MONEYWEB, BY BRUCE WHITFIELD, 20 DECEMBER 2001

BROADCAST TRANSCRIPT: We go over to BoE now, where Arthur Buchner, the head of derivatives is standing by. Arthur, it’s been futures closeout day – fairly busy?

ARTHUR BUCHNER: It is incredibly busy, I think it must have been a volume day, at R6.5bn worth of stock traded, and a good two-way fight, ending on the upside and, funnily enough, only on the upside, with about ten minutes to go, because suddenly the rand really took a knock. It did take a bit of a knock this morning, but this afternoon was the biggest move and that really catapulted everything up over the last ten minutes.

MONEYWEB: But again, the big movers today? Financials were all over the place. Old Mutual gained 5% – is that more of a London issue?

ARTHUR BUCHNER: In London, to give you an idea, it was down 2 pennies and right across the session, Breweries were down 9 pennies, 39 pennies on Anglo American. All these stocks were down in London terms, and they were all up in rand terms.

MONEYWEB: Extraordinary today that we did see Billiton adding 8%, Anglo American 7%. Anglo American now, if you look back before the 4-for-1split, Anglo American would now be over R800 a share. It is extraordinary what impact the rand is having on this market.

ARTHUR BUCHNER: Correct, and you mention 6%, 7% and you’ve got a devaluation of the rand by 6, 7%. So basically the investor out there is looking at it and saying, I’m glad I’m breaking even, because that’s virtually what he’s doing.

He may be making rands, but he’s not making any money really.

MONEYWEB: Having a look again at Richemont for example, there was some positive news from LVMH out today, Richemont being a luxury goods producer. It also did a share split – 10:1 earlier this year. It would now be worth more than R250 a share. You could have bought it at R137, I think, just after September 11th.

ARTHUR BUCHNER: Correct. The irony, going back to the international markets, it’s actually down about 3% in Switzerland. So that LVMH news didn’t really do too much for it in Switzerland, but fantastic here.

MONEYWEB: And Liberty International, another one that has been running very, very strongly. It was in the mid-sixties a couple of weeks ago?

ARTHUR BUCHNER: Yes, and if I’m not mistaken, Donny Gordon switched into LBH out of LGL and everyone said he’s a bit crazy, but he doesn’t look that stupid at the moment, does he?

MONEYWEB: On the downside though, looking at some of the shares that were punished quite severely, the retailers, Metcash, JD Group, Profurn, all of those down 10%?

ARTHUR BUCHNER: I hope that some of those retailers have actually got a large amount of stock, because they can make a lot of money, and our analysts have come out and said that if they hold a lot of imported stock, next year they could just mark those prices up and make money. But I know they have cut back a lot in inventories, especially in Metcash’s case and that could also be having a negative effect on it.

MONEYWEB: Discovery – is the market beginning to take notice of the fact that perhaps Discovery is not going to win its battle with the Registrar. Down 10% today, closed at R9, that’s a new low for Discovery?

ARTHUR BUCHNER: Yes, definitely, every news article that comes out just seems to be blocking their path. You’ve got their competitors, who are also against any proposals which they’ve come to he fore with, and I think the market is saying listen, when in doubt, let’s get out.

MONEYWEB: Any concern with the announcement from Energy Africa this afternoon – it came out quite late, you may not have seen it – but they have secured a $15m revolving credit loan in Europe basically to keep prospecting in the North Sea. $15m? Revolving credit? It sounds as if it could be dangerous?

ARTHUR BUCHNER: I think that everyone wants to get access to capital outside of the South African market. They have done this from ABN Amro Bank in London and Tokyo Mitsubishi. So they financed it from international banks. The rand has weakened considerably, it’s a dollar-based loan. Hopefully they’ve done it at these levels and not at the lower levels.

MONEYWEB: But a $15m revolving credit loan for a small cap JSE company is certainly not bad going?

ARTHUR BUCHNER: Correct. Someone must believe that they are on to something, and that they may actually use this money to discover the little oil well at the bottom.

MONEYWEB: We wish them luck with that. Just having a look at the action on the JSE overall, the futures closeout was today; when the market closed at 4:00pm that was the end of the fourth quarter officially. Tomorrow the markets, next week, likely to be very, very quiet?

ARTHUR BUCHNER: Not if I look at the futures close because, funnily enough, our futures close did about 150 point discount to fair value which implies maybe some profit-taking in the markets tomorrow, depending of course on what the rand does overnight and what the US markets do.

MONEYWEB: We will be watching that one with substantial interest. Arthur Buchner, the head of derivatives at BoE.

MONEYWEB, BY BRUCE WHITFIELD, 18 DECEMBER 2001

BROADCAST TRANSCRIPT: On to Dennis Dykes now, who’s senior economist at Nedcor. And the latest bit of bad news that has hit us, really, I suppose – and it’s hardly likely to light up our Reserve Bank governor’s face – is the fact that after several years of successfully fighting inflation, it seems to be getting the better of him. Tito Mboweni has made fighting inflation his primary task. He’s always said that he plans to get to between 3% and 6% inflation in the next year, In 2002. Today we saw CPIX at 6.3%, up from 5.9% the last time round. Dennis, just how serious are today’s numbers?

DENNIS DYKES: Not too bad. The consensus forecast had been for around about a 6.2% increase, and I think one of the key features was there was a very low base last year. The same period last year only rose 0.1% in November 2000. So it was really very much expected that it would rise above 6%. I think what’s disturbing in the numbers, though, is that food inflation has been rising quite strongly, and that we haven’t yet seen the effect of the rand’s depreciation come through.

MONEYWEB: Other economists on this programme have said in the last couple of weeks that, regardless of what action the Reserve Bank takes in the next couple of months, Tito Mboweni’s targets are going to be missed. There is no way in which he can make that 3% to 6% target range. Do you agree with that, or is there still room for him to move?

DENNIS DYKES: I do agree in one sense, and that is if you raise interest rates now it would really be to try and achieve your 2003 target, rather than your 2002 target, because typically interest rate rises take something like 18 months to 24 months to have some sort of effect on inflation. So in that sense I agree. I think there is a possibility. It very much depends on what happens to the rand, obviously, between now and the middle of next year for him to make the target still. If we see a consolidation and maybe a slight pull-back in the rand – which I have to admit doesn’t look very likely at the moment – but if that happens then I think he’ll still make the target. If, however, we continue to see this continual drain on the currency then clearly he’s going to miss the target.

MONEYWEB: What levels does the rand need to strengthen to in the next six months for Tito Mboweni to meet that 3% to 6% target next year?

DENNIS DYKES: Well, I think the key is that it starts consolidating at around about the R12/$1 level and maybe pulls back into the lower R11s. that would make it still difficult for him, but nevertheless achievable. What’s helping him at the moment is that international prices are actually quite depressed. You know, if you look at things like oil prices, they’ve come off quite substantially. A lot of our imported prices are actually falling in dollar terms, so that’s actually offsetting some of the rand depreciation. Obviously not all of it. And it’s quite amazing, if you look at certain of our imported components in the CPI, they really have not shown any tendency to rise, despite the big depreciation we’ve seen already – if one thinks of appliance prices, even new vehicle prices, which we know are going to go up early next year. But so far they’ve actually held back quite well.

MONEYWEB: Global inflation is declining. We’ve seen it in other economies. Ours is showing signs of uneasiness. Put it that way. There’s got to be a significant problem here if the rest of the world’s inflation is declining, ours is showing signs of going up. Should we be worried?

DENNIS DYKES: Well, the main concern, obviously, is the currency. The currency has fallen by 35% over the last year, which means that import prices, other things being equal, would have risen by around about 50% or so. So it’s just been a tremendous strain. The only other area where we’ve seen some sort of upward tendency to inflation is food inflation, and that’s linked to very wet weather that we’ve seen over the last little while and in no small part, as well, to the rand’s demise.

MONEYWEB: You must be sick, I’m sure, of talking about the rand. I think every person and their dog must be asking you what is happening – give us reasons for it. We pretty much know the reasons. The fact that it’s illiquid. The fact that there are currency traders who are taking advantage of that illiquidity and they are able to drive our currency down. Arthur Buchner, earlier on in the programme, from BoE, described the rand’s weakness as a thief sitting on the outside and if nobody’s going to stop the thief he’ll continue stealing. It sounds quite dramatic, but perhaps not entirely inaccurate.

DENNIS DYKES: It’s not a bad analogy. You know all the reasons that are given for the rand’s fall – Argentina, Zimbabwe, etc, etc, are valid reasons in themselves, but should not really have led to such a significant fall in the currency. If you look at the year as a whole, South Africa has performed practically the worst out of any emerging market currency. Most emerging market currencies are pulling back against the dollar at the moment. So there is something really quite unusual going on here, and I think the analogy that was given to you is not misplaced. Certainly there are some international traders who’ve had a very profitable relationship with the rand, and they obviously are locked in a battle with the Reserve Bank to show their that their recent tightening of controls will not work.

MONEYWEB: The other thing about the rand, I suppose, is the fact that it does seem to be in crisis. But do you buy the argument that the currency is undervalued, that our fundamentals are strong? Or is the market telling us that perhaps we’re not quite as well off as we thought we were?

DENNIS DYKES: If you look at any fundamental – and it’s not just South African economists that say it, is it? – it’s also international credit rating agencies and outside economists who look at these factors. You can’t make out a strong case that the rand is overvalued, and most would say significantly undervalued. So that, I think, is why people are looking for other reasons to explain the big drive down. And unfortunately you then have to come to most sinister sort of motives for people driving it down.

MONEYWEB: Dennis Dykes, senior economist at Nedcor.

MONEYWEB, BY BRUCE WHITFIELD, 18 DECEMBER 2001

BROADCAST TRANSCRIPT: Joining us now is Arthur Buchner, head of derivatives at BoE.

Arthur, the big story today has got to be Marinus Daling. He’s been at Sanlam for, I don’t know, 30-odd years. He’s been in charge, he’s been the chairman at least for the last seven years of that, and he’s stepping down. Is anybody, to be quite respectful, going to notice the difference?

ARTHUR BUCHNER: I don’t think so. I think those conglomerates really are so well structured at the moment that each division handles pretty much their own and you just need a figurehead who can actually represent you. I think he’s done fantastically well. I mean he’s overseeing the listing without too many problems and after 30 years with the same company, I hope I can also retire.

MONEYWEB: But this time last year, when he announced that, because of his illness, he was splitting the role of chief executive and chairman, the chief executive post went to Leon Vermaak. And basically, he’s structured his own departure, which has been appreciated by the market, I suppose.

ARTHUR BUCHNER: No correct. I don’t think there’s any gaps, it’s not like someone dying and suddenly you need to get your key man deposit out and you have to find someone in a rush. I think he’s done it very well, structured it very well, structured it very well and the group will continue forward.

MONEYWEB: Having a look at the volumes today, we are sort of heading into the holiday season in serious fashion. Where the volumes any lower today than we have seen recently?

ARTHUR BUCHNER: No, on the contrary they were actually quite big. I think futures close out on Thursday, it’s a big day. There’s a lot of open interest on the option side and a lot of guys tussling to see who’s actually going to get the market in a direction.

MONEYWEB: We’ll pick up on that futures closeout with you on Thursday I think, because it is quite a technical matter and guys like yourself, involved in the futures market – it’s a fairly technical thing. Look for an explanation in English if you can, on Thursday, exactly what it means and how it all pans out.

ARTHUR BUCHNER: Yes, I think guys like ourselves really just sit on the sidelines and hope the bigger boys don’t hurt us too much, because at the moment there are a couple of big boys throwing around a lot of weight and they tend to do it in this closeout, which is December, which is supposed to be a little bit illiquid. But at the same time when you’ve got two big boys who both have the same idea, except in two different directions, it makes for good brokerage volumes and a volatile market.

MONEYWEB: We look forward to picking up on that one on Thursday. Talking about illiquidity, we must talk about our currency, I suppose. Monday afternoon, four o’clock, the rand was sitting nicely at R11.78 to the dollar. By the end of the Classic Business programme last night it was at R12. Today we saw it go to the R12.20s again. What’s your reading?

ARTHUR BUCHNER: And yet again it’s the weakening after our market sort of closes. I don’t think the currency traders leave their desks, but I do think that their institutional clients or the corporates or individual stocks or shares that are exporters or importers, they sort of go to bed, and it can only be someone offshore that’s trying to push this thing. And when you’re not fighting – I always take the analogy, if you’re a thief and you get caught and nothing happens to you, you’ll continue to do it. And at the moment that’s exactly what’s happening with the rand. Someone’s stealing from the South African public and is pushing it and no-one’s stepping in. The Reserve Bank’s not stepping in. I know that the Reserve Bank gets criticised for then they do step in but, please, just provide some liquidity.

MONEYWEB: Can our currency policeman, Mr Mboweni, actually do anything about it right now?

ARTHUR BUCHNER: I think he should find out who this foreign hedge fund is, sell him a couple of dollars, as many as he wants, $1bn or $2bn, and then hike rates 5%, 10%, and let’s see if the guy is really happy to be short of the rand then.

MONEYWEB: We’ll be testing that theory, I think, with Dennis Dykes from Nedcor in just a little bit. Having a look at the market today, we have seen resources over the last couple of weeks run very, very strongly, due to the weak rand with people almost panicking into rand-hedge shares. But today the rand, look it got to Friday’s levels again, but it was the day for financials. People buying those up again.

ARTHUR BUCHNER: Well, the amazing thing about the rand is that every single one of those rand-hedge stocks and resource stocks that are, let’s say, listed in London, for example Billiton and Anglo American, they were down last week in pound terms yet in rand terms they excelled. I think Anglo American was up 30p on Friday, it was up R18 in our market. So it’s not like everyone’s piling in there overseas. It’s just that when it trades over in London and it trades here, it’s got to take a rand price. And the problem with that – it’s not really a problem because 90% of us are actually long through our unit trusts – the problem with it is that when Anglos turns around in pound terms and the rand maintains its levels here, we’ll have an even bigger squeeze on the upside. So I don’t even think that Anglo American is overdone at these prices, because in pound terms its the same as what it was two weeks ago.

MONEYWEB: Having a look at companies Metcash, Illovo, two of our industrial companies, they hit new highs today. People are going for value, it looks like. And they’ve both got some offshore elements to them as well.

ARTHUR BUCHNER: Yes, I think it’s the offshore element and also they have haven’t been disappointed in the recent results. So let’s get in. You know sugar is dollar-denominated, same as wheat. I mean we trade wheat futures and you cannot believe how that things running – as a rand-hedge it’s a great rand-hedge. Maize. Anything which has got any aspect of selling overseas the guys are looking and saying, well, where can we find it, why hasn’t it run yet?

Oh, it hasn’t run, let’s grab it.

MONEYWEB: You talk about agricultural futures. That’s got to be good for companies like OTK for example, for Tiger Brands, that sort of thing, where the futures are telling us that these stocks could make some good earnings in the year ahead.

ARTHUR BUCHNER: Correct. I know for a fact that Tiger is very active in CBOT, the Chicago Board of Trade, where 90% of commodities are traded. And, for them, if there’s a price discrepancy between South Africa and let’s say Chicago, they export. They go and buy futures there, they sell here. They go and buy stock there, they sell here, or they sell here and they buy here and sell there. So very good for them, because they have the mechanisms in place to actually take advantage of the price discrepancies – in other words arbitrage between the two markets.

MONEYWEB: And farming used to be so simple. You put stuff in the ground, things would grow, hopefully, and you’d harvest them and sell them at the local co-op. But it’s not quite that simple any more.

ARTHUR BUCHNER: No it’s not, but then the surprising thing is that futures actually started in agriculture. They didn’t start in the financial markets. We just took and annexed it as if it was our idea.

MONEYWEB: Arthur Buchner from BoE. Thank you very much for joining us on Classic Business.

MONEYWEB, BY BRUCE WHITFIELD, 23 NOVEMBER 2001

BROADCAST TRANSCRIPT: John Clemmow from Investec London is with us know. John, I don’t know how much you would like to say about the news which came out yesterday that there is to be an Investec listed in London. But what’s the reception been like in the corridors of Investec, where you are?

JOHN CLEMMOW: We’re all very pleased. Steven Koseff yesterday said that this has been a process that was initiated four years ago, that it’s a process that he and the senior management team at Investec think is vital for the future growth of Investec. I could see the emotion on Steven’s face when he announced the move that he and his management team think is very important to us. I could just correct possibly your previous correspondent in one little detail. He’s quite correct in saying that it looks highly unlikely as though Investec London would be large enough to qualify for the FTSE 100, and therefore those tracker funds that do look at the FTSE 100 wouldn’t be picking up Investec. But by far the majority of tracker funds actually look at the FTSE 250, which Investec would certainly qualify for. So I don’t know at what level there would be demand, but there certainly would be tracker demand for Investec London listing.

MONEYWEB: Based on current valuations, though, we would see Investec at between 110 and 120 on the FTSE 250, wouldn’t we?

JOHN CLEMMOW: I don’t think we’d see it at that level. As far as I’m aware, for the listing purposes, the value of market capitalisation in London will be just that of Investec London – not of the greater Investec group. Rather like the case of Billiton BHP where the market capitalisation for index purposes of Billiton BHP in London is just the Billiton element, and in Australia is just the BHP element. That’s the way these structures work. So, in effect, you would be just having the assets of London valued in London and the assets of South Africa for market cap purposes in South Africa.

MONEYWEB: We’ll pick up more on this Investec story with Kokkie Kooiman at coronation in just a couple of minutes’ time. John let’s have a look at the markets now because the American markets were closed yesterday. It’s been a half day in America today. Doesn’t seem to be much news coming out today on this long weekend?

JOHN CLEMMOW: No, it looks like it’s by far the quietest day of the year. I think there is some news that is quite interesting relating to the market. The first bit of news was late on Wednesday we got some data on money funds. Our Moneynet reported that the inflow of individuals and institutions into the market has increased. $22bn of new money entered into taxable money funds in the week ended Tuesday. This means the total amount that’s now in there is a staggering $2.01 trillion dollars. This is the first time ever that the $2 trillion level has been broken. And the flow of money into taxable money funds is up $200bn since September 4 and $440bn since the Fed started easing in January. In short, there is a great deal of money going into the American stock market. And given that IPOs are still very thin on the ground, given that you’re seeing far more share buybacks than share issuances – when you get that much money and you get so little new equity out there, you tend to see a market that goes up.

MONEYWEB: What does this tell you about the medium-term view on American markets then?

JOHN CLEMMOW: You have to consider that for American investors sitting in their domestic market, interest rates are now effectively negative. Putting your money in the bank is going to lose you money – even before tax. After tax, of course, that’s a certainty. So I think investors are rallying to the flag. There’s a wave of optimism in that the war in Afghanistan is going well, that Osama Bin Laden will be captured or possibly found fairly soon. And that as a result there’s money flowing into the equity markets. Now, this may be a little naïve, but the data that’s coming out of the United States has turned almost uniformly bullish, and it appears as though the recovery in the United States is under way. We’ve heard calls all over the place that September 4 was the bottom of the metals cycle. We’re about to see metal prices going up. And that explains, by the way, why you’ve seen such strong performances on the mining sector. Not just in South Africa, where you’re protected by the rand, but in Australia, in the United States and here in the UK, where Rio is very strong again today. There’s a lot of feeling that the market has turned. I have to say there are still pessimists out there who point out to the extremely high level of valuations that you’re seeing in the S&P 500 and the Dow. But we as a house are optimistic that the American economy will surprise on the upside, and if that’s the case, you will tend to see an improving market. I would just caution one thing. Our investment strategist pointed out earlier this week that usually the first year of a recovery is not the best year to be in the equity market. It’s a reasonable year, but it’s not the best year. We in general are optimistic. We think the markets are going to pick up.

MONEYWEB: And then John, finally, Tony Blair has been speaking on the euro and we’ve seen the pound slip. What exactly has he been saying? Is he moving closer and close to the European single currency?

JOHN CLEMMOW: Well, there’s two wars being fought in the UK at the moment. One in Afghanistan and one between Tony Blair and his chancellor. Gordon Brown and Tony Blair dominate British politics to an extent that it’s hard to imagine elsewhere, but they don’t seem to particularly like each other. In particular, Mr Brown believes that at a famous lunch before Mr Blair ran for party leader, Mr Blair agreed to step down after his first term as prime minister and allow Mr Brown to become prime minister. As Mr Blair shows no signs of doing that, Mr Brown is getting quite sulky. Mr Blair seems to now believe that it’s his destiny. He believes – he is quite messianic and believes these kind of things. It’s his destiny to take Britain into the euro and Mr Brown is his chief opponent. Now we’ve seen all kinds of leaks and sniping in the press from Labour Party lieutenants in either camp saying whether we should or shouldn’t go into the euro. But Mr Blair now seems convinced that it’s time for Britain to go in, and it looks as though he’s going to take a gigantic political gamble and hold the referendum on the euro on the date of the next general election. And the reason why this is a gamble, is that almost already you won’t bet against Labour winning yet another landslide in the next general election. Conservative opposition is in complete disarray and Mr Blair is extremely popular. But on the other hand, seven out of ten Britons say they don’t want to join the euro, and the number of those anti-euro is increasing almost day to day. So Mr Blair would be fighting a campaign where people might be voting for him, but against the policy that he’s campaigning on, and it might make things a little difficult.

MONEYWEB: John Clemmow at Investec London. Thank you very much for joining us. British politics is certainly something which is worth watching. Pictures in newspapers, British newspapers, this week showing lots of friendly smiles and handshakes between Gordon Brown and Tony Blair. Would Britain’s entry into the euro have any effect on South Africa whatsoever?

ARTHUR BUCHNER: I don’t think so, but I think it would be a bad move from their perspective. You know, they are one of the banking capitals of the world. Why go and suddenly support Spain and Portugal and Italy and so on when your economy’s running? Their parliament is fascinating to watch like a comedy show. I’m surprised they don’t throw oranges and pawpaws at one another.

MONEYWEB: Prime minister’s question time I think happens every Tuesday afternoon, and it is among the best television viewing anywhere in the world.

Arthur Buchner from BoE Securities. Before that you had John Clemmow at Investec London.

MONEYWEB, BY BRUCE WHITFIELD, 23 NOVEMBER 2001

BROADCAST TRANSCRIPT: And joining us now, Arthur Buchner from BoE Securities. Arthur, the Iscor story, it’s the end of an era, I suppose you could call it, but as Stewart says, who cares – if you’d invested in Iscor at R12.75 at the beginning of this year and it’s R32.50 today? You would have made yourself a whole big pile of cash!

ARTHUR BUCHNER: Well, I remember when Iscor first listed, and I think pretty much every South African had an Iscor share and they saw no growth out of it. I think 90% of those guys actually sold out and the insider punters actually made all the cash.

MONEYWEB: Do you remember what Iscor listed at?

ARTHUR BUCHNER: It was R1, if I’m not mistaken.

MONEYWEB: So people have made, anybody who stuck with Iscor …

ARTHUR BUCHNER: There was a ten for one spilt.

MONEYWEB: Yes, ok. Fair enough. But still, you’ve done pretty well out of it if you haven’t been in there for too long?

ARTHUR BUCHNER: If you’d held them right from listing, you’ve made money, but I think you could have invested better somewhere else.

MONEYWEB: Ok, but then the unbundling on Monday, we see that the business split into two, the steel and mining businesses. The Iscor – the steel – business is likely to disappoint?

ARTHUR BUCHNER: There is such a supply of steel at the moment in world markets, so when there’s an oversupply why go into it and actually purchase it? And I really do think Kumba is the jewel. I don’t think JP Morgan have valued it correctly. I think they’ve overvalued it. I don’t think it’s worth that amount of money, but judging by the amount of people that have been purchasing Iscor over the last three days and the demand for call warrants on Iscor – punters seem happy and they still think there’s upside.

MONEYWEB: Would you stick your neck on a block and say where you would see Iscor and Kumba on Monday?

ARTHUR BUCHNER: Well, it’s very difficult and the warrant issuers themselves don’t even know where they’re going to open, so they’re doing an actual basket between Kumba and Iscor. They’re saying, we’ll add the two together and we’ll get an eventual price. And that’s what it’s going to do. At the end of the day Iscor closed at R32-odd. The two together will open around R32.

MONEYWEB: Stewart was saying that the Miningweb guys are hedging their bets quite significantly – between R5 and R10. It’s far more likely to be in that range than at JP Morgan’s R20, which they said at the beginning of this year.

ARTHUR BUCHNER: Yes, correct. And I would hate to trade on a R5, R10 spread!

MONEYWEB: Having a look at the market overall today, we did see the banking shares do very well indeed. Nedcor and Absa in particular shone. Nedcor 5.5% up to R130. It has been sold extensively over recent weeks. Was there any particular news in the market today that saw Nedcor strengthen like that?

ARTHUR BUCHNER: Not at all, in fact Didata … Nedcor has almost become a Didata stock. If Didata goes down, Nedcor goes down. If Didata goes up, Nedcor goes up. They actually went opposite directions today. So it was surprising. I think someone may have decided to get involved in the financial sector. Nedcor was at this price three days ago. So it did get knocked down R8 or R9 over the last two days and rebounded up to these levels.

MONEYWEB: And then Absa at 3.5% – the results out earlier this week. They were good results, and yet the share price each day has been gaining ever so slightly.

ARTHUR BUCHNER: A lot of guys, before the results, sold out and I think they’re getting back in again. Nowadays with the results, the results have tended to disappoint, so everyone expected maybe there was going to be a disappointment and got out. Now they’re saying, hold on, there’s no disappointment and their growth strategy forward is looking quite good, so let’s get back in.

MONEYWEB: So far the market seems to like Investec. They liked it a lot more yesterday. The share price there rose R11. Today it was up just half a percent and closed at R176. What’s your view on the Investec offshore listing which was granted yesterday?

ARTHUR BUCHNER: Well, I don’t believe that an offshore listing is going to enhance earnings at all. So the fact that people are buying it is on the hype that Didata when it listed offshore had a big run, but that was because it was actually entered into the FTSE. I don’t think Investec is going to be in the top 100 in the FTSE, so there won’t be any index trackers purchasing it. And I think it’s purely a sentiment play on the fact that Didata which listed went up, Anglos which listed went up, South African Breweries on their listing in London went up. So we’ll buy Investec because it should also go up, but it’s different because it’s so much smaller than those shares. I think a lot of punters will be a little bit disappointed on the listing and you won’t find those index trackers pushing it any higher.

MONEYWEB: But surely for Investec to grow, it does need to be in an international arena? They’ve pretty much saturated the South African market. It makes sense for them to go and make a couple of juicy acquisitions overseas. Others have tried and failed, as we know. Old Mutual for example has spent a lot of money on growing internationally, but maybe the Investec guys have learnt from that?

ARTHUR BUCHNER: Well, I think they could have done that from South Africa, and they always use that argument that it’s cheaper capital to get overseas. But cheaper capital also comes at a price … and if you’re earning a lot of money in South Africa and you’re lending money overseas, you’re paying with your earnings out of South Africa, so it is costing you a lot of cash. I think that they’ve done great marketing in Europe – they bought cleverly unlike some other South African institutions – and I don’t think that the listing is going to enhance any more acquisitions or make them any more marketable than they already are. They’re a household name in England, and you can see that at the test on Saturday, they sponsor all the tests, all the rugby, everyone in London knows who Investec is.

MONEYWEB: If you held Investec shares at the moment, in your personal capacity, would you be holding on to them or would you be selling them?

ARTHUR BUCHNER: I would liquidate some. I think there’s hype around it. It came from R150 up to R185 yesterday. It’s too big a move on no earnings justification yet – they still have got to come out with results. But I would lighten a little bit.

MONEYWEB: Arthur Buchner from BoE Securities is sticking with us through the programme. We’ll continue to pick his brains from time to time.