Today’s markets. ‘A lot of small companies…are not fulfilling their promise.’

ALEC HOGG: Hello, good evening and welcome to the SAfm Market Update with Moneyweb. I'm Alec Hogg.
    The lines are open again this evening for our special investment hotline. Magnus Heystek is with me in the studio to take your questions. We are on 011-684-2770.
    Ahead of that, we'll hear about today's markets with Vlad Anuchin, who's with RMB.
    And then gold expert Jeff Nichols will give us his thoughts on whether recent predictions of the yellow metal's demise are premature.
***
Vlad Anuchin of RMB Asset Management is one of the few people who's actually working at this time of the year. Vlad, are you guys just about denuded of staff?

VLAD ANUCHIN: Ja, this was my punishment for the day.

ALEC HOGG: Well, Mr McCurrie is getting his own back, I am sure, for something. But it wasn't a bad day on the stock markets generally.

VLAD ANUCHIN: Not at all. If you think of it, 0.5% is not much to talk about. But seeing we are down about 5% on the last quarter it is not a bad thing to finish off a week and perhaps a month with.

ALEC HOGG: We know that the Europeans and the Americans are still going hell-for-leather with their trading. Is that being reflected in the South African market - is it mainly from overseas?

VLAD ANUCHIN: Yes, the locals seems to be on holiday, or not interested. We see a lot of sales, certainly, around the financials - Standard Bank and so on. And of course a lot of the guys over there buying the resources.

ALEC HOGG: Interesting to note that some of the construction companies had a good session today. I don't know if you followed very closely the developments there - Group Five up 6%, Raubex 5%, Wilson Bayly, which has had a good week, up another 1%.

VLAD ANUCHIN: Yes, I think they have been punished so much that sooner or later it is in the price and the price begins to get value, for example AG, or rather Aveng, is not a bad buy right now. With the Murrays one could question, but Group Five is a good company to have as well.

ALEC HOGG: Talking about AG Industries , that's one of the problem children. But it's not half as big a problem as a company called Best Cut. Today we had Gerhard Barnard, who's been the financial director of Best Cut for all of five-and-a-half months, resigning. The company has been suspended from trading for the last two weeks, and it looks like this is something that might be the Class of 2008 - because it was only listed then - that'll be hitting the wall quite soon. I guess in this economic climate you can expect that to happen.

VLAD ANUCHIN: Yes, indeed. In fact, once we look at the AltX versus the all-share, or the bigger exchange, there are some interesting and worrying trends happening. And that is where the Top 40, for example, or Alsi is up by 50% since March and the AltX is down 50%. So a lot of the companies, a  lot of small companies, certainly, are not fulfilling their promise, and things like the theme of the year for 2009, which is a very strong continuation from 2008, is that size matters.

ALEC HOGG: Best Cut is from the Richards Bay/Empangeni area. Other news to come out to that area today was Howard Buttery, who has been on the board for 36 years, is stepping down. The share price went up 1.5% today. I suppose it's not too good when you resign and the price goes higher.

VLAD ANUCHIN: No. I think there's been so much trouble around that - very thin trade, very small market cap - let's give him the benefit of the doubt.

ALEC HOGG: He'll be replaced by Mike Mun-Gavin. And then two other little companies that were in the news - Aurora, which is the business that is run by Mandela and Zuma, they want to list their gold operation in April next year. And then finally Pinnacle Point, a company that's been in a lot of trouble, hasn't released its financial results for the six months to the end of August. It was supposed to do that by the end of November, and the JSE said today if Pinnacle Point do not release their financial results they won't be able to trade them any more.

VLAD ANUCHIN: Yes, we can actually be proud of the JSE and them for ... a lot of rules that they have sat with. We've seen a number of companies failing in terms of their auditing, for example Blue Financials and the likes. And I think one could say, so much bad news - is it all worth it? But I think it's not a bad idea to weed out perhaps poorer organisations and let better companies, such as Abil and that sort of industry, to prosper.

ALEC HOGG: Pinnacle Point has until the end of the month, otherwise if you own shares in that company you won't be able to trade them any more.

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The SAfm Market Update with Moneyweb is broadcast on SAfm 104-107fm, weekdays at 18:00 to 18:30.

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