One of the new popular phrases being used within the investment world is “base effect”. For example, globally we’re hearing all about how the current surge in inflation is due to base effect. This is because a year ago we’d seen the price of Brent crude oil crushed (and even turn negative for West Texas Intermediate contracts). In addition, while being locked down nobody was out spending much, so last year’s inflation came under severe pressure. Now, a year later, that lower number is the base for calculating inflation and as such this year’s number spikes higher.
It is important to take this base into account. We’re seeing the base effect in company results too. Recently, Capitec* issued a trading update saying it is reasonably certain that headline earnings per share (HEPS) for the six months ending 31 August are expected to be more than 500% higher than for the same period a year earlier. This is in large part due to the base effect as the comparable period was under massive pressure and Capitec also included large provisions for bad debts.
Esta historia es de la edición 23 July 2021 de Finweek English.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición 23 July 2021 de Finweek English.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.
