1. Investment context..
TIPED GGDA
November 9th, 2017
Welcome

2. What is investment?
An investment is an asset or item that is purchased with the hope that it will generate income or will appreciate in the future.
In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.
In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit.

3. Investors can originate from any economic entity / legal person
Individuals
Pension funds – the largest investor source!
Government
Companies
Trusts
Finance house including, Private Equity
Note: Types of investment include:
equity, debt, real estate, currency, commodity, token (e.g. BITCOIN), derivatives, futures, forwards etc. and…
An investor who owns stock is also a shareholder
Did you see the story of Simon Chiu, the Headmaster at St Francis, California.
The catholic school invested $15,000 in Snapchat, in 2012, that is now worth ~$3M
Did u see that Tencent bought 10% of snapchat

4. Investors expect returns also known as “earnings”, derived from Profit
Investors expect returns also known as “earnings”, derived from Profit. Investors expect higher returns for higher risk!
Currently (well 3 days ago!) the RSA 5 year government bond was yielding 8.3%
RSA Govt bonds are similar to the USA Fed bond (openly traded at 1.25 %) on the market
Pawn brokers / short term lenders demand ~10 -15% per month
Returns also depend on the source of funds and the levels of surety provided
There are many types of finance available, and they have different terms of risk and entitlement should something go wrong..
Note your homeloan is a low interest rate, as the bank can seize your house should you default on the loan – it is considered “low risk”
Investments in an African context currently demand a higher return to reward market perception of being higher “Risk”

5. What is GDP and how is it measured?
Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. GDP is a broad measurement of a nation’s overall economic activity – that can be commonly calculated across nations – allowing accurate comparisons.
GDP is usually calculated on an annual basis, it can be calculated quarterly.
GDP includes all private and public consumption, government outlays, investments and exports minus imports that occur within a defined territory..
Gross domestic product can be calculated using the following formula:
GDP = C + G + I + NX
C is equal to all private consumption, or consumer spending, in a nation's
G is the sum of government spending,
I is the sum of all investment, including businesses capital expenditures 
NX is the nation's total net exports, calculated as total exports minus total imports (NX = Exports - Imports).

6. The global US fed rate is the global benchmark, Currently at 1
The global US fed rate is the global benchmark, Currently at 1.25% is generally considered the risk free rate for financial decisions
Rates have risen 3 times in this cycle..

7. Almost a decade after the financial world plunged into financial crisis, the US Federal Reserve started unwinding the stimulus it created to ward off a second Great Depression.
The Fed started cutting its $4.5 trillion balance sheet (bonds and other securities) by $10bn / month these assets were bought in the market to keep interest rates close to zero and kickstart the economy.
Fed chair Janet Yellen said “the normalisation process would be gradual and predictable”.
Policymakers also left US interest rates unchanged, at 1.25% (risen from 0.75% in Jan 2017), with Inflation at just 1.4%. “We don’t really understand why inflation hasn’t returned to target”.
The Fed committee expects to raise borrowing costs once more time this year (December 2017), followed by two more raises in It lowered its long-run target to 2.8% (from 3%).
Unemployment rate fell in July to a 16-year low of 4.3%, expecting it to fall to 4.1% next year.
Investors took the Fed’s decisions well, with shares finishing higher in New York. The US dollar has jumped, while US government debt has weakened, as investors prepare for policies to hit the markets.
“The basic message here is that US economic performance has been good,”” but she added the Fed could reverse course if conditions changed....

8. How well do we understand and apply the core basics of economics and investment decisions in RSA? - Cost (and availability) of Capital? - Productivity / competitive position? - Risk? - Return on investment? - Market potential and opportunity?

9. Farming Investment opportunities – Poland and Zambia
Many Polish farmers are working in UK –high productivity but low wages..
Farmers Weekly reported that a group of UK farmers are investing in Poland to:
Apply their world class skills and economic acumen, technology
Apply their financial strength, capital, and track record
Acquire cheaper land (50%), and lower wages than the UK
Realise High productivity
Access large EU market – with firm prices
Deliver superior returns on investment!
Is this case relevant in SADC?
Zimbabwean farmers have been welcomed into Zambia
Applying their world class skills and economic acumen, technology
Access to land and supported by Government
Realise High productivity and export earnings for Zambia
Access SADC and COMESA market – as well as international export prices
Deliver superior returns on investment!