Arthur Buchner: Nedcor Securities


BROADCAST TRANSCRIPT: Single-stock futures on a Monday evening. Arthur Buchner from Nedcor Securities is here. Well, Arthur, we went long on gold at probably just about the worst time possible, buying the Gold Fields, but we did quite well out of platinum. We are starting to get a feel of this. I think we bought the platinum on Monday last week and then sold it on the Thursday, well sold half of the position that we had in Anglo Platinum – made a nice return on that one. Gold’s not looking that great, but I’m quite happy to stick with it.

ARTHUR BUCHNER: Well, finally you guys have realised what futures are about. It’s about diving in, taking your 6% or 7% – and the market has been going up 6%, down 6%. And really you’re in, you’re out, three or four days, not volatility changes against you, and you can make your returns. Then really, you buy into the golds at the top – they had traded about R12 or R13 higher, the Gold Fields. But it has, in terms of the portfolio, been a major loser because it’s 500 shares which we would normally have been trading in 200-odd shares of a stock, and we’re in at 500 and it’s down R10 from there.

MONEYWEB: We’ll be OK. I’m still confident about that one.

ARTHUR BUCHNER: I’m a terrible gold bull, but what I do like about gold is that it had that spike up to $385 and when it came back $15, it sat around the $370 levels and it’s holding the $370 levels. There’s no-one cutting gold in terms of physical gold, and maybe it’s forming a base for the next move up. And that normally takes a week or two or three to get the stale bulls out, let everyone think OK now it’s going down, get caught short, and that’s when you have the next move on the upside.

MONEYWEB: If you have a look at the Gold Fields share price as well, it hit R100 – in the last year, it’s hit R100 twice and then bounced straight back off it, and we’re just over R100 a share at the moment. I’m talking about the spot price. I’m quite happy with that positioning in gold. ARTHUR BUCHNER: OK, that makes me a little nervous, because Sasol hit R90 four times and then when it finally got their the next time it ran through.

MONEYWEB: All right, well let’s forget about that technical argument. But if you talk to the technical analysts all over the world, they do say that gold as a whole is looking good, and if Gold Fields Limited can bounce off R100 – ARTHUR BUCHNER: Well I like the position from a rand perspective. I mentioned it into the end of last year – I think the rand will be stable up until the end of January, beginning of February, and I think the rand will now start to weaken, because you’ve got these dividend flows and these dividend flows have a marked effect on the rand. All the currency traders will tell you that they watch the dividend flows, and today I think for the first time we also saw the rand weaken quite a bit at the close and – MONEYWEB: R8.44 against the US$. I’m talking R8.30 and I see it’s gone to R8.50, so it’s dropped 6c in the last 10 minutes.

ARTHUR BUCHNER: So from that perspective I think now we’re in the right stock. We’ve got gold, which is trying to bottom out at the $370 levels after the pullback, we’ve got the rand that’s looking quite weak – both those are going to be factors in our favour and I think for the next month, from a rand perspective we’ll have a lot of support. And I agree with the technicians, you’ve got to buy support and if it breaks it, cut the position. At the moment we’re on support.

MONEYWEB: We also did quite well getting out of Nampak when we did. It had a nice rally and we finally cut our losses there.

ARTHUR BUCHNER: And that’s another thing – don’t try and break even on the trade. If it bounces and you still feel uncomfortable on it, cut. Most people lose money because it bounces and, as it gets close to their price, they wait for their price. And the other thing, as I said, we’re becoming more traders. We’re not becoming fundamentalists where we want to hold on to a position for three months. Futures are not about three months, futures are about four days. Ask me for my view for the next two weeks, I’ll give you seven, because that’s what’s going to happen in the market.

MONEYWEB: Arthur what about if you’re dead right, and if the rand does take a knock over the next little while, what stocks or what single-stock futures should we be considering?

ARTHUR BUCHNER: Well I think the dual-listeds. You can look at any one of the dual-listeds, because it’s not only the fact that they earn money offshore. It’s a fact that, if they’re stable in pounds, they will go up in rands and therefore you get the double win. I wouldn’t look at something for example like Barlows, which is not listed overseas but has a lot of earnings, because there you only get the earnings following through. So it will under perform the ones that have a double-edged sword to it actually moving up.

MONEYWEB: Old Mutual?

ARTHUR BUCHNER: Yeah – you can have a look at it. Not really one of my favourites. I think Richemont’s around this level. I think it was R13.50. There’s been a lot of support on it from Switzerland, as well. I would look at Richemonts. I wouldn’t touch South African Breweries yet. I don’t think the sellers are out of that market with the Anhauser Busch stories and the like. Sappi – I think they’ve had a nice pullback from R126 to R115, R114, I think they traded. R112 was the support on Sappi, so definitely have a look at something like that even though it’s not listed offshore. It’s listed in New York, but I think it has more upside potential. But Richemonts and Sappis – those would be the two.

MONEYWEB: Arthur Buchner from Nedcor Securities.

Posted in Market commentary

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