CitiBusiness
Business News
Global meltdowns and your money
Although it appears confidence is returning in the global economy, CitiBusiness yesterday looked at some of those factors that may push the globe, and SA, off its recovery path.
08 April 2011 | Malcolm Rees
Although it appears confidence is returning in the global economy, CitiBusiness yesterday looked at some of those factors that may push the globe, and SA, off its recovery path.
If the worst-comes-to-worst, all could still come tumbling down and those with excessively bullish investment positions may stand to lose heavily.
So what can you do to mitigate your risk against some of the threats facing local and international markets?
According to Imara SP Reid, the biggest risk to global recovery is the potential of an eruption of civil unrest in Saudi Arabia.
If the world’s most oil-rich nation were to erupt into ‘‘serious’’ civil unrest crude oil could spike to as much as $200-$300 a barrel according to an estimate provided by Saudi oil minister Seikh Zaki Yamani.
This would ‘‘with certainty’’ result in a global recession as recovering economies would be unable to foot such a bill for desperately needed fuels.
By yesterday Brent crude oil sat at $124,57, which is already very high and many are saying that if current prices are sustained global recovery will start to suffer.
If you’re worried about further escalation of oil prices, or complete global meltdown on the back of Saudi unrest, ‘‘there is only one product in South Africa which gives you complete protection,’’ said Mike Brown, founder of Etfsa.co.za” … the RMB Oil Exchange traded note (ETN)”.
‘‘That gives you direct exposure to the dollar price of oil , so if the dollar price of oil goes to $300 from the current level of just above around $100 dollars then the price of that product will triple ... you’ve got a pure hedge.’’
RMB’s OIL ETN will also provide investors with protection against a deflation in the rand, which is approaching record highs against the dollar, which would push the price of oil up further.
Sasol is best local stock option to hedge against rising oil prices.
Other risks the world could face according to Imara, are lagging or muted growth in the Eurozone and China may continue to grow.
If you feel that the West may slow while China grows then ‘‘the big beneficiaries of the Chinese story have been the commodity nations (with strong exchange rates) … Australia, Brazil, Canada and to some extent South Africa under those circumstance you would just invest in any equity portfolio which benefits from a firm exchange rate’’, said Brown.
Business News
Global meltdowns and your money
Although it appears confidence is returning in the global economy, CitiBusiness yesterday looked at some of those factors that may push the globe, and SA, off its recovery path.
08 April 2011 | Malcolm Rees
Although it appears confidence is returning in the global economy, CitiBusiness yesterday looked at some of those factors that may push the globe, and SA, off its recovery path.
If the worst-comes-to-worst, all could still come tumbling down and those with excessively bullish investment positions may stand to lose heavily.
So what can you do to mitigate your risk against some of the threats facing local and international markets?
According to Imara SP Reid, the biggest risk to global recovery is the potential of an eruption of civil unrest in Saudi Arabia.
If the world’s most oil-rich nation were to erupt into ‘‘serious’’ civil unrest crude oil could spike to as much as $200-$300 a barrel according to an estimate provided by Saudi oil minister Seikh Zaki Yamani.
This would ‘‘with certainty’’ result in a global recession as recovering economies would be unable to foot such a bill for desperately needed fuels.
By yesterday Brent crude oil sat at $124,57, which is already very high and many are saying that if current prices are sustained global recovery will start to suffer.
If you’re worried about further escalation of oil prices, or complete global meltdown on the back of Saudi unrest, ‘‘there is only one product in South Africa which gives you complete protection,’’ said Mike Brown, founder of Etfsa.co.za” … the RMB Oil Exchange traded note (ETN)”.
‘‘That gives you direct exposure to the dollar price of oil , so if the dollar price of oil goes to $300 from the current level of just above around $100 dollars then the price of that product will triple ... you’ve got a pure hedge.’’
RMB’s OIL ETN will also provide investors with protection against a deflation in the rand, which is approaching record highs against the dollar, which would push the price of oil up further.
Sasol is best local stock option to hedge against rising oil prices.
Other risks the world could face according to Imara, are lagging or muted growth in the Eurozone and China may continue to grow.
If you feel that the West may slow while China grows then ‘‘the big beneficiaries of the Chinese story have been the commodity nations (with strong exchange rates) … Australia, Brazil, Canada and to some extent South Africa under those circumstance you would just invest in any equity portfolio which benefits from a firm exchange rate’’, said Brown.
