Arthur Buchner: Head of Derivatives, BoE Securities

MONEYWEB, BY BRUCE WHITFIELD, 8 FEBRUARY 2002

BROADCAST TRANSCRIPT: Arthur Buchner, head of derivatives at BoE securities, joins us now. Arthur, the all-share index up today 34 points. Nice to see financials bouncing back as strongly as they did?

ARTHUR BUCHNER Well, exactly. In fact it’s the first day in four or five that we’ve had right across the board buying. We had the industrials up, mid-caps, mining resources, coal, gold, platinum, you name it – it was up. I think the only thing down was diamonds and the small caps, and that was only marginal.

MONEYWEB: Saambou, 38% gains today after Johan Myburgh on this programme earlier on this week did try and dispel as many of the rumours in the market as possible. Big volumes, 4m shares changing hands?

ARTHUR BUCHNER Well, I think it’s very speculative. It falls pretty much in the Profurn department where you get guys coming out saying there’s nothing wrong with our share, yet they still continue to fall and, where there’s uncertainty, I wouldn’t be dabbling, and it has had a bounce from about R1.50 up to this R2.90 level. I think bargain hunters looking for bargains, but I would stay away from it myself.

MONEYWEB: And then Sage, which has been under pressure recently, up 7% to R6. It seems to be quite happy around that level?

ARTHUR BUCHNER Yes, I think what you saw was that, with the stronger rand and Mbeki’s comments that there’d be a move to an open economy, we’re not going to close down, we’re looking at forex and controls being eased and the like, that all the banks actually took heart from this, in fact all the financial sectors. They have been really sold down, and when people tend to pull out of the market in terms of selling, buyers want to get stock, there’s no stock available, they have to pay up, and I think that is what happened with Sage today. They were moved on thinner volume than normal for that bigger size move.

MONEYWEB: Despite lots of concerns we’ve heard from fundamental and technical analysts on gold shares, the gold index up 78 points today with the gold price above the $300 an ounce level. People still hungry for South African gold shares?

ARTHUR BUCHNER I’m hearing a lot of stories about whether gold is sustainable and whether it is not, I mean guys are coming out and saying would you buy a company, for example, if something like Enron can happen? At the moment with corporate governance and accounting standards being so bad … at least with gold, when you purchase it, you know what you’re buying. You’re buying a physical asset, it’s not going to deteriorate in terms of its physical properties over time, and guys are saying that’s why this bull run is different. At the same time, besides my wife buying it up and trying to keep the price higher, I don’t see too much long term out of it!

MONEYWEB: It is interesting, though, to see that these are sane individuals, we suspect! A lot of buying coming from overseas in gold shares as well?

ARTHUR BUCHNER Correct. One of the reasons that we feel that the rand has also been strong over the last two days … what you found is South African investors selling into South Africa, the international banks purchasing those stocks in South Africa and then going overseas and selling them into the American ADR market. Now when they sell into the American ADR market they effectively get dollars for the stock which they sell. Those dollars have to be repatriated, normally after the markets close, say between 4 and 5:30, and if you look at the rand’s movements, the rand’s movements have been stronger after our spot market has closed, and I think that that is partly the reason that the rand has actually shown the resilience it has over the last two days.

MONEYWEB: Interesting point there. Discovery up 10% today to R7.90, that is a share that has been under extraordinary pressure recently – we will be catching up with Belinda Anderson from Moneyweb who spent the afternoon with the directors of Discovery, but is there anything in the market which is inspiring confidence in the shares?

ARTHUR BUCHNER I think the best thing that Discovery has going for it, is the fact that it’s relatively tightly held in terms of 70% of its stocks are not free float, and when you have that type of scenario you get the weaker hands selling out of the stock and the stronger hands never sell, and hence it becomes a short squeeze, and people do like the stock and then take it up. Myself, I would be staying out of Discovery, I don’t think it’s a purchase – once the uncertainty surrounding the stock is out then I would have a look at it. Maybe as a total buy-out by the controlling shareholders, it could be a punt, but on earnings and the like, I don’t think I would get involved.

MONEYWEB: Mvelaphanda’s had a great week – listed on Tuesday, saw some very strong gains for three days, and then today big stories in the newspapers on Mvelaphanda and a relationship with De Beers. The shares retreated slightly, perhaps the news not quite as good as the market was hoping for?

ARTHUR BUCHNER I think a little bit of buy on rumour, sell on fact, and also if you look at the diamond sector today, it was down slightly. So all diamonds – it has got a large holding in Transhex and generally all diamonds were slightly down. Definitely the buy on rumour sell on fact because there has been talk, not necessarily of De Beers, but of other people putting money into the company to assist them with exploration, and maybe some guys taking profit there.

MONEYWEB: Arthur Buchner, he’s the head of derivatives at BoE securities.

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