SIKI MGABADELI: Checking on the markets – up just over 1% at 51 875. The Top 40 index up 1.25%. The rand is at R15.14/dollar, R21.84/pound and R17.23/euro.
David Shapiro is here. What held us up, David?
DAVID SHAPIRO: I’m not sure. Foreign markets, yes – global markets were all better. Again, I’m not too sure why. There wasn’t any corporate or economic news out today anywhere in the world to really give the market a boost.
But the US is picking up. I know we are going into the competition right at the end of the show, but Facebook is at a new all-time high, Amazon at an all-time high. Even McDonald’s – I’m not sure if it’s at an all-time but certainly at a one-year high. It’s the last share I ever expected to have gained almost 30% I think over the last year.
But broadly Europe is also picking up. I’m not sure that there’s a view that the global economy is stabilising. Also we saw a rebound in resource prices – once more. I think maybe coming from an oversold position rather than anything dramatic in any of the companies that got things ticking up.
Gold shares came down, the second day in a row. Big downfalls there, I think also getting used to a lower gold price or the gold price losing momentum as global markets stabilise.
But Siki, it wasn’t an easy day to find news–
SIKI MGABADELI: It was very mixed. You’ve got financials slightly down, industrials up 1.25%, resources up 1.75% and, as you said, gold shares just down close to 4%.
DAVID SHAPIRO: I think just on the industrial market, if you looked at some of the top performers, Raubex was building on yesterday’s good result – an encouraging outlook from the company. They were up another 7%. And then Sappi also building on yesterday’s half-year results, getting more and more supporters as they restructure the company, take down their debt and improve their cellulose sales and take away from the coated paper. And I think the weaker rand is also helping them. So Sappi is starting to look interesting.
Barloworld had a good day, up 5%. I couldn’t find why.
SIKI MGABADELI: I looked everywhere.
DAVID SHAPIRO: So it was just one of those days. The only thing that worried me a bit, I was looking at the property index, which was down 1.5% on a day when everything was better. Certainly there were a lot more gainers than losers. Right across the board property shares were down. Resilient came out with a book-build. They are raising R800 million, so I think the dilution took the shares down about 3%. But apart from that everything seemed to be trading weaker.
SIKI MGABADELI: It’s one of those sectors that has really done well over the past few years.
DAVID SHAPIRO: Very well. It may be that we are seeing long bonds rising, worries about the downgrade and staying stubbornly above 9% or a little higher than that. It’s starting to affect property shares. But that was just one of the weak sectors.
SIKI MGABADELI: And the rand is holding pretty steady. It had weakened earlier because I suspect they had looked at Moody’s saying we are going to keep you guys here. We still have the two who aren’t as friendly – or perceived to be as friendly – as Moody’s coming up next month.
DAVID SHAPIRO: Fitch and S&P. I don’t think they are going to do anything now. They may do something down the line.
SIKI MGABADELI: It would be six months since they last reviewed. We were chatting to Kevin Lings yesterday and he said they should at least give us more time.
DAVID SHAPIRO: I don’t think they are in a hurry to downgrade. But I think we’ve also got to do our share, and I know that Pravin Gordhan and President Zuma are getting together and everybody is trying to make an effort. But I mean it takes a massive restructuring and repositioning of this economy to actually get momentum in during a time when there is not much momentum in the rest of the world. We are an old mining economy, a service economy. There is nothing really fresh and vigorous to get things thumping. We are not a major manufacturer. Yes, we’ve got motor vehicle manufacturing, but I think there is a big challenge to reposition ourselves and to create jobs. You saw the jobs number yesterday, which is awful.
SIKI MGABADELI: It was awful, awful, awful – that many people losing jobs in the first quarter cannot be sustained.
DAVID SHAPIRO: I hope it’s wrong. I hope they added a nought or something like that.
SIKI MGABADELI: I suspect they didn’t. You can almost feel it. If you look at the quiet news – you’ve got these voluntary severance packages Telkom told us about, all those people taking those. So it may not be the big “Ohh, look, we are retrenching or firing this many people,” but there is a lot of that going on slowly in the general economy, which is a bit scary.
DAVID SHAPIRO: It is scary because I think if there is one thing that’s going to worry rating agents or worry any kind of investors it’s, number one, huge unemployment, perhaps the highest in the world, as well as no growth. So politicians have to take this seriously.
SIKI MGABADELI: We are about to talk of financial resolutions. Some of us just go, right, this year I’m going to be financially fit.
DAVID SHAPIRO: Against this layoff of jobs or losing jobs we’ve still for the Mall of Africa, wherever you go now–
SIKI MGABADELI: And people are still swiping and spending. That’s why we are going to remind them they need to go back to those promises they made themselves at the beginning of the year.