What’s on the horizon… A bullish 2018!

What’s on the horizon… A bullish 2018!

Economic data for January showed some positive signs, but sentiment took another hit after parliament voted to change the constitution regarding lands rights. Despite assurances that this should be done on unused land, without affecting food security and focus on the development of new agricultural zones, it introduces another hurdle for new investment.  

 

The market is concerned that its another step towards a Zimbabwean style decay.  

 

The real question is; “How much will the improved confidence translate into higher economic growth?  

 

Higher growth is needed to address declining real income levels and unemployment. There has already been a sharp improvement in the BER Conference Index, that typically correlates with an improvement in consumer spending. Inflation is under control and will be kept in check by the recent Rand Strength. This bodes well for interest rate cuts this year, another boost to the consumer.  

 

Financials (which have already reacted) would benefit and other SA based consumer companies; retailers, gaming and leisure and telecoms.  

 

The tone is certainly more bullish for the rest of 2018!!   

 

The week ahead: 

  • Local economic data releases:  Manufacturing: Production and Sales (13/03), Mining: Production and Sales (15/03) 
  • Results Due: SOH, TRL, ELR, MCZ, RSG, GPL, MTA, OML, AHL, ARI, BEL, ERN, EPE, FCR, REM, SIPBEE 
  • LDT (13/03): AGL, ASR, BVT, COM, DSY, DRD, GNDP, HMN, L2d, LNF, SOL, SOLBE1, SHP, TFGP, TPC, TRU, WHL 

 

Last week’s movers and shakers… 

 

Best Performers: AVV 8.8%, LHC 8.7%, SAP 8.3, MSM 7%, MTN 6.5% 

Worst Performers: EXX -16.8%, TBS -13.4%, HLM -12.1%, FSR -10%, MUR -8.3% 

 

Other Economic data releases of interest… 

  • Tuesday: Annual Budget Release (UK); CPI (USA); BOC Gov Poloz Speaks (CAN)  
  • Wednesday: ECB President Draghi Speaks (EU); Core Retail Sales, PPI, Crude Oil Inventories (USA), GDP (NZL) 
  • Thursday: Libor Rate, SNB Monetary Policy Assessment (CHF) 
  • Friday: Building Permits (USA) 

One to Buy: Buy the ALSI into Closeout 

 

With futures closeout on Thursday, we should see the market kick up into the closeout auction at 12h00. 

 

This is a short term speculative trade. And you can use an ALSI or ALMI future. You can also use CFDs on the Satrix 40 ETF. 

 

Entry: 51850, stop loss 51350 and target 52850 (or after the closeout auction). 

 

None to Sell 

 

Long Term Ideas 

  • Sasol: Up over 5%.   
  • Aspen: Buy dips below R260. Price has been volatile. 
  • Sygnia: Add below R12.50. 
  • PPC: Finding support before a break through resistance. Hold 
  • Santova:  Buy below R3.00.  
  • Merafe: Accumulate below R1.55. 
  • Jubilee: Bottoming out. Hold. 
  • MTN: Buy Dips below R122.50 
  • Glencore: Diversified Commodity exposure. Hold 
  • Wescoal: Long term buy. Add below R1.80 
  • Naspers: Buy dips below R3,300, excessive discount to NAV. 

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