In this Issue:
- Profit as the Rand blow out settles!
- Buy Netcare before an oversold bounce
- The Week Ahead
- Other Economic data releases of interest
- FINOVA Investors Digest – View the Statistical Data Table
Profit as the Rand blow out settles!
The Rand fell over 3% from its open to close last week. This is on the back of Ace Magashule’s surprise (and incorrect) inclusion of changing the Reserve Bank’s mandate and possible quantitative easing. When you add the bad GDP growth figures, you can see why people panicked and sold the Rand for any price they could get. Typically, this herd mentality happens at exactly the incorrect time creating pockets of opportunity. This past weekend also had positive news from the G20 and President Trump backing off from the Mexico tariffs.
Look at the chart below and you will see the long ‘wicks’ on each high candle, these are points where Rand buyers overcome Rand sellers against USD. Friday’s red reversal candle opens a pull back to around R14.6250 in the near term. If the ‘Trade Wars’ de-escalate significantly we could see R13.8550 before year end.
Traders can go long the Rand against the USD above R14.8250 and profit as the Rand strengthens. (This means you will short the USD/ZAR currency Pair).
Buy Netcare in oversold territory
Our market scanner has signaled Netcare as significantly oversold, on a standard deviation of -3.1 and due for a bounce. NTC has fallen over R4 to below R19 since it released its interim results around three weeks ago. This fall has been exacerbated by the CEO being forced to sell all his shares to cover obligations related to his investments in the shares.
The numbers reveal NTC has a strong balance sheet, with Debt/EBITDA for the FY19 expected to be 1.1 (among the lowest amongst its peers). And management have confirmed the dividend policy of paying out 50% -70% of earnings and investigate possibly buying back shares.
Investors who take a longer-term view will bank at least 5% in dividends over the next 7 months, and benefit if the company buys back shares.
Buy NTC below R19.00 for a bounce to R23.00 over the coming months. Traders can gear up their positions using CFDs to amplify their gains.
The week ahead:
- Local: Retail trade sales (12/06)
- Results Due: ANA, CTA, LAB, PGR (10/06); SSS, TTO (11/06); CKS (12/06); KBO, MCG, NVS, PMV (14/06)
- LDT (11/06): AFT, AFTJ, BWN, CTK, CVW, CMH, DNB, DIA, DIB, EMH, EXP, HPB, HPR, IPF, MEI, NRL, NVE, TDHBP, TKG, TSH, SILP
- Special/Share Premium Dividend: TDH (11/06)
Other Economic data releases of interest…
- Tuesday: RBA Assist Gov Kent Speaks, Westpac Consumer Sentiment (AUS); Average Earnings Index (UK); PPI (USA); CPI, New Loans (CNY)
- Wednesday: ECB President Draghi Speaks (EU); Core CPI (USA); RBA Assist Gov Ellis Speaks, Unemployment Rate (AUS)
- Thursday: SNB Monetary Policy Assessment, SNB Press Conference, Libor Rate (CH); Fixed Asset Investment, Industrial Production (CNY); OPEC-JMMC Meetings
- Friday: Core Retail Sales, Prelim UoM Consumer Sentiment (USA); BOE Gov Carney Speaks (UK)