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Rand improves slightly in sea of negativity

Consolidated Infrastructure Group and Netcare under the cosh – Maudi Lentsoane 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 Maudi Lentsoane, who is the CEO of Lehumo Investments. Maudi, are you having a better day than the shareholders of Consolidated Infrastructure Group?

MAUDI LENTSOANE:  I’m afraid not. It’s one of those days. I think since yesterday we’ve had all the negative news flow coming through. Today it’s all red across the board. We’ve got the all-share index finishing down 0.5%. The falloff was all across the board.

The resources were down heavily, 2.3%. That’s where the resource counters finished.

We had some negative Chinese data missing expectations this morning, and I think that’s why you are seeing that bloodbath among the resource counters – down 2.3%.

The financials were slightly up, call it flat. I think that was primarily because we’ve got surprisingly a stronger rand against the US dollar, despite all the negativities. Yet the rand somehow found the way to come back from all this negativity from yesterday’s selloff of just over 1%. I see today the rand is regaining a bit of ground at R14.42/dollar. That’s where we are sitting.

So the financials were supported, the industrials flat. A flat picture there. You’ve really got a selloff across the board.

Asia this morning was negative. Europe as well. We’ve got all the results missing expectations.

NASTASSIA ARENDSE:  You had a look at the statement out of Consolidated Infrastructure Group. It’s down 57%, and they expect a decline to be worse than they had earlier forecast. I was looking at the companies who have exposure to this share. It looks really bad.

MAUDI LENTSOANE:  It’s tough. This company has been under a lot of pressure over the past couple of years. It just hasn’t really found any footing and this is just a confirmation. Investors are not happy, and that’s why you see that massive selloff today. There had been some selloff from General Electric overseas as well, investors generally not happy about what’s happening there.

You’ve also got another one that came out after the market closed – Netcare. That’s a very poor trading update as well. I think tomorrow when they open the sector will come under a lot of pressure. They say earnings per share will be 130 to 135% lower. They are alluding to the fact they are not doing well in the UK, being under a lot of pressure there. So it’s going to be very tough, I guess, for Netcare tomorrow.

NASTASSIA ARENDSE:  As we proceed into the week, any key piece of information you are going to be keeping an eye on?

MAUDI LENTSOANE:  We’ve got the economic data from the US coming through, we’ve got the housing data that’s going to be released. We are going to be watching those to see a confirmation of how strong the US economy is. We know that the December rate hike is an almost foregone conclusion.

Also there is going to be focus on the UK – some numbers coming through on Thursday as well, the CPI numbers. We know that the pound has been under pressure since the potential no-vote being tabled against Theresa May. So the CPI numbers will shed some light as to what’s going to happen going forward.

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

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