Arthur Buchner: JSE Report


BROADCAST TRANSCRIPT: Now on to Arthur Buchner. He’s a senior trader at what is now called Nedcor Securities, previously BoE Securities. Not an exciting day to end the week off with, the all-share index down half a percent. Is the market still very much in holiday mode?

ARTHUR BUCHNER: It definitely is in holiday mode, but what we’re seeing is a lot more options coming into the market, guys are starting to hedge themselves. Look at plans and the like. We found that most of the volume is in the early hour, and then just after that it goes flat, and then in the last hour it’s really dominated by FTSE opening and by the Dow opening. People aren’t prepared to really put their money on the line. They want to follow the trend.

MONEYWEB: So all the action coming in the morning as the JSE opens, and in that closing auction as the JSE closes. Just looking at some of the indices today – platinums under pressure, down 2.25%. That in spite of a nice run that we’ve seen in the metal over the last couple of days.

ARTHUR BUCHNER: Well, I think Amplats actually closed up. And I think what you’ve got is that Implats has had a big run from around R540 up until – I think they opened at R611. That was quite a big short squeeze. And with this whole Gencor/Implats movement, no-one’s really sure, is the deal done, is it not done. If it is done, is it positive for Implats, because guys are saying there’s going to be a lot more stock coming onto the market? And therefore the outperformance of Amplats today against the Implats performance was really the talk.

MONEYWEB: Yes, just to put that into a bit of perspective, Implats lost 5.5% today, but Angloplats ended marginally better on the day, closing about two thirds of a percent better off. Now, resources lost about 1% today. What about financials? That bucked the trend, up, well marginally up, say about a third.

ARTHUR BUCHNER: A lot of it also came from rand strength. If you look, the rand was at R8.58 on the opening and it closed, or it was at one stage down, at R8.48. Now your financials took heart from that and your foreign-based listed stocks, those were all down. If you look, Anglos down, your South African Breweries were down. Richemont was actually a big faller today on the back of that rand strength, and because no-one’s really prepared to stake big positions; they’re actually just following wherever the rand is going. You’re finding the day before yesterday we had rand weakness, it was exactly the reverse. No-one really wanted to take the lead.

MONEYWEB: And the same can be said of the movements in the rand also affecting the likes of Anglo American, Sasol and Dimension Data?

ARTHUR BUCHNER: Correct, all these dual-listed stocks.

MONEYWEB: Now you talk about the financials bucking the trend today. Alexander Forbes off 1.5%. Any idea what’s behind that?

ARTHUR BUCHNER: I think two days or three days ago there was quite a big movement on the upside as well. And it was on very thin volumes, so I think it’s just retracing that movement.

MONEYWEB: And SABMiller putting out an announcement today that it’s closing down one of its smaller breweries in America. I suppose that has nothing to do with the fact that South Africa’s SABMiller lost 1% today.

ARTHUR BUCHNER: No, when the data actually came out they actually moved up, funny enough. And only about an hour or two thereafter did they start to come under any pressure.

MONEYWEB: Right. We’ve spoken about a couple of the losers today. What about on the upside? Iscor up 3.5%.

ARTHUR BUCHNER: Yes, you know on our market we buy pre-empting news and we sell straight after the news. And I think with the results expected to come out guys are expecting good stuff. They don’t think that Lakshmi Mittal would have bought into Iscors if they didn’t predict good earnings, and I think guys are following that.

MONEYWEB: Also interesting to see Johnnic up there – up 2.5%.

ARTHUR BUCHNER: That whole sector, MTN, if you look at them, M-Cell, it’s up from R12.50 on Wednesday to R13.50. So that whole sector – Naspers is also a very strong performer. I wouldn’t be surprised that someone has actually decided to take a view on telecoms and is buying into all the telecoms sectors, all the telecoms shares that are listed, and we saw right across the board, all those were moving up. And I think around 10%, on average, over the last two days.

MONEYWEB: What about the week ahead? What can we expect?

ARTHUR BUCHNER: Gold – underperformance, really, in relation to the gold price, is starting to worry, and I think it’s really related to the rand gold price that these guys are getting. We’re finding whenever the gold price spikes, you’re bumping into a lot of stock on the upside. Guys maybe getting saturated. You might see a pull-back on the gold shares if the gold price doesn’t hold, because there’s been a lot of talk of bullishness. The rand, I think, tried to break that R8.68. I think it’s heading down to R8.30. I wouldn’t be surprised next week if we touch R8.30 on the rand. Because, with all the negative news – and today, for example, we had negative news from the minister who was touring Zimbabwe, who said that South Africa must look at land reform programmes and can learn from Zimbabwe. That was supposed to be negative on the rand, initially it was. They couldn’t push it to the levels. I think the rand’s going to go stronger, so watch those dual-listed stocks.

MONEYWEB: Bullish on the rand and bearish on the dual-listed stocks. That’s Arthur Buchner from Nedcor Securities.

Posted in Market commentary

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