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Johannesburg - Equity markets may have bounced back, but traders remain cautious, according to the head of the derivatives trading firm Global Trader.
"Confidence definitely hasn't returned to the same levels as 2008 yet," said Global Trader CEO Charles Savage in an interview with Fin24.com.
Global Trader makes up 76% of JSE-listed Purple Capital's revenue.
For the year ended August 31, Global Trader contributed R12m in pre-tax profit on revenue of R73.5m - an 8% decline on the previous year.
Savage said that trading activity at Global Trader had begun to pick up from around April this year and has been steadily on the increase.
However, a noticeable feature was that while trade volumes themselves were picking up, the size of the trades was smaller than last year - a sign that confidence was still lacking.
His comments echo the sentiments of PSG Konsult CEO Willem Theron, who observed similar trading patterns among customers trading contracts for difference (CFDs) and single stock futures (SSFs).
A key feature for Savage over the last 12 months has been the change in attitude of investors toward their investments. He said investors are showing more interest in a hands-on approach and expect product brokers to interact with them on a more regular basis on investment ideas and strategies.
"The industry is witnessing an investor shift from dealing through the old-world discretionary asset managers, banks and brokers - who largely left client assets to roll out with the financial tide - to greater investor oversight and control and dealing through new-world, self-directed, full-service trading houses," said Savage.
Client assets at Global Trader increased by 270% over the 12-month period.
Back to basics
"It's back to basics now," said Mark Barnes, chairperson of Purple Capital.
The group reported a drop from R105m to R97m in its annual revenue, while the loss for the year decreased from R109m to R88m.
Significantly, its debt dropped by 90% from R163m to R19m.
Barnes said that during the 2009 financial year Purple Capital completed a two-year process of returning to a bankable balance sheet.
"We are practically debt-free now and have retained only core businesses where we have specific expertise, hands-on operational influence and real growth prospects."
Business interests which were disposed include Purple Capital's 20% stake in financial services firm Acsis which was sold for R32m, its 5.3% stake in the Bond Exchange of South Africa (Besa) for R12.9m, its 8% investment in Cape Empowerment Trust for R9.5m and a 47% equity stake in mortgage loan business Integer, which was sold for R9.4m.
This leaves Purple Capital with its stakes in Global Trader, a small corporate finance business (Purple) and a stake in Real People South Africa (RPSA) a credit management business.
Purple Capital closed at 21c a share on Tuesday - a significant discount to its reported net asset value of 40c a share.
- Fin24.com
