A healthy correction underway! Get ready to start buying the dips…

A healthy correction underway! Get ready to start buying the dips…

The first week of this month has seen investors being spooked by a selloff in stocks and bonds. This will be short lived and allows investors with new money an opportunity to invest this fresh capital at a lower level. 

 

The global market needs a 15% correction after volatility was at it’s lowest level in years and investor confidence in the market rising day after day was at record highs.  

 

The major diver behind this recent sell off is the rising bond yields and US interest rates expectations. Importantly, the drivers behind higher yields are; increasing global growth, global earnings are increasing quickly, inflation is expected to remain constrained, US tax cuts and infrastructure spend will be great for the global economy.  

 

As mentioned in previous newsletters, this is a great environment for commodities and the fact that global asset managers are still underweight South African equities, this sell off will be short lived. 

 

Stocks to look at are BAW, AGL, TBS, SPG, RCL and APN. 

 

Don’t panic, the market is just back to where it was a few months ago. 

 

The week ahead: 

  • Local economic data releases: Mining and Manufacturing Production and Sales (08/02)  
  • Results Expected: ITE, SAP, UPL (07/02), BTI, GTR, NT1, OLG, TON (08/02), MLD (09/02 
  • LDT 06/02: QFG, SBV, NWL 

Last week’s movers and shakers… 

 

Other Economic data releases of interest… 

  • Tuesday: Trade balance (CAN); Unemployment Rate (NZL) 
  • Wednesday: Crude Oil Inventories (USA); Interest Rates (NZL) 
  • Thursday: RBA Monetary Policy Statement (AUS); BOE Inflation Report, Monetary Policy Summary, Official Bank Rate (UK) 
  • Friday: Manufacturing Production m/m (UK); Unemployment Rate (CAD) 

None Buy and Sell 

 

Take this opportunity to slowly accumulate stocks you didn’t get to buy last year before the latest rally! 

 

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