The Rand has bucked the emerging market currency trend by strengthening 7.6% year to date. The Brazilian Real, Indian Ruppee and Turkish Lira have all weakened over 7%. The Turkish Central bank surprised the market with it’s 3% interest rate hike last week.   


We should see an increase in market and currency volatility leading into Friday’s US employment data, which is expected to stay near the 18-year low hit in April. The market will be eyeing the average hourly earnings as a gauge for an uptick in US inflation. The Fed is expected to raise rates at its next meeting (mid-June), but committee members are cautious on raising rates quickly due to other regions still maintaining accommodative policies. 


Any sell-off will be short lived and we expect markets to rebound to their previous highs by year-end. 


The week ahead: 

Last week’s movers and shakers… 

Best Performers: DRD 7.9%; MUR 7.4%; SNV 5.6%; BAT 5.6%; MRP 4.8% 

Worst Performers: SNH -18.9%; MSM -14.3%; SGL -12.7%; ADI -8.4%; SAP -8.2% 


Other Economic data releases of interest… 


One to Buy 

RMI – deep value financial play 

Financial shares retraced almost 10% in the last two months. RMI is significantly oversold and the share is currently trading at a discount.  


Technically it has found support at R38,50 in the past. We expect this support level to hold and would be buyers at around R39, 00.  


Buy RMI at R39,00, with a medium-term target of R44,00 (12,5% upside). Apply a Stop loss of R37,75.   


Short term Ideas 

MTN: Go long below R116.00, stop loss R108.45, target price R130.00 

FSR: Buy below R61.15, stop loss at R59.90. Target R65.00 


Long Term Ideas