The rand has been buoyed by tighter monetary policy in Turkey, Russia and Argentina. Our local inflation data assisted in the strength even though the Reserve banks held rates on Thursday. The Rand has gained over R1.30 against the Euro, USD and GBP in the past three weeks.
Investors tend to panic and run for the exit all at once, at the expense of externalising funds at the worst rate compared to investors who take a tactile and measured approach.
Investors looking to increase their offshore exposure should do so while the Rand is getting stronger. Rand strength is coming against resistance from a technical perspective, but we could see a short-lived move stronger over the coming weeks.
As election campaigning gains traction, expect political parties to ‘Up the Ante’ with calls to nationalise more, expropriate more and redistribute more. This will cause gradual weakness to previous levels.
The week ahead:
- Local Data: Quarterly financial statistics, Quarterly Employment Statistics, Producer Price Index (27/09)
- Results Due: ACS, AEG, BCF (25/09); CPI (26/09); ACE, TBG, CGN, CND, EUZ, JSC, TLM (27/09); AND, DTA< EPE, GML, HWA, LNF, MCZ, TEX, TRE, UCP, WEZ, YRK (28/09)
- LDT (25/09): AIP, ARI, ASR, HYP, IPL, IPLP, MST, PPR, SUR
Other Economic data releases of interest…
- Tuesday: BOJ Gov Kuroda Speaks (JP); CB Consumer Confidence (USA)
- Wednesday: ANZ Business Confidence (NZL); Crude Oil Inventories, FOMC Economic Projections, FOMC Statement, Federal Funds Rate (USA)
- Thursday: Interest Rate, RBNZ Monetary Policy Statement (NZL); Core Durable Goods, Final GDP, Fed Chair Powell Speaks (USA); ECB President Draghi Speaks (EU)
- Friday: BOC Gov Poloz Speaks, GDP (CAN); Current Account (UK)
Short Term Ideas
- Goldfields: Strong support at R34.00. Long below R35.25, hold for a move back above R40. Target it R43.75 with stop loss of R32.55.
Long Term Ideas
- Lewis: Buy below R30, target R47.50.
- Remgro: Buy below R210 for a run to R250.
- Discovery: Resistance building at R178. Keep stop loss at R160.00.
- Coronation: Strong support at R55. Buy below R60.00 for a move back to R80
- Dischem: Up over 16%, target and stop loss remained at R36.50 and R32.00. Hold
- Shoprite: A break above R200 is needed to curb further declines. Hold.
- Aspen: Results disappointed market, share price under pressure. Hold
- Sygnia: Support building above R10.00. Add
- MTN: Strong bounce on positive news, buy below R75.00.
- Glencore: Up just under 20%. Hold
- Naspers: Tencent down around 2% over night. Accumulate below R3,200.