Constructing a portfolio consisting of 10 shares listed on the JSE

Essay by roryharpurUniversity, Bachelor'sA-, May 2006

download word file, 44 pages 4.4

Table of Contents

1 Introduction 1

2 Global Prospects 3

3 South African Prospects 6

4 The Portfolio 7

4.1 The South African Mining Sector 7

4.1.1 The South African Gold Mining Sector 7 Western Areas 10 Gold Fields 12

4.1.2 The South African Other Mineral Extractors & Mines Sector 14 Kumba Resources 15 BHP Billiton 17

4.1.3 The South African Platinum Mining Sector 19 Impala Platinum Holdings Ltd. 19

4.2 The South African Steel Sector 21

4.2.1 Mittal Steel South Africa Ltd. 21

4.3 The South African Oil and Gas Sector 25

4.3.1 Sasol Ltd. 25

4.4 The South African Investment Company Sector 27

4.4.1 Remgro Ltd. 27

4.5 The South African Maritime Industry 29

4.5.1 Grindrod 30

4.6 The South African Sugar Industry 33

4.6.1 Illovo 34

5 Conclusion 39

6 References 41

1 Introduction

In selecting a portfolio of ten shares listed on the JSE, a top down approach will be used.

Thus the paper will begin with a brief economic analysis of the global economy, giving an indication of the projected global trend. Placing South Africa into the global context, along with a more detailed macroeconomic analysis, will suggest the direction of the economy. The South African macroeconomic analysis will illustrate which sectors within the economy are expected to experience good growth. Once the key areas of growth have been established, firms within the sectors must be selected. This selection will be based largely on a fundamental analysis of the companies within the selected industry.

Due to the long term (5 year) nature of the portfolio, the focus of the analysis will be on the economic environment in which the firm operates. If a firm operating in a favourable climate is managed well, it will create wealth for shareholders. A large...