This paper aims to investigate the change in corporate debt levels in South Africa from 1994 to 2016 as well as analyse certain factors that play a role in the decision making of corporates when it comes to the all important decision of capital structure. The study uses data from large capitalisation, retail and food producing firms listed on the Johannesburg Stock Exchange. Four different leverage measures are used to determine the change in capital structure over the period under review as well as six of the most common determinants of capital structure used in literature. The analysis shows that South African corporates have drastically increased their appetite for debt funding compared to equity funding over the last two decades. Large capitalisation stocks reflected the largest increase in the use of debt, whilst food producers showed the smallest yet still significant increase in debt. Analysis has also shown that firms have changed their maturity profile of their debt significantly since the 2008 financial crises. Results from the analysis on determinants varied with some determinants showing statistical significance.

Using a Principal Component Analysis (PCA) approach, we investigate the sovereign yield spread term structure of the BRICS economies against the U.S. We show that the term structure for these markets are primarily driven by three latent factors which can be classified as the spread level, slope and curvature factors. We further postulate that a country’s yield curve contains valuable information about its future economic state and as such the PCA derived spread factors, which are based on the differences between sovereign yield curves, encapsulates material macro-economic information between the countries. In light of this, we show that augmenting the traditional Uncovered Interest Rate Parity model (UIRP) with these factors improves the models predictive accuracy of exchange rate movements.

In this study it was examined whether Pairs trading is a potentially profitable trading strategy on the Johannesburg Stock Exchange. Pairs trading is a quantitative based trading strategy, in which shares are paired up based on a historic price relationship and traded accordingly, in a contrarian manner, when they diverge from said historical relationship. The essence of Pairs trading is to take advantage of perceived market inefficiencies, which is a direct contradiction of the Efficient Markets Hypothesis (even in its weak form). This study tested Pairs trading on both an unrestricted (any two shares can be paired), as well as a sector-restricted (only pairs within the RESI and the FINDI sectors could be paired), sample of shares (the JSE Top80 - based on market capitalization). Furthermore, a number of different signals (which are based on standard deviations) to open and close pairs were tested, on both the unrestricted and sector-restricted samples. The aim of using different samples of shares, as well as different trading signals, was to determine whether or not different strategies could serve to bolster the performance of a Pairs trading strategy.

Most investors would want to know what is included in the price of a share and how far accounting data explain the share price. This study uses the most common measures of financial performance to measure what is explained by the share price. Most analyst briefings use these financial performance measures: book value per share, cash flow per share, earnings per share and most recently the market performance measure, the economic value added (EVA) in the share valuations. The objective of the study is to examine the relationship between the above measures of financial performance as presented in financial statements and the share prices and share returns. If there is a relationship, which measure is most closely related to both share prices and share returns? The study uses data obtained from a balanced sample of 87 companies listed on the Johannesburg Stock Exchange (JSE) during the ten-year period (2005-2014). Both the price and the returns models were used to analyse this financial data to find out which accounting measure has the greatest explanatory power on the share prices and share returns (measured by the R-squared or R 2metric). For the price model, share prices 3 months after the financial yearend were used to allow for the release of financial information. Using the price model, earnings have the highest overall R2 at 56.4%, with book values at 18.4%, EVA at 2.18% and lastly operating cash flows at 1.18%. This effectively means that earnings per share is more value relevant in determining firm value than either book value of equity, EVA and operating cash flows, respectively. Using incremental value relevance, equity book values and earnings explain 65% of the share prices. However, changes in EVA deflated by price have the greatest explanatory power (R 2 at 30%) using the returns model and none of the other measures(earnings and operating cash flows) have a significant relationship with share returns. Overall the results show that both accounting based (book value of equity and earnings) and market based measures (EVA) are value relevant in determining firm value. The results also show that a consideration of more than one variable in determining firm value is more informative than considering each variable separately. EVA should also be used in determining value as it has shown that it explains some of the share prices and returns.

The Mineral and Petroleum Resources Development Amendment Bill has drawn criticism from industry experts and the press. There are a number of amendments that could be damaging to future investment in South Africa's upstream oil and gas industry. This study examines the key changes brought about by the Bill, South Africa's fiscal terms, how the fiscal terms are impacted by the Bill and current activity in South Africa's upstream oil and gas sector. The report then focuses on the most significant change made by the Bill, which is the level of State Participation. A fit for purpose economic model was built and the resulting cash flows were used to calculate the economic indicators presented in the results. The results from the model indicate how the increase in State Participation levels affects the ranking of South Africa's fiscal terms and the profitability of hypothetical investment opportunities. When ranked on fiscal terms, the country moves from having some of the best terms in Africa without the new Bill, to a position where the fiscal terms can be described as average or even onerous, depending on the interpretation of the State Participation clause. Accordingly, the result of the hypothetical investment opportunity has very positive economic indicators without the changes from the new Bill. If the most optimistic interpretation of the State Participation clause is modelled, the opportunity is less attractive but still viable and if the most pessimistic interpretation is modelled, the opportunity would not warrant investment. Even though South Africa has limited reserves, significant exploration activity is taking place under the existing legal and fiscal framework. If the Bill is implemented in its current format, it is likely that the country will see a significant decline in investment in the upstream oil and gas industry. Attracting new investment by international oil and gas companies in an environment governed by the terms of the proposed Bill will be challenging.

Purpose - The analysis of the South Africa property sector to provide an effective inflation hedge has not been researched to the same extent as other more developed countries. In addition, the South African property sector has been excluded from international studies owing to its underdevelopment and inconsistent legislative environment. However, post 2013 the new SA REIT legislation was promulgated putting it on par with its international counterparts. In addition from 2012-2013 the market capitalisation of the sector doubled. The study reviews inflation's relationship with direct and indirect property, and the study compares this relationship to other asset classes available to investors. It further reviews the difference between inflation hedging versus inflation protection, using different measures of inflation hedging and also reviews the various component parts of inflation being expected versus unexpected inflation. Design/methodology/approach - The methodology in this study is adopted from the extensive research previously applied to other more developed markets. Additionally, technical and fundamental analysis of returns, correlations, risks and returns were applied.

Financial advisors have long been considered a part of the financial market through the advice that they offer investors. Behavioural finance has demonstrated that individual investors do not always behave in a rational manner, unlike financial advisors who seem not be prone to the behavioural biases that individuals experience when investment decisions are made. Furthermore, financial advisors have greater access to information, financial analytical tools, as well as better education in financial markets compared to the average individual. Financial advisors are thus better equipped to assist individual investors and provide them with improved investment results. This study investigated the value added by financial advisors in the investment performance of advised individual investors as opposed to non-advised individuals. The study wanted to establish whether financially advised individuals showed greater return on investments than non-advised individuals. A sample of individual investors from a large South African investment house were analysed across the investment categories of an advised investor and a non-advised investor for a period of 10 years from 1 January 2005 to 31 December 2014. The data was analysed to draw conclusions on returns, trading behaviour, the risk profile of investors and the reasons for differences identified. The results indicated that there is no statistical difference between the returns generated between advised investors, non-advised investors and the fund invested over the period. There was a statistical difference between the number of trades entered into by advised and non-advised investors, with advised investors making statistically more trades than nonadvised investors. There was no significant difference between the risk profiles of the investors based on qualitative data. The results indicate that there is no significant additional benefit of utilising a financial advisor, after the initial decision of which fund to invest in has been made.

Includes bibliographical references / The core objective of this study is to compile an African Mutual Fund database with a focus on fees charged, expenses borne and fund sizes. Until now, no consolidated database of African Mutual Fund expenses exists. The ancillary goal of the paper is to arrange the dataset in order to perform basic statistical analysis; and to test for the existence or non-existence of a number of internationally established relationships between fund fees, expenses and other variables in an African context. The paper aims to establish both similarities and abnormalities relating to the efficiency of African Mutual Funds in comparison with their international counterparts. No prior work has been produced in the context of African Mutual Funds as the industry has been overlooked, until recently, due to the growing perception of Africa representing the final frontier for investors seeking abnormal returns. The fundamental data utilized in this research paper includes African Mutual Fund Total Expense Ratios, Net Asset Values (NAVs), and mean Total Expense Ratios (TERs) for international mutual funds with no particular geographical limitations. This paper achieves its objective of collating a comprehensive database of African Mutual Fund fees, expenses, size and other variables. Findings include weak evidence confirming the inverse relationship between the level of financial market development and mutual fund expense ratios, the inverse relationship between mean expense ratios per country and the strength of investor protection in the related country, and a positive relationship between fund family size and mean TERs - indicating the presence of scale economies in African Mutual Fund families. All such findings are in line with empirical evidence presented by international studies. Consistent with other exploratory research, the paper includes a number of unexpected findings and observations regarding the general disarray of corporate governance in the African Mutual Fund industry. A foundation for the research of African funds has been built, and is intended to serve as a platform for future research as African financial markets continue to develop.

There is no doubt that the equity market plays a central role in the growth and the sustainability of an economy. Equity and capital markets allow companies to access increased levels of accessibility to capital. Besides the traditional models to access for corporate finance, new opportunities have appeared which offer interesting alternatives. The accumulated wealth from the Islamic community became accessible through new vehicles, built on the Islamic Shariah laws in as far as money and banking is concerned. The Islamic concepts of money and banking, emphasise the relationship between profit and risk as well as responsibilities of institutions and individuals. Many of the guiding principles of corporate finance and banking would not be pegged on religious provisions and doctrines. The Western, conventional economic system holds opposing views to Islamic economics and a key question arises, could principles of Islamic finance feed into a Western economic system and be maintained on a sustainable basis? Proponents and supporters of a Shariah compliant economic system argue that religion is meant to affect every other aspect of life and so would be the economic principles one stands for. As such, remaining committed and observing Islamic law in business and economic activities would be inevitable for all those who take pride in prophesying the Islamic faith. More recently, regulators in South Africa have taken a number of steps to promote Islamic finance in South Africa. The country has one of the more efficient and advanced financial systems, legal and tax frameworks as well as governance structures and regulations on the continent. This gives South Africa a competitive edge and first mover advantage over other African countries in promoting and advancing the Islamic finance industry. The main goal of this mini thesis is the study of what constitutes an Islamic Shariah compliant Private Equity Fund (IPEF). At a secondary and more basic level its viability is considered within a South African context. It also examines the key challenges and potential solutions for such a fund to exist in an economy based largely on Western principles, particularly with reference to the legal frameworks, interest treatment, taxation laws, regulatory and supervisory bodies as well as basic conceptual understandings. Of great attention to the researcher would be the differences between the conventional economic principles that guide equity and finance in South Africa and how Shariah compliance has affected the trade instruments. The author of this thesis has vast experience in the area of Private Equity and Islamic finance as it pertains to this field. In this work, the author builds on his own experience and critically reflects it against the dominant literature in the field. This work does not focus on the risk/return profile or provide any consideration as to the likely performance of such Islamic Private Equity Funds.

No description available.