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Aveng shares plunge sharply

Resources driving market, Glencore, Northam, BAT, Naspers, Richemont, Aveng, Pick n Pay, Foschini, currencies and Amcu statement – David Shapiro on Tuesday’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, thank you so much for your time.

DAVID SHAPIRO:  Hi, as always. Pleasure.

NASTASSIA ARENDSE:  What happened on the markets today?

DAVID SHAPIRO:  A new high again, up 0.3%, driven mainly by resources again. I think what we’ve seen is global markets quite strong. And global markets are moving – certainly the US is at a new high now, and it’s really on improving business confidence that we are seeing in the world, and also solid corporate earnings.

Besides that, we see economic data in Asia, Europe and the US all encouraging or leading people into the market. I think that’s the backdrop that we gained. But it’s helping commodity markets as well, particularly the gains that we are seeing in Asia, and leading there is iron ore. Iron ore is very strong. Copper took a breather today, platinum also a lot stronger than it was.

So all our major mining shares were up today, Glencore leading up about 2%. And then platinum shares continued to strengthen. Northam once again featured for the second day in a row, up about 3%.

Just looking at the industrial market, we saw a turnaround in British American Tobacco, just finding some support. I see in Europe at the moment it’s up about 2.5% – that’s in the UK – and that’s following two days of heavy selling after the Federal Drug administrators called to lower nicotine levels in cigarettes. So the share rallied there on our market about 2%. Big buying. It made up almost 11% of our market, which is unusual, just coming under Naspers.

Naspers, incidentally, those shares closed unchanged.

Luxury goods company Richemont was another feature – up 1.1%. Nastassia, I think that’s also in line with better numbers that we are getting out of Europe. We had their growth numbers and people are now starting to talk more and more about Europe. If you look at the euro, it’s now at €1.18/dollar having been at about €1.05 six months ago. So a big improvement there.

Just on the negative side, one story that I followed today was Aveng. That plunged about 15%, simply on the disappointment over a settlement of a longstanding arbitration play in Australia. Generally construction companies down.

Pick n Pay gave back some of its gains. Foschini also down on having done a bookbuild that raised about R2.5 billion on the issue of about 17.2 million new shares, which has a dilutory effect.

So overall I think those were the main events on the market today.

NASTASSIA ARENDSE:  And for tomorrow – any particular news you’re going to be looking out for?

DAVID SHAPIRO:  We are watching very carefully the trends that we are seeing. I see the rand’s improving slightly. I wasn’t quite sure why it deteriorated in the first place. I know that there are concerns about our growth and that it might start hurting investors.

But I think we are all waiting for trading updates for the June companies, and that will always dictate where markets go. I’m just hoping that with this trend we are seeing now, the new highs that we are making, we can continue to edge up higher. I like the pace. It’s not heavy, it’s not strong. Just good enough. Goldilocks – lukewarm.

NASTASSIA ARENDSE: David, thank you so much for your time.

Moving afield, we had a conversation with Amcu president, Joseph Mathunjwa, on the back of some of the remarks that came out from NUM calling for Minereal Resources Minister Mosebenzi Zwane to be removed. He told us what he thinks should happen in the mining sector.

JOSEPH MATHUNJWA:  With regard to the mining charter, the mining charter, according to Amcu, is a code of good practice. It’s a stakeholder engagement and a timeframe of how to achieve set goals in the mining charter. So therefore it’s not quite an act or legislation, it’s a code of good practice.

And then how the government came about…I think to me it’s more political than anything else. I do support any transformation in this country, whether it’s economic or political, or what. It has to happen. It must happen. The question that we raise as Amcu is: when the economy was booming the past ten, 14 years, why was the government not clamping down on this industry that is not transforming?

NASTASSIA ARENDSE:  Joseph Mathunjwa was speaking to Moneyweb.

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