Arthur Buchner: Local Market Report


BROADCAST TRANSCRIPT: Onto our local markets now and Arthur Buchner of BoE Securities. Arthur, we’re sounding like stuck records here, aren’t we? Resources up almost 4% today, but all that on the back of rand weakness?

ARTHUR BUCHNER: It was actually an unbelievable movement on two or three of them. You can’t really say that resources as a whole were up because your platinum stocks like Amplats didn’t close up, and you had Implats which is only up 20c. But Anglo American itself up R12.20, and if you take it in two days, it’s up about 9%. That’s an unbelievable move!

MONEYWEB: We saw the platinum shares coming back a bit on the platinum price coming back $3 – currently at $452 an ounce. But let’s have a look at some of the big movers in the resources sector, the likes of Iscor up 9%. What’s driving that?

ARTHUR BUCHNER: There have been a couple of announcements on it – first of all we had Rio Tinto come out with good results. The results which came out say that the iron ore division of Rio Tinto did very well. This first of all assisted Iscor and it should have really assisted more the Kumba side of it, but it did assist Iscor, and then also the purchase of the other 50% of Saldanha, which looks likely to go ahead if the competition tribunal says it’s OK.

MONEYWEB: It’s certainly been one-way traffic for Iscor since they unbundled Kumba from the whole setup late last year. Iscor gaining another 9% today. Also gaining 9% today was Energy Africa – still on the back of good news of the discovery in Equatorial Guinea?

ARTHUR BUCHNER: 100% and, you know, people are looking for real stars at the moment. We’ve become very much an Americanised market where a year ago if a share moved up 2% or 3% we jumped up and down and we were screaming. The international investors seem to say, listen, if a share doesn’t go up 8% or 9% in a day and then 8% down the next day, they’re not happy and they do get in and when they get in they get in aggressively. I think that’s what’s happening with Energy Africa.

MONEYWEB: Another share up strongly today, Afgem up 6%, almost pre-empting the announcement that came out about the appointment of a new chief operating officer?

ARTHUR BUCHNER: Correct. I wouldn’t know too much about it because it does fall out of the ambit of the top index stocks, but it has been strong and there was an announcement earlier on.

MONEYWEB: One that doesn’t fall out of the ambit of the top shares on the JSE is Didata. Up almost 6%?

ARTHUR BUCHNER: 100%. There was a buy brought out by one of the stockbrokers yesterday, which is a little bit of positive news, because I think the last two or three articles that we’ve got, two of them emanating out of London, which was about two weeks ago, said that they were selling, and now suddenly we’re starting to get some positive news, and that’s what the people really want to see.

MONEYWEB: Just paying attention now to some of the fallers on the Johannesburg Stock Exchange today. Fedsure losing close on 8%. That rather public feud with Investec not going down well with investors?

ARTHUR BUCHNER: You know, whenever there’s uncertainty – it’s when in doubt stay out, I think. Fedsure and this whole Investec deal has really disappointed the market. It should have been sorted out, it’s been pending for a year. Every single time you think that it’s out, you go in, you buy your stock, you find out there’s something else, and when there’s that uncertainty people don’t want to buy it. They want to know that there’s good earnings potential … this is the price I’m going to pay and then they’ll sit and they’ll hold it, but you don’t have long-term holders there, you’ve got punters and jobbers, and they’re not scared to get out and get out aggressively.

MONEYWEB: Yesterday I went to a presentation by Old Mutual. They’re pretty bullish on the financial services sector. They say that financial services are basically trading at their lowest levels in close on eight years. Is that a view that you share?

ARTHUR BUCHNER: I do tend to share it, the only problem that I find with the financials is that 99% of unit trust holders are long on financials. In other words, where is the impetus going to come from for someone to purchase those financials? So you need people to be underweight on financials, or one or two unit trusts to suddenly decide let’s liquidate, and then you’ll suddenly find that as it starts to move up, they’re underperforming their benchmark – they have to come in and buy it. I see one of the other brokers also came out during the week and actually brought out a buy on the financial sector, and they’ve now said it’s a hold. The minute that research houses start to come out and change their view from a buy to a hold, I start to get bullish, so I don’t think it’s too far from the bottom.

MONEYWEB: Any sectors that you are bullish on at the moment?

ARTHUR BUCHNER: I look at these resources – something making new highs every single day, you don’t short into that! Because today’s strength was actually unbelievable, and I wouldn’t be shorting them, and I’d actually on some pullbacks look to purchase.

MONEYWEB: It’s been the story on the JSE over the last three years, resources . They continue to climb and Arthur Buchner still confident that there’s more to come.

Posted in Market commentary

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