Politicking Pushes the Rand against the Ropes

Politicking Pushes the Rand against the Ropes

The Rand is against the ropes after renewed calls to nationalise the Reserve Bank by Julius Malema. Malema clearly hasn’t followed the demise of Argentina and recently Turkey after their central banks lost independence and credibility. 

 

International investors will most likely be paying close attention to weekend reports on expropriation of land, without due process being followed.  

 

Events that could cause market and currency volatility this week: 

  • Trumps low-level meeting with China, ahead of further tariffs (21/08), 
  • Jackson Hole Symposium will most likely give investors a little insight into what central bankers are thinking regarding, interest rates and policy to garner economic growth. 
  • Turkey’s policy response to economic woes – ongoing. 

The week ahead: 

  • Local Data: Retail trade Sales (20/08); Composite business cycle indicators (21/08); CPI (22/08) 
  • Results Due: SOL, SHP, WKF (20/08); BIL, CLI, HAR, IPL (21/08); BID, BLU< GRF, ITE (22/08); BRT, GTC, MSM, SGL, S32, TPC, WHL (23/08); AIP (24/08) 
  • LDT (21/08): FSRP, L2D, MIX, MND, MNP, NBKP, TWR, ZXSWB, ZSXWS, QLT (Special Dividend) 

Last week’s movers and shakers… 

 

 

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Best Performers: ADI 11.3%; IAP 9.3%; ANH 7.8%; FFB 7.5%; SFN 7.4% 

Worst Performers: GFI -26.5%; TBS-19.9%; DRD -14.4%; SGL -11.7%; ANG -10.6% 

 

Other Economic data releases of interest… 

  • Tuesday: RBA Gov Lowe Speaks, Monetary Policy Meeting Minutes (AUS) 
  • Wednesday: Core Retail Sales (CAN); Retail Sales (NZL); Crude Oil Inventories, FOMC Meeting Minutes (USA) 
  • Thursday: ECB Monetary Policy Meeting Accounts (EU); Jackson Hole Symposium (Thursday to Saturday) (USA) 
  • Friday: Core Durable Goods, Fed Chair Powell Speaks (USA); BOC Gov Poloz Speaks (CAN) 

 

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Buy GFI for rally after pounding.  

Our proprietary market scanning software is highlighting GFI as massively oversold and implies a high probability of a rebound to the mean share price of R44.47. 

 

Weak commodity prices and confirmation of Goldfields commitment to South Deep, which is still loss making, have weighed heavily on the share price.  

 

Markets tend to overact; commodity prices have already improved and in the short term there is a high probability of a recovery to approximately R44.47. 

   

Buy GFI below R35.25 with a stop loss of R32,55 and a target price of R43.75.  

Be aware that gold stocks can be more volatile and adjust exposure risk accordingly.  

 

Short Term Ideas 

  • GFI: Buy Long above R35.25 for a move back above R40. Target it R43.75 with stop loss of R32.55. 

 

Long Term Ideas 

  • FSR: Buy below R63.25 for a move to R67.75 
  • Discovery: Place stop loss at R160.00 for a 6.6% gain. Hold 
  • Coronation: Buy below R60.00 for a move back to R80 
  • Dischem: Buy below R28.00. Target R33.00 
  • Shoprite: Building an uptrend from the R200 long-term support level. Hold. 
  • Aspen: Pulling back from Resistance. Accumulate on weakness below R245. 
  • Sygnia: Support building above R10.00. Add 
  • Santova: Closed at R3.75 for gain of 20.57%  
  • Merafe: Accumulate below R1.55. Big Dividend LDT 28 August. 
  • Jubilee: Speculative buy below R0.50.  
  • MTN: Accumulate for long term below R110.00. 
  • Glencore: Still bullish. Hold 
  • Wescoal: Long term buy. Dividend of 6.22c received. Add below R1.80 
  • Naspers: Recent sell off provides another opportunity to enter.  Buy below R3200.  

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