Sunday, September 9, 2007

World of investment awaits Discovery

But Gore is still trying to turn around the fortunes of bleeding US arm Destiny, writes Adele Shevel

Discovery Holdings is free to move full force into the investment products market after FirstRand unbundled its 57.1% stake in the company and put it up for sale to new investors.

It also leaves FirstRand with a cleaner, simpler structure and makes the group a more attractive target for foreign buyers seeking a pure banking business.

Discovery has been reined in from the investment products market because of FirstRand’s ownership of life group Momentum.

Discovery started in healthcare but subsequently expanded into life cover, while Momentum focused on life and now offers health cover.

With Discovery’s extension into investment products it would have been treading on the turf of RMB Asset Management — also owned by FirstRand, and possibly resulting in more conflict in the stable.

The unbundling will also improve Discovery’s liquidity, or the amount of shares available to be traded — long a bone of contention in the investment community.

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Gold stands proud as stocks are hammered

Gold was the big winner in what could be described as safe-haven buying when economic data releases surprised on the weak side on Friday.

According to Chris Craddock, head of derivative strategies at Plexus Capital & Securities, the big move came with the release of weaker-than-expected US jobs data that saw the dollar fall substantially.

“This resulted in commodities moving higher. Also moving higher for the week was oil as inventories continue to fall below expectations,” he said.

SA stocks, bonds and the rand were battered on Friday after the unemployment data raised fears of a slowdown in the US, hitting emerging markets across the board. US payrolls declined last month for the first time in four years, fanning concerns that a housing and credit crisis may shift the world’s biggest economy towards recession.

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