PSG Konsult Financial Planning is an authorised financial services provider. FSP 728 www.psg.co.za/centurionstockbroking 1

T 0861 101 179 012 679 0565 C 082 320 9097 F 086 249 7345 | | | | | | |steynberg@psg.co.za PO Box 68277 Highveld Centurion 0169

NEWSLETTERCENTURION STOCKBROKINGBlock B Corporate 66 Of�ce Park |

Cnr Lenchen & 269 Von Willich Avenue|Die Hoewes Centurion 0157

OCTOBER 2013

If we look at the world's population, we see that at the dawn of agriculture, about 8000-4000 B.C., the world population was approximately 5 million. By 1 A.D. it grew to 200 million (some estimate 300 million or even 600 million, suggesting how imprecise population estimates of early historical periods can be), with a growth rate of under 0.05% per year. A tremendous change occurred with the industrial revolution: whereas it had taken all of human history until around 1800 for the world population to reach one billion, the second billion was achieved in only 130 years (1930), the third billion in less than 30 years (1959), the fourth billion in 15 years (1974), and the �fth billion in only 13 years (1987). During the 20th century, the world population has grown from 1.65 billion to 6 billion.

The world currently has just over 7.1 billion people. According to the United Nations the world population has reached 7 billion by 31 October 2011. It is predicted that the world population will reach 9.2 billion by 2050 (www.worldometers.info). The Internet has caused massive changes through an absolute explosion in knowledge in all �elds. This, with the changes in transport e.g. �ying, has led us to us to become the global village, an interconnected world like never before. South Africa, with its wealth of mineral resources needs to produc-tively develop these resources to aid the people of Africa and the growing world population.

When we look at the world's growth rate it reminds us that a little bit of growth in the U.S. will go a lot further than a lot of growth in China. Don't forget Japan - the world's third largest economy, which shows just how high the stakes are as the country's leaders embark on an extremely aggressive monetary policy. Germa-ny's 4th place position and relative size to the top three economies adds credence to expecta-

tions that the European monetary union and its singular currency (the euro) will outlast sceptics. In aggregate the countries of the European Monetary Union, even in austerity and reces-sion, nearly rival the size of the US economy. Brazil is in six place and South Africa 27th (John Stoltzfus: Oppenheimer Asset Management: Business Insider: 40 Biggest Economies in the World)

The world Economy is recovering with Maersk saying the cycle has turned with world trade starting to pick up.

The political dysfunction in America has come to the fore with the US Government Shut Down being in its 10th day. The next important date is the renewal of the $16.7 trillion Debt Ceiling of 17 October 2013. It will probably be increased by $1 trillion or more. Thus far the cost of the stand off to the US economy has been $ 300 million per day.

The US economy is recovering, albeit slowly. House prices are rising in many of the larger cities, factory production is increasing and unemployment is going down. The tapering of Quantative Easing has made news as it develops and has caused movement in world markets prompting speculation as to how fast this will happen. Some analysts are predicting the United States becoming energy independent in the next 10 years. This says a lot, as the US is the world's largest consumer of energy and oil consumer. There is a natural gas vehicle revolu-tion in the US with the exploration of Scale gas. This will greatly aid the USA economy as they will be less dependent on the Middle East for oil and even exporting oil and scale gas. In the US petrol is being produced from ethanol, so corn is trading at double it was 3 years ago. According to Barack Obama, America is to become the

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Our Of�ce Moved to PSG Centurion. We are centrally located on the corner of Lenchen and 269 Von Willich Avenue in Centurion, just across from the Momentum Head Of�ce and near the Gautrain Station. We offer a full range of Financial Services inclu-ding Short-Term Insurance, Long-Term Insu-rance, Investments, Risk Assessments, Asset Management, and various options on world markets. You are welcome to contact us, or just pop in for a visit should you require help regarding one of these areas.

Also remember that everyone must register in November 2013 and February 2014 in order to vote in the annual general election of April 2014. You need to register in the area where you stay.

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number one producer of energy in the world. The current government 'Shut Down' and the looming Budget ceiling is negative for America's economy. Hopefully the Democrats and Republicans can resolve the issues shortly.

Facebook with 900 million users has the turn-over of 2 or 3 countries with growing interest in the East. It went from 38$ to 18$, is now trading at 46$.

China's growth is slowing, but with a GDP of $11.4 trillion. China was the biggest winner du-ring the global recession as a result of tightly controlled currency systems, which greatly be-ne�ted its manufacturing base, although China's aging population is a great concern. China grew

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7.7% during the �rst quarter of 2013 and although this is a bit slower than expected it is not the hard landing some pessimists expected. The Industrial and Commercial Bank of China / ICBC owns 20% of Standard Bank and surprised everyone by showing double digit growth in 2012. China consumes 40% of the world's copper and 60% of the world's nickel. The civil service in China is bigger than the population of several African countries. China has, since 2009, had about 10 million civil servants who are managed under the Civil Service Law. Most of them work in government departments 95% being members of the Communist Party.

The world's third largest economy introduced Quantative Easing during the beginning of 2013, involving buying bonds like Draghi did in Europe. This stimulus programme has support-ed markets so markets in Japan have responded positively to the multiple Trillion Yen stimulus package. Japan's GDP has increased the most in the last year and the Nikkei 225 is up 42% year to date (30 Sept 2013). Japan has intended to raise their interest rates, moving money from bonds to equities. The weak Yen has assisted in a recovery in exports.

The European economy is slowly recovering. This is good news for South Africa as about 30% of our trade is with the EU and with the end of the commodity super cycle in place, this may help us. The European Union have 500 million people. There seems to be an easing of the Eurozone crisis and their economic woes and slow European growth had a negative impact on our exports.

Cyprus was another domino falling in the continuing European �nancial soap opera. Although the Cypriot economy only represen-ted 0.4% of the Eurozone, their debt was 100% of GDP. Fear of contagion to the whole Euro area's banks became real and the systemic risk to peripheral Europe increased considerably. Cyprus had assets under management of x8 times its GDP, a story sounding almost like Iceland before its bubble burst. The resignment of the Cyprus Finance Minister, banks closing, investors unable to cash cheques and the closing of the Cyprus Stock Exchange, rocked Europe and the world. The European Troika (German, European leaders, IMF La Grade) implemented a restructuring of the banks with a bailout package of 10 billion Euro on condition that Cyprus' second largest bank close completely, and that the bank of Cyprus (Cyprus largest bank) downsize considerably. The Cyprus Bail-out prevented Cyprus leaving Euro land but actually sent the island country into recession.

Germany is a leading exporter of chemicals and machinery. It is also the top �nancier and the

largest economy in the European Union and unemployment is currently at very low levels. Fiscal problems within the Eurozone, particularly that of Greece, carried a signi�cant burden to Germany's economic growth however still ma-naged to pull a positive growth rate thanks to a recent rebound in exports and manufacturing orders. With Angela Merkel winning another round of elections with a landslide victory, we expect more of the same as Germany is still the engine of growth in the Eurozone.

Analysts say the sectors to watch is lLuxury goods and shipping, as it may still grow considerably worldwide. 2.7 billion people will arrive in the middle class � this is the size of the world in 1955. Therefore Richemont and Grindrod shows promise.

2013 Global Growth Forecast. Moved from 2 speed to 3 speed recovery. 5.3% in 2013;. US 1.9% in 2013 and 3% in 2014.; Euro -0.3% in 2013, 1.1% in 2014.

AFRICA is the fastest growing content for urbanization, with some areas growing faster than China. According to SA's Finance Minister Pravin Gordhon, Africa has the fastest-grow-ing middle class in the world. The world needs Africa. With 70% of the world's arable land on a planet with limited resources, Africa is the key to food security for the future of our world. The potential growth of Africa, with almost 1 billion people with and the world's youngest working population, cannot be underestimated. If you're not invested in Africa you are losing out, since seven of the world's fastest growing economies are in Africa with the growth rate of many sub Saharan African countries at 5-6%.

South Africa and Nigeria are leaders in Africa. The world is seeing Africa as a consumer growth market and businesses are also looking at com-modities for future growth. Africa has a huge infrastructure gap, ensuring road, rail, ports and energy for power to build their societies. Africa also has great quantities of resources like minerals and huge potential for farming and food production. The opportunities for retail sales and banking penetration in Africa are huge with possible volumes doubling or tripling in the next couple of years.

The value of trade between Africa and the BRICS has increased dramatically, with trade levels increasing ten-fold in ten years, to a value of US $340 billion per year.

LOCAL is LEKKER or is it?

The World Economic Forum on Africa was held in Cape Town in April and was attended by multi-national corporations. Delegates discussed investing in Africa, using South Africa as a springboard to African investment and develop-ment goals. The IMF was expecting growth of

2.8% for SA in 2013 and 3.3% in 2014. How-ever with all the turmoil in the mines and other factors the Gross Domestic Product (GDP) of the South African economy only grew with 0.90% in the �rst quarter of 2013 and 3% over the second quarter. However, we are not out of the woods yet as strike season is still ahead of us. Pravin Gordhon said the SA goal for growth was 5% but with SA manufacturing struggling, this for the moment seems unlikely.

GDP Growth Rate in South Africa is reported by the Statistics South Africa. Historically, from 1993 until 2013, South Africa GDP Growth Rate averaged 3.19% reaching an all time high of 7.60% in March of 1996 and a record low of -6.30% in March of 2009.

South Africa's economy is the largest and most developed in Africa. The country is rich in natural resources and is a leading producer of platinum, chromium and iron. From 2002 to 2008, South Africa grew at an average of 4.5% year-on-year, its fastest expansion since the establishment of democracy in 1994. However, in recent years the government has failed to address structural problems, such as the widening gap between rich and poor, low-skilled labour force, high unemployment rate, deteriorating infrastruc-ture , and high corruption and crime rates. As a result, since the recession in 2008, South Africa's growth has been sluggish and below African average.

The mining sector in South Africa = - 5.4% of GDP, - Employs +- 500 000 people directly- Represents 50% of our exports.- Represents 34% of FTSE/JSE All Share Index- There was a time when gold shares represen-

ted 50% of the JSE, it is now down to 2%.

Recent renewed unrest in the mining sector has taken a toll on SA's export earnings� de-terred capital in�ows and tarnished investor perceptions of the country. This has raised the spectre of further credit rating downgrades. The three top global rating agencies, Standard & Poor's (S&P)� Moody's Investors Service and Fitch Ratings, all cited last year's wave of strikes and social unrest as one of the main reasons behind their decisions to downgrade SA. Credit ratings are important as they help determine a country's cost of borrowing and often affect foreign demand for local shares and bonds� which in turn has an effect on the volatile rand. Moody's maintain a negative outlook for South African banks due to these factors and bad loans exposure.

The mining and labour unrest and strikes of the last year or so, has irrevocably changed the collective bargaining process in South Africa. The rising of the newcomer union AMCU has caused Numsa to shrink and the con�ict between them has caused unrest and killings which is a lot of bad press for South Africa. Despite politi-cal pressure Amplats has now commenced redu-cing its labour force by 6900 by September 2013. Gold�elds used to have 40000 employees worldwide but now only has 9000 employees left of which 3500 are in South Africa. Nick

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Holland CEO Gold�elds. Currently AMCU is threatening to enforce a closure of mines with strikes. This has hugely damaged our collective image to the outside world. Christo Wiese of the PEPKOR group recently stated that South Africa has an image problem.

In 2010 only 5% of Municipalities had clean audits, indicating theft, fraud and massive mis-management of public funds by government with about R3 billion being unaccounted for. The power station at Medupi is struggling to reach completion as it is plagued by strikes and low productivity. With general elections coming up in 2014 there will be lots of pressure on the ruling party.

It's estimated that only 10% of all AARTO traf�c �nes are paid. This bodes disaster for the unpopular E-toll system, struggling to get off the ground. According to SANRAL the cost was R17 billion but if SANRAL is allowed to continue it will eventually cost tax payers R71 billion. A lot of this money will also leave the country to places like Austria. President Jacob Zuma has now signed the contentious e-tolling bill into law, as the Opposition to Urban Tolling Alliance (Outa) took its �ght against the system to the Supreme Court of Appeals. The Presidency's announcement came as a shock, as speculation was rife that signing the bill into law would hurt the African National Congress (ANC) in next year's election. E-tolling on Gauteng Highways has faced widespread opposition from across society i.e one in four South Africans who live in Gauteng. The E-toll system will de�nitely give rise to a civil disobedience the current govern-ment has not yet seen, even though Zwelenzima Vavi has been suspended from Cosatu. He was against this system.

It has been said that from 2004-2009 the SA government received R21 billion per year from fuel levies, yet has only spent R14 billion per year on the roads. Where does the rest go? Some economists say that in 1996 you paid one in four Rand in taxes, while in 2013 you are paying one in three Rand in taxes � lots of which are indirect taxes.

The Agriculture industry in South Africa has been under tremendous pressure with strikes and labour unrest plaguing the Western Cape. This has put pressure on farmers and workers nationwide. According to Dr Pieter Mulder, there is only 37000 commercial farmers left in South Africa. Fifteen years ago, in 1998, there was 60000. According to some, the govern-ment's land policy and uncertainty in the agriculture industry can cost the ANC the election in 2019. Primary Agriculture accounts for about 4.5% of SA's GDP and up to 10% of formal employment.

Poultry Farmers are happy because Trade and Industry minister, Rob Davies announced raised chicken import tariffs. This will help local farmers to be competitive, help retain jobs in this sector and assist in food security. Afgri have announced that they will be delisting from the JSE. A manage-ment �rm has offered about R2.6 billion in cash to buy out the agricultural sevices company. AFR

share was up 12% after the news.One analyst recommended investing in what people need, not in what they want. Food is something everyone in the world needs. Shares like Zeder (Agriculture) and Omnia (Fertilizer) are good shares to invest in going forward since the struggle for Food Security in South Africa will intensify. PSG owns interest in these shares due to visible growth in these areas. The world will increasingly turn to Africa with its vast areas of arable land to supply the rest of the world with food.

SA's widening Current Account De�cit is sitting at 6.5% of gross domestic product (GDP) in the second quarter and can partly be explained by weak demand growth. �Our exports have also suffered due to widespread strikes,� says South African Reserve Bank governor Gill Marcus (Momentum Cues).

The Rand may trade in a range of R9.60 to R10.40 in the foreseeable future.

According to Stats SA, the unemployment rate increased with 0.3% from 24.9% in the fourth quarter of 2012 to 25.2% in the �rst quarter of 2013 4.6 million people in SA are jobless. While this is the of�cial unemployment rate some are saying that the real SA unemploy-ment rate is closer to 30-50%. It is in an utter disgrace that our unemployment rate is so high. In any developed nation, the current govern-ment would have been voted out long ago because of this.

�Consumer driven growth has severely out-stripped productive industry growth. We have to get manufacturing going again. We have realised this lack of productivity based growth is unsustainable for our economy.,� said Minister of Trade and Industry, Rob Davies. South Africa are selling locomotives and weapons in Africa.

With in�ation currently at 6.4% (Momentum Cues), it means you are actually losing money when your sitting in cash/Money market earning 5%. We are now in an environment of Stag�ation � high in�ation and low growth. Investment in the stockmarket gives better returns at the present time.

South Africa hosted the 5th BRICS summit in Durban from 25-27 March 2013. BRICS countries includes Brazil, Russia, India and China. The BRICS countries preside over half of the world's population and nearly a quarter of the world's GDP. South Africa is the newest and smallest member of what used to be the Bric nations. Its population is 50 million compared to China's more than 1 billion, and its GDP ranked only 27th in the world. By contrast China is 2nd, Brazil 6th, Russia 9th and India 10th. South Africa accounts for just 2.5% of the Brics' GDP, according to Standard Bank research. Although

some may regard South Africa more of a briquette than a Bric it is still the gateway to investing in Africa.

Talks of a new BRICS development bank proved con�dence in the South African Financial and Bank system because the Bank may be seated in South Africa. This could be a rival for the World Bank (infrastructure lender) and the IMF. Starting with 50 Billion Dollars capital this will be the 'World Bank' of the BRICS. The role of South Africa, the most open economy of the BRICS countries, with excellent regulation for the banking and �nancial sector, still remains to be seen.

The GOLD price is down 20.4% year to date, the biggest drop since 1983 and went to a low of 1192$ per ounce (28 June 2013). This is down from a high of 1895$ per ounce on 5 Sept 2011 so gold had a 12 year bull run of consec-utive growth with an increase of 500%+. A selloff in gold was sparked by Cyprus selling some of their gold reserves (14 tons) after the unpopular Cyprus bailout. This caused some investors to ask � Are we getting into a Bear market for gold? Although the gold price is very volatile, we do not believe so.

Gold has bounced and is back at 1395$ per ounce, just below the 1400 mark. Gold remains an in�ation hedge especially with govern-ment debts standing where they are, namely UK 103% of GDP,; USA 105% of GDP,; Japan 220% of GDP, it is still an important part of your Portfolio we believe, South Africa 6% of GDP. China and India is the world's largest importing nations of gold with demand picking up. Russia and Turkey has also been buying gold since the prices went down. In terms of gold mining production, South Africa were nr 1, but are now nr 6 in the world with some analysts calling gold mining a sunset industry. The gold price however is about perception. Gold is like an international currency, not just a commodity. How much gold is left in the world? The supply is limited so in the long run it has to go up.

Some, like US author and hedge fund manager James Rickards, are advocating that the inter-national monetary system may collapse and that this will cause major economies to bring in a new set of rules of which the best option would be to return to some form of the gold standard. This may see the gold price shoot up to a level of $7000 per ounce.

We still have a positive outlook for gold in the long run. We believe, though volatile, the gold price can go to $2500 in the next 5 years.

For Portfolios bigger than R2 million, we also advise to keep 5% of Kruger Rands. Kruger rands are portable, an in�ation hedge and recognized globally based on the spot gold price.

PSG Konsult Financial Planning is an authorised financial services provider. FSP 728 www.psg.co.za/centurionstockbroking 4

The JSE has made several new high points in recent times. With the average P/E ratio of the JSE closer to 18 than the long term 14, things may appear expensive. According to econo-mist Dawie Klopper, the economies of the USA and South Africa are both in the begin-ning of an economic recovery cycle. This bodes well for future growth of markets.

We suggest that proportionate pro�ts are taken in some client portfolios. Therefore, bank some pro�ts in some of your shares that have done well and then diversify your portfolio with that money by utilizing pullbacks as buying opportunities. It is good to keep 5% to 30% cash in your Portfolio as markets can still retract considerably. This money is then available to apply to pick up bargains in the market.

The new highs of the market was also driven by Rand Hedge stocks like SAB, Richemont and Naspers. We maintain that it's impera-tive to have Rand Hedge Stocks on your portfolio especially since we see Rand weak-ness coming through these include BTI, SAB, CFR, MTN, Naspers, RIN, Bidvest and Aspen.

The shareprice of Naspers has gone from R17.50 to R840.15 in x19 years, an estimated growth rate of 5272% or a staggering 23% per year. DSTV of Naspers operates in x28 countries and the market cap of Tencent in China is almost as big as that of Facebook. Most of the gain can be attributed to an incredible run by Chinese internet and mobile service provider Tencent, in which Naspers holds a 34% stake. Since its initial investment

in Tencent in 2001, Naspers assets have risen an incredible 600 times in value. Tencent is the largest internet company outside of America and capitalizes on China's explosion in online gaming and messaging. It has a market cap bigger than McDonald's Corp, Facebook Inc. or Boeing Co.

MTN is a Rand Hedge Stock which is aggres-sive in Africa and Iran. Lots of upside but more risk. Growth in Nigeria. Looking attractive with a P/E of 23 and dividend yield of 3.8%. Vodacom and MTN came down sharply after news that legislation will change the call costs between cellphone operators from 40 to 10 cents. This creates some nice buying opportu-nities.

We like Rede�ne International/RIN. RIN is an international property share with a P/E of 9.5 and dividend yield of 6.5%; this is an excellent share to share to have on your Portfolio. The JSE represents less than 1% of world markets and it is imperative to have exposure to the world markets through Rand Hedge Stocks or through direct investment in International Markets. Please contact us in this regard.

It is important to have ''Cash cows'' or high paying dividend stocks in your Portfolio like RIN, Vodacom, KIO, MTN and Coronation. Vodacom, whose new FY HEPS was up by 25%, was in talks to acquire the �xed-line and internet provider Neotel for about R5 billion. It is interesting to note that Vodafone makes more money in Africa than in the UK. General miners like Kumba Iron Ore and Billiton still show good value.

STOCK PICKSApple was nominated as the best brand in the world for the �rst time. The top spot was held by Coca-Cola for the past 13 years. Google is second with Coca-Cola third.

STX40 listed in 2000. 1964 the �rst Unit Trusts (R1 trillion industry in SA) were listed in South Africa. Newgold listed in 2004 are backed by the physical gold. R20 Billion under management. 47 tons of gold. They hold bullion and issue depentures that match that. One hundred of an ounce of gold. The gold is stored in London, UK. NewGold ETF / GLD is the largest Exchange Traded Fund in South Africa also released by Absa Capital. One restriction that was placed on this is that both the gold and platinum have to be sourced in South Africa

(Dr Vladimir NedeljkovicHead of Investments - Absa Capital)

Attacq/Atterbury is listing on Monday 14 Oc-tober 2013. Attacq owns 25% of the Atterbury Property Group. According to CEO Morne Wilken, their longterm Portfolio Strategy will be for 70% of assets in South Africa, 20% in the rest of Africa and 10% International. Their exis-ting assets of R12.5 billion include the Waterfall development in Midrand, Lynnwood Bridge in Pretoria, Eikestad Mall in (Eikestad Mall in Stellenbosch of Mooirivier Mall in Potch) Potchefstroom and the Garden Route Mall in George. In the past x8 years the Atterbury group has produced 20% + for its shareholders. Please take note that this share focus is on Capital growth and not on Income or dividends like other property shares and will not be paying dividends in the beginning. Please contact us to buy some for you.

PSG Konsult is OTC (over the counter) or unlisted shares that will list the second half of 2014. With a P/E of 26.21 and dividend yield of 2.56%, it still looks attractive. To the host of people that feel they missed out on the opportunity of the growth story of the PSG share, we say � this is your chance. Contact us to invest in this opportunity.

New Gold Platinum � NGPLT a brand new platinum ETF was launched by Absa Capital on Friday 26 April 2013. It provides investors with the opportunity to obtain exposure to the Rand performance of platinum bullion. The Debentures are fully backed by physical platinum. The launch of this New Platinum ETF has shown some fresh demand for platinum, without the risk mines face such as labour and cost issues. Platinum is a useful metal with practical implications, this green metal is used in catalytic converters of cars and has other uses. The plati-num index is at its lowest in seven years and the

mines are experiencing continued labour and cost problems. With these supply constraints out of South Africa and the world economy slow-ly recovering, the platinum price will go up. The new platinum ETF has shown exceptional value and has become the largest platinum ETF in the world in less than x6 months, with R2 billion+ under management. We advise clients to hold 5% GLD and 2% NGPLT in their Port-folios for gold and platinum exposure.

Glencore Extrata plans to list on the JSE. Glencore Xstrata's plan to obtain a secondary listing on

the JSE during the fourth quarter of this year is expected to be a much-needed boost for com-petitiveness of the South African mining sector. Glencore acquired Xstrata for $29 billion (R283bn) in May, making it the third-biggest global mining house. According to Patrycia KulaKula (of the JSE) Glencore Xstrata, which is primarily listed in London with a market value of £42.4 billion (R66bn), would become the third-largest company on the JSE, exceeded only by British American Tobacco and SABMiller. Its mar-ket capitalisation would be twice the size of Anglo American's. Please contact us in this regard.

Vickus Steynberg Stockbroker

t 012 679 0565

f 086 249 7345

c 082 320 9097steynberg@psg.co.za

Erasmus J. Visser Stockbroker

t 012 679 0512

f 086 249 7344

c 072 544 9770erasmus.visser@psg.co.za

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