Today’s market. ‘Watch out for the rand at this level.’

ALEC HOGG: Hello, good evening and welcome to the SAfm Market Update with Moneyweb. I'm Alec Hogg.
    A week ago we reported on this programme how our colleague James Myburgh had uncovered shocking fraud at the national company registration office, Cipro. Names of company directors were being switched and new names used to open fraudulent bank accounts to which millions were being illegally diverted.
    Well, James is back in the studio tonight, along with Cipro's chief executive, the previously elusive Keith Sendwe.
    Also this evening, new listing Sephaku. And a strongly positive day for shares, as we'll hear from market watcher Wayne McCurrie.
    Wayne, David Shapiro would love to be here tonight, because with the way the share market performed today he'd have smiles all over his face.

WAYNE McCURRIE: The market was very strong today, and it was driven I would say exclusively by what happened overseas. Two big news items overseas. Pending house sales in America best in two years, so very strong. And Ben Bernanke said that the US is on the cusp of economic recovery. So the overseas markets were massively strong and ours simply just followed suit. So we almost touched 25 000 again, ending up about 24 800, somewhere around there. And the overseas markets are all up 1.5%.

ALEC HOGG: Well, if we see it get to 25 500, that's when we are going to have a lot of interesting times, because if it gets through 25 500 happy days are back again.

WAYNE McCURRIE: I'm not a big person on numbers and technical analysis, as you well know. I just feel that 25 000, 26 000 is expensive. And it's not 40% expensive, it's maybe 10, 15%. But the run-up has just been too quick and too strong, and it's very much a short-term U - you know, it's not saying don't buy equities for the next three years, but the run-up seems very strong. As you were talking earlier, the market, wow, it just powered ahead today. The banks were hugely strong, the banking index up 2%, RMB Holdings up 4% - but generally green right across the board.

ALEC HOGG: The all-share index finishing just over a percent better. But it was green, as you say, everywhere. Wayne, foreigners still buying - we heard from Russell Loubser earlier in the week that last year the foreigners sold R4bn worth of South African shares. This year - up till June - they've bought R38bn.
WAYNE McCURRIE: You can just see it in the rand. The day, almost to the minute, when the market turned, the rand strengthened. The rand went down to R7.75 - now, that's a big movement on the day. It's about R7.80 now, so obviously foreigners are the ones in there buying our market, and we know that because, when we examine the average South African fund manager, for want of a better word, they are in essence fully invested. They actually virtually can't buy any more, because they are fully invested. So any movement in our market up or down will be dictated to by foreigners - and that's in fact been the case for many years. And of course our market, given the severity of the global shock we've had in the last year, all the ups and the downs in our market, I would say 100% of them are driven by the ups and downs on the overseas market. So we are still captive to what's happening overseas.

ALEC HOGG: South African rand back to levels we saw in the first quarter of 2008.

WAYNE McCURRIE: It's getting a bit expensive now - watch out for the rand at this level, it's getting a bit expensive.

ALEC HOGG: Well, the gold miners have certainly been saying that. They are crying. They are saying the rand needs to weaken from here.

WAYNE McCURRIE: And they are probably right. Unfortunately I don't think it's going to. Maybe it goes R8.50, maybe R9, but it's not going to weaken massively because if the globe recovers and if China's OK, and if the US and Europe and everyone recovers, it's very good for commodity-producing counties like South Africa. So, in an up-cycle, for want of a better word, the rand doesn't collapse in the up-cycle, so it might weaken a little bit, but I don't think it's going to weaken significantly. And unfortunately, when you look at the gold mines, I don't think anyone's making profits with gold and the rand at the moment. I just don't think anyone's making profits. The rand gold price has fallen 25% since the peak, and if you look at Impala's trading update today, the platinum miners are at least making some profit, but they are making significantly less than they used to.

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