David Shapiro: Market watcher, Sasfin

MONEYWEB, Belinda Anderson, 22 November 2005

A down day on the JSE, except for gold shares.

MONEYWEB: Welcome to the Moneyweb Power Hour brought to you by First National Bank. I am Belinda Anderson. Time now for the MTN market report with David Shapiro from Sasfin. David, a down-day today.

DAVID SHAPIRO: Yes, if you think about it, the market lacked enthusiasm today, it lacked any kind of direction. And if you think about it, we have been saying, well, gold’s going to get to $500/oz – suddenly we’ve got gold almost $500.

MONEYWEB: It’s nearly there.

DAVID SHAPIRO: Platinum is going to get to a $1 000 – we’re almost there. I think the all-share index is about 2 000 points above where even the most optimistic forecast was at the beginning of the year – we are way ahead of it. Suddenly everybody is asking where is the next big story, and probably through to the end of the year there might just be this respite, a pull-back, unless overseas markets do something to give us a further kick. But it’s hard to muster up any kind of enthusiasm, having done so well for the year. And I think also we’re starting to see the end of the reporting season. We’ve got one or two more results coming through – MTN, Tiger Brands and that – and then it’s turn off the lights, let’s go on holiday.

MONEYWEB: Oh dear!

DAVID SHAPIRO: Or turn off the screens. You’ll still be here. [Laughs]

MONEYWEB: We’ll still be here.

DAVID SHAPIRO: I think it’s that kind of attitude that could be creeping in. I hope not, because we have had some very good Decembers in the past, and if we get a bit of an overseas market that does move and something happens there. Yes, we can still be in for an active time.

MONEYWEB: Gold shares going up with the price today, but everything else down.

DAVID SHAPIRO: Platinum – you know, we saw big profit taking in platinum; it was not unexpected, I think, after the incredible run that we have seen there. Platinum price came off slightly. I think it triggered some profit-taking, but gold still seems to be the big story. On the negative side, platinum and banks, and we discussed banks last night. It’s strange to see the sector actually starting to fall back with very, very respectable results.

MONEYWEB: We’ve got Jacques Badenhorst from JP Morgan on at the end of the programme to really unpack that for us, and just to say if we are being too pessimistic on banks, and is there still value – if so, which ones?

DAVID SHAPIRO: Probably the value is there, and we have done 20% in the banking market this year, which I think is OK, you know, for that sector. And if we do that 20% next year, that’s also OK. So I think it’s finding a level, it’s just coming back for a breather, and then we’ll see.

MONEYWEB: If you look at the top performers of the week so far, MTN still hanging in there – it’s up 3.8%. But that’s really because most other things went down. MTN did pull back a little bit today as well.

DAVID SHAPIRO: I have heard a good story or what could be a credible story is that, having lost VenFin – you know, if you wanted to get into the telecom industry, you could only buy Telkom, MTN and VenFin, although VenFin and Telkom both have a big share in Vodacom. So, being forced out of VenFin, maybe some of the money is going into MTN now, you know, as the only other play. So some of that money that was destined for communication companies or for telcoms has gone into MTN. We are trying to unpack is there a deal or is there not a deal, and tomorrow we might get further information.

MONEYWEB: Might or might not. But confirmation yesterday about the Iranian deal happening, so we know that that is certain now. Some of the other big gainers – it’s all golds, except for Naspers which is coming out with their results I think next week.

DAVID SHAPIRO: Yes, I think it’s probably the best company in that sector, in the media sector, even though Koos Bekker always tries to talk down profits. I think it’s a company that’s doing very well and being pushed up on its prospects, nothing more. And I think most of the good performers are going up on very positive prospects for next year. So even though I say that we might be going into a period of rest, I think that next year we are still going to see good profits out of companies and we expect the market to pick up its momentum.

MONEYWEB: The Satrix 40 today came down nearly 1%, the Satrix Fini tracking the financials down a 1.5%. So all inevitable moves, really.

DAVID SHAPIRO: The rand was also a bit strong, and you don’t realise it but it took a bit of the edge off shares like Breweries and Richemont, which were reasonable performers on the offshore market. But the conversion from sterling or Swiss francs into rands because, remember, it wasn’t the rand against the dollar. The rand has been very strong against the pound and the euro, so I think that on conversion that brought those shares down.

MONEYWEB: Internationally the US opened a little bit softer, nothing really in it.

DAVID SHAPIRO: Also running out of news on those markets. The FTSE was strong today – couldn’t find any great reason for it, but a lot of gainers there. I think just an upward momentum there. But difficult to find international news as well, to give us some kind of direction here.

MONEYWEB: An interesting story though on the FT website – I was having a look at it a bit earlier – Adecco, the world’s biggest temporary employment group, its CEO – it had a young CEO – he’s been forced out by a billionaire investor who has put his foot down and said time out.

DAVID SHAPIRO: But that’s where private equity is beginning to stamp its mark on companies, you know. That’s where the power of private equity is, because they do establish big stakes and they are able to change the direction of companies there. Not so here, because I think we have a much bigger control situation or some of our institutions have larger stakes there. But there private equity is very important, where you are getting individuals being able to change direction of companies. So you have to measure up or march out.

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