Arthur Buchner: Market watcher

MONEYWEB, Byron Kennedy, 16 November 2004

‘The market is tending to ignore all bad news which is coming to it. … Normally you find that it will hold for a week or two, and then it has a quick sell-off, but I wouldn’t be selling out at the moment.’

MONEYWEB: With us in the studio is Arthur Buchner – he’s our market watcher this evening. He’s just heard Brian Molefe talking about the warehousing of that 15% stake. Do you think it’s pretty much a storm in a teacup?

ARTHUR BUCHNER: I really do. I think that the transaction is already sealed. What needed to be solved – Thintana wanted to step away. Someone had to take it. The PIC has said well there’s a little bit of a furore, but they’ve also looked at the background to the whole transaction and they’ve seen that a couple of BEE transactions may have been skewed to the partner leaving the company, and I think that they said, hold on, we know of other structures that we can finance it. So it think the deal is done and I don’t think there’s too much behind the scenes that has to worry any investor.

MONEYWEB: But one of the concerns is that you’ve got a former DG of communications who could have been feathering his nest in his last moments of office before he moved into the private sector.

ARTHUR BUCHNER: Yes, I think that you’ve seen a lot of people move out of government for example and become private investors, and the classic on that would be Tokyo Sexwale leaving government and getting in there. If they have gone and feathered their nests, it will come out and it will be found out. Personally I think that they’re buying the stock, there’s a broad-based black economic empowerment with Wiphold also in the transaction, and I don’t see any problem with it if the guy’s actually purchasing it. If he’s been given the stock, then I think there’s a problem.

MONEYWEB: Is this noise having much impact on Telkom’s share price?

ARTHUR BUCHNER: Well, I personally think that the Telkom price has been taken to unrealistic levels in the short term – R93. and I think that partly the reason that they’ve done that, whoever has taken it there, is to make the deal look so much sweeter. It”s most probably going to be placed at a discount, and if a share’s trading at R93 and you place it at R80, it looks like a great deal for however purchases it. Meanwhile the share should be trading at R85.

MONEYWEB: All right, let’s get into the markets. The all-share index was down just on half a percent today. Down to the 12,200 level. What were the factors at play today?

ARTHUR BUCHNER: It was weighed on mainly by the fact that the oil price moved up and we saw the S&P coming under a bit of pressure. The S&P has had a nice run, and I think there’s also PPI data out of the States and that brought in some sellers in the American market. You know, the Americans have been sitting back and are quite relaxed and expecting this bull market to continue. I see technicians calling 1220 on the S&P and whenever you see this relaxed attitude, invariably something comes along that just trips them up. And we yesterday held very, very well, even with the stronger rand. Today the rand wasn’t in play – just overseas profit-taking.

MONEYWEB: Well we heard from Johnson Matthey a little earlier, that they expect the platinum price to trend down over the next six months, and we saw the platinum price reduce about $4 today to $873 an ounce. Do you think it was that report that had an impact on the price?

ARTHUR BUCHNER: I think it may have. The market really watches Johnson Matthey. It”s in the forefront of platinum. Six years in a row that it”s been up, and now all of a sudden you’re seeing a dip down. I hope Anglo American have got their facts right, because they’ve been buying Amplats, and I hope at the end of six years they don’t suddenly find that they’ve bought at the top. I think that all these commodity prices, be it gold, silver, copper, are also driven by dollar weakness and if the dollar continues to weaken it won’t necessarily be a function of supply and demand, but more a protective hedge.

MONEYWEB: What platinum lost today, gold just about put on. In fact more. Almost $5 today. Almost at $440 an ounce. Any idea what’s driven this latest increase?

ARTHUR BUCHNER: Nothing at all. The dollar was pretty stable – well, it got down to 1.2925 [to the euro]. I see it weakened to 1.2980 at the close. Could have been dollar weakness. I think it”s touching an all-time high, gold. I think it just broke into an all-time high and it could be the technicians that are actually coming in to purchase it.

MONEYWEB: Arthur, results yesterday out for BJM, Barnard Jacobs Mellet, and Alexander Forbes. Pretty average results for both of them, but today the share price of BJM up 7% and Alexander Forbes share price dropping by just over 4%. What do you make of that?

ARTHUR BUCHNER: Well, often in the case of BJM it”s a tightly held stock, and people have been expecting weaker results from them. The broking side of the operation is what generates all the income, and that is looking quite good. It was really external factors that brought in the weaker results. Alexander Forbes had a very big run up into the results and I think just some profit-taking.

MONEYWEB: Looking at where the markets are going to go from here, Arthur – what’s your view?

ARTHUR BUCHNER: I think some consolidation. We have had a big run. The market is tending to ignore all bad news which is coming to it. That doesn’t always hold. Normally you find that it will hold for a week or two, and then it has a quick sell-off, but I wouldn’t be selling out at the moment. I think there’s still some value to be had.

MONEYWEB: Arthur Buchner from Nedcor is our market watcher and he’ll be staying with us in the studio for the rest of the programme.

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