Risk off sentiment sees Investors Flee Emerging Market assets

Risk off sentiment sees Investors Flee Emerging Market assets

This week is full of event risk; the US interest rates announcement, the market expects a 25-basis point increase, with an 85% probability, US and North Korea summit, US CPI, UK unemployment, ECB committee meeting and Italian policy uncertainty. All of these could push investors towards less risky assets in developed markets. 

 

Short term traders should focus on Rand sensitive shares as volatility and uncertainty in them could present profit opportunities. Risk averse investors should sit on the side lines while these events unfold and wait for the market to choose a direction. 

 

The week ahead: 

  • Results Due: CKS, GTR, SCD, SSS (12/06); BAT (13/06); APF, MMP, PRG (14/06); GAI, NVS, PMV (15/06) 
  • LDT (12/06):  AFT, BWN, CRG, CMH, DNB, HPB, ISB, IPF, MEI, NRL, NVE, SYG, TDH, TRE, TSH 

Last week’s movers and shakers… 

Biggest Gainers / Losers (sorted for the week) 11 June 2018
Close 1 d% 1 w% 20d% 60d% YTD% 1 Y%
Steinhoff 1.24 4.0 20.6  -18.9 -63.7 -48.6 -98.0
Sibanye 9.40 -2.1 13.6  -1.9 -18.9 -16.4 -44.7
DRD Gold 3.69 4.3 11.6  19.6 28.3 19.6 -7.0
Kumba 315.22 1.5 8.3  8.6 4.3 9.4 103.0
Implats 22.05 -0.1 7.9  12.4 -12.9 -7.4 -39.6
Billiton 309.85 0.3 7.4  8.7 32.5 27.3 59.4
Sappi 91.00 -1.1 7.4  7.8 15.2 12.2 2.3
Capitec 884.11 -2.1 -6.6  -0.9 -5.3 -0.6 11.0
Torre 0.76 0.0 -7.3  -15.6 -24.0 -11.6 -41.1
Transhex 1.50 -1.3 -7.5  -1.3 5.0 -17.8 -57.8
PSG 215.00 -2.1 -8.4  -5.6 -7.8 -4.8 -8.9
Discovery 147.00 -1.3 -9.0  -12.1 -18.8 -16.1 12.3
M &R Hlds 17.26 0.7 -9.4  11.8 84.9 15.9 33.0
Sanlam 73.38 0.1 -9.5  -6.6 -21.3 -9.4 9.7

Best Performers: SNH 20.6%; SGL 13.6%; DRD 11.6%; KIO 8.3%; IMP 7.9% 

Worst Performers: SLM -9.5%; MUR -9.4%; DSY -9%; PSG -8.4%; TSX -7.5% 

 

Other Economic data releases of interest… 

  • Tuesday: Average Earnings Index (UK); CPI (USA); RBA Gov Lowe Speaks (AUS) 
  • Wednesday: Trade Balance (CAN); Crude Oil Inventories (USA); Trade Balance (AUS) 
  • Thursday: Main Refinancing Rate, ECB Press Conference (EU); BOJ Policy Rate, Monetary Policy Statement (JP) 
  • Friday: BOJ Press Conference (JP) 

 

One to Buy 

 

Coronation back to buying territory 

CML has pulled back to attractive levels after Sanlam’s operational update surprised the market and the Rand weakened significantly. It’s down over 29% in the past two months and approaching support. 

 

Investors like the juicy dividend it pays out, on a dividend yield of over 7%. Investors who buy the dips with a longer-term horizon will be rewarded. 

 

Buy CML below R60.00 for a move back to R80 

 

 

Short term Ideas 

  • RMI: Entry R39.00, stop loss R37.75, target R44.00 
  • MTN: Awaiting a break above R121.36 to open up R130.00 
  • FSR: Buy below R61.15, stop loss at R59.90. Target R65.00 

 

Long Term Ideas 

  • AB InBev: Buy below R1,250 for a move to R1,475. 
  • ARM: Up 6% since we got in. Hold 
  • Dischem: Accumulate below R30.00 for a move above R37.00 
  • Shoprite: Hold. Target of R285. 
  • Anglo: Increase stoploss to R303.30 to lock in 6.4% gain.  
  • Aspen: Accumulate on weakness below R260. 
  • Sygnia: LDT today. Add below R12.50. 
  • Santova: Moving higher, place a stop loss at R3.10. Hold 
  • Merafe: Accumulate below R1.55. 
  • Jubilee: Speculative buy below R0.50.  
  • MTN: Maintain position, accumulate for long term below R120.00. 
  • Glencore: Still bullish. Hold 
  • Wescoal: Long term buy. Add below R1.80 
  • Naspers: Increase exposure below R3,000.  

 

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