Business Confidence will accelerate growth

Business Confidence will accelerate growth

The RMB/BER Business confidence index for 2018 Q1 rose sharply to 45, the highest level since 2015. A level above 50 is considered positive, but it’s a move in the right direction. 

 

As mention last week, improvements in investor, business and consumer confidence is the tail winds behind improving economic growth. 

 

There are a few obstacles that could come in the way of increasing growth like the land reform policy, funding “free” tertiary education and the Mining charter. 

 

If the SA government play their cards right, we could be headed for a “Brazilian styled recovery”. 

 

Brazil’s stock market has more than doubled since the process to impeach their president Dilma Rousseff started in late 2015. Inflation has come under control and the Brazilian Real is also significantly stronger. 

 

The remainder of the year will be volatile, but investors that buy the dips and don’t get frightened out of the market will be rewarded. 

 

The week ahead: 

  • Local economic data releases: CPI, Current Account (20/03), Retail trade sales (22/03), Moody’s Decision (23/03), we expect Moody’s to hold SA at Investment grade. 
  • Results Due: ACT MDI, SFN, TRL (20/03), CHP, GTC (21/03), SOH (22/03), GND (23/03) 
  • Ex Div (20/03): ANG, ART, BTI, BID, BCF, CPIP, DST, GRT, HLM, IPL, IPLP, JSE, MRF, NBKP, PGFP, RLF, SNT, SCD, WIL 

Last week’s movers and shakers… 

 

Other Economic data releases of interest… 

  • Tuesday: CPI (UK), G20 Meeting 
  • Wednesday: Average Earnings Index (UK); Crude Oil Inventories, Crude Inventories, FOMC, Federal Funds Rate (USA); RBNZ Rate Statement, Unemployment Rate, GDP (NZL) 
  • Thursday: Retail Sale, Monetary Policy Summary, Official Bank Rate (UK) 
  • Friday: CPI, Core Retail Sales (CAN), Core Durable Goods (USA) 

 

Two to Buy 

 

Sibanye-Stillwater: Lonmin take over making progress 

 

The trading pattern on Sibanye has been providing good opportunities for short-term traders. The price has retraced again on the offer for Lonmin and buyers have been defending the R11 level. A bounce is due and could materialise irrespective of the outcome of their offer 

 

Buy SGL below R11.50 for a move to R13.50 in the short term 

 

Shoprite: Benefiting from interest rate cuts 

 

SHP has pulled back to support around the R250 and with better consumer sentiment and prospects for interest rate cuts we expect another run to new highs.  

 

Buy SHP below R257.50 for a move back to above R285.  

 

None to Sell 

 

Long Term Ideas 

  • Anglo: Buy below R285 
  • Sasol: Buy dips below R400 
  • Aspen: Accumulate below R260. 
  • Sygnia: Add below R12.50. 
  • PPC: Close at R7.08.  
  • Santova:  Buy below R3.00.  
  • Merafe: Accumulate below R1.55. Special Dividend on the cards. 
  • 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, Tencent results due tomorrow. 

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