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A2X stock exchange goes live on Friday

US jobs, PSG Konsult, Naspers, AB InBev, Richemont, Vodacom, Anglo, Billiton and Glencore – David Shapiro on Thursday’s market moves.

NASTASSIA ARENDSE:  Good evening and welcome to the SAfm Market Update with Moneyweb. My name is Nastassia Arendse.

I’m joined on the line by David Shapiro from Sasfin, who is here to take us through today’s market performance. David, how are you doing?

DAVID SHAPIRO:  A good day today. You know what’s interesting? It’s that the all-share index closed at 56 999.79. We can round that up to 57 000. I’ll buy that.

But a very good day, I think taking a leaf from global markets. They continued to surge ahead. US markets are now up for the eighth day in a row and nothing is worrying them. We have this all-important jobs number out tomorrow in the United States, and normally there is a bit of hesitancy ahead of it. But the market just seems to be brushing it aside, knowing there could be distortions because of the hurricanes. But overall a very good move on global markets, and it’s translating here.

Maybe it’s the top end of the market. Nastassia, I must say something. At the top end of the market, the heavyweights, a lot of good movement there. But if we go down to our retailers, we go down to some of our construction shares and some of those companies which have a lot of exposure to the South African economy, there’s still a bit of pressure and a bit of selloff. So it wasn’t all one-way traffic on the market. But I think we can still rejoice.

NASTASSIA ARENDSE:  PSG Konsult reported interim numbers today. Did you get a chance to have a look at those?

DAVID SHAPIRO:  To be honest, no. I saw PSG themselves were very strong and, funnily enough, PSG was up quite strongly today, 2.84%, generally being lifted by the underlying investments in the group, mainly Capitec and that. So I’m not sure. I don’t know whether that had any effect.

I’ll tell you where I was watching. Naspers was up another 1.25% today. That always moves the needle.

The share AB InBev, which obviously took over SABMiller, is not included in the indices yet because the local free float is not big enough, but it is by far the biggest company. It closed on the JSE with a value of almost R2.8 trillion. So it’s a massive company. That was up about 1.5% now. We are finally starting to see movement in that share after almost a year in the wilderness. There was a big selloff that followed the takeover. It’s starting to look very strong. If it was included in the index we would have made that 57 000 level quite easily, but you’ve got to ask the actuaries there.

Richemont is another strong one.

Vodacom is coming back [up] after yesterday’s selloff it was very strong as well. It bounced 2 or 3% today, almost back to the level it was before we saw this Competition Commission inquiry news. What I think is also happening is that it is such a big contract that it is having an effect on competition, so MTN was under a bit of pressure today, as were Telkom and Blue Label. Blue Label because of their exposure to Cell C. So I think the competition came under a bit of pressure, but Vodacom just bounced back.

The miners strong, at the top end. It’s all the demand for Anglo, Billiton, Glencore, all of those – just keeping that market going. I think below the scene there, when you look at the metals, there is a lot of volatility. For some reason I can’t explain Angloplats was very strong as well. The platinum price is still under a bit of pressure, but there was quite a bit of demand for that. Sometimes you see these movements but don’t really have any reason to understand them.

NASTASSIA ARENDSE:  Something that’s happening tomorrow is that A2X is going live with Peregrine, Coronation and Arc Investments – and this is on the secondary listing side of things. I was having a conversation with somebody who used to work on the bond floor of the JSE back in the early ’90s, talking about whether he ever in his lifetime would have imagined that the JSE would have competitors, that the market would be getting a little bigger. Did you ever anticipate anything like that happening?

DAVID SHAPIRO:  Well, I don’t want to go back to when I came to the market, but we used to have a little board that came from the Union Stock Exchange. It was the last competition to the JSE, which never really took off. My big worry is that, even as we look now, the JSE is dominated by a handful of shares – those big ones that I was talking about. If we go outside of that, it’s a very small market. There is not enough volume. So I’m not quite sure how they are going to keep alive. Today technology makes it a lot easier than it was in the old days, where you needed a floor and you need to shout and you needed systems. I think that’s happening a lot easier – starting a market. But you need stock on your shelves, and I think that’s going to be very heavy. To be fair, we overrate the size of the market here, and also we need a super bull market to really make those exchanges a success. So good luck to them for having the entrepreneurial spirit. My fingers are crossed for them, but I’m a bit dubious. Sorry to do that to you.

NASTASSIA ARENDSE: Thanks, David.

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