even the most tech savvy among us have a hard time wrapping their heads around Bitcoin. It’s a hot topic and a frequent point of discussion among investors, entrepreneurs and stock traders, so you should want to know all about it.

For starters, here’s an overly simplified explanation of Bitcoin: It’s a digital currency (there are more than 800 now) that isn’t controlled by a central authority such as a government or bank. It’s created by “miners,” who use computers and specialised hardware to process transactions, secure the currency’s network and collect bitcoins in exchange.

Supporters say it allows for more secure transactions over the internet. That’s in part due to blockchain, a technology that records cryptocurrency transactions chronologically in a public digital ledger.

Bitcoin is only eight and a half years old, but it’s the oldest and most highly valued cryptocurrency out there. In such a short time, it’s had a rocky and controversial history, but it’s also attracted a fair share of high-profile supporters.

Related: 6 Rookie Investor Mistakes You Must Avoid For Profitable Investing

Click through to read 11 bits about Bitcoin that will make you at least sound like you know what you’re talking about next time it inevitably comes up.

The birth of Bitcoin

birth-of-bitcoin

Starting point at 2008

The origins of bitcoin trace back to 2008, when its creator, who went by the pseudonym Satoshi Nakamoto, published a proof of concept for Bitcoin.

The proof was then published to a cryptocurrency mailing list in 2009. Nakamoto left the project in 2010 and disappeared, but other developers picked up the work.

Bitcoin’s birthday is Jan. 3, when Nakamoto mined the first 50 units of the currency.

An elusive creator

elusive

No one really knows

The true identity of Bitcoin’s creator has never been confirmed. Newsweek claimed to have found Bitcoin’s creator in 2014, identifying Temple City, Calif, resident Dorian Satoshi Nakamoto. He has vigorously denied it.

In 2015, an Australian entrepreneur named Craig Wright said he was Bitcoin’s creator, but he couldn’t produce the evidence to support his claim.

Whoever Nakamoto is, that person is very rich, as the creator is estimated to have mined a million bitcoins in the currency’s early days.

Very expensive pizza

pizza

We wonder what was on the pizza?

The first transaction involving bitcoin was reported on May 22, 2010, when a programmer identified as Laszlo Hanyecz said he “successfully traded 10,000 bitcoins for pizza.”

As of June 14, 2018, 10,000 bitcoins are worth about $64.8 million.


Fintech: Fusing Finance And Technology

Fintech has become a disruptive force in the financial sector that is threatening the current status quo of banking and finance. The main beneficiary of that is the consumer.


You can spend bitcoins

spend-bitcoins

How to spend your bitcoins

While it may not seem like it, people continue to use bitcoins to buy stuff.

Related: Make The Most Of SA’s Law And Initial Coin Offering

The largest businesses to accept the cryptocurrency include Overstock.comExpediaNewegg and Dish.

Federal Bureau of Bitcoin

Federal Bureau of Bitcoin

The banning of Bitcoins

At one point, the U.S. government was one of the largest holders of bitcoin.

In 2013, after the FBI shut down Silk Road, a darknet site where people could buy drugs and other illicit goods and services, it took over bitcoin wallets controlled by the site, one of which held 144,000 bitcoins.

Investors have been making a killing by bidding on government-seized bitcoins.

A mountain-sized setback

Mt. Gox

Mt. Gox

In early 2014, Bitcoin suffered a devastating loss after the alleged hacking of Mt. Gox, a Japanese exchange.

About $460 million of the currency (in 2014 value) was stolen. It was the largest loss of bitcoins ever and raised concerns about how secure the currency was.

The billionaires’ takes

warren-buffett

Warren Buffett

Warren Buffett, perhaps the most famous investor in the world, was not so keen on Bitcoin one of the only times he addressed the currency.

“Stay away from it. It’s a mirage, basically,” he told CNBC. “The idea that it has some huge intrinsic value is a joke in my view.”

Fellow billionaire investor Jamie Dimon, chief executive of JPMorgan Chase, had even stronger words about Bitcoin:

“You can’t have a business where people are going to invent a currency out of thin air. It won’t end well … someone is going to get killed and then the government is going to come down on it.”

But not all billionaires are against Bitcoin. Mark Cuban has said its value is inflated, but he recently invested in a venture capital fund that backs cryptocurrency. Richard Branson, however, has spoken more optimistically about it.


The Currency Revolution

The rise and rise of digital currencies – and how they’re affecting your business.


Wealthy twins and a smart teen

Cameron and Tyler Winklevoss

Cameron and Tyler Winklevoss

Other notable investors in Bitcoin include Cameron and Tyler Winklevoss (the Harvard-educated twins who sued Mark Zuckerberg claiming that Facebook was based on an idea they’d had).

They invested $11 million into Bitcoin in 2013, an amount said to be about 1 percent of all bitcoins in circulation at that time. The Winklevoss twins have been petitioning the SEC to create a bitcoin exchange traded fund.

The agency rejected the idea earlier this year.

Another is investor and entrepreneur Erik Finman, who invested $1,000 into Bitcoin when he was 14 years old and is now a millionaire.

Celebrities want in

ashton-kutcher-2017

Ashton Kutcher

Celebrities have also expressed enthusiasm for the cryptocurrency.

Actor and Goop founder Gwyneth Paltrow advises Abra, a Bitcoin wallet, and Ashton Kutcher, Nas and Floyd Mayweather have all invested in Bitcoin start-ups.

Support from a big financial institution

Fidelity Investments

Fidelity Investments

In August 2017, Fidelity Investments became a rare standout among financial institutions in embracing Bitcoin and other cryptocurrencies.

The company allows its clients to use the Fidelity website to view their bitcoin holdings held through digital wallet provider Coinbase.

“This is an experiment in the spirit of learning what these crypto assets are like and how our customers may want to interact with them,” Hadley Stern, senior vice president and managing director at Fidelity Labs, told Reuters.

A hard fork

Bitcoin Cash

Bitcoin Cash

On Aug. 1 2017, Bitcoin experienced what’s being called a “hard fork” as a result of a few issues, including the limited number of transactions that can be processed per second. Essentially, the cryptocurrency split into two, with Bitcoin Cash debuting.

Here’s how Rob Marvin of PCMag explains the situation:

“The Bitcoin fork speaks to a fundamental ideological rift over what’s more important: Preserving the decentralised nature and independent control of the Bitcoin network, or accelerating transaction speeds to make the cryptocurrency more viable for mainstream ecommerce and payments.”

Bitcoin Cash allows larger blocks of currency and more transactions per second.

This article was originally posted here on Entrepreneur.com.


Related: 10 Ways To Make Money While You Sleep

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