Anglo below R100/share: David Shapiro – deputy chairman, Sasfin

A blood red JSE – except for the gold index, Foschini and Mediclinic.

HANNA BARRY: We are talking markets now with David Shapiro of Sasfin. The all-share index closed just more than 1% lower on the day at 52 056, the Top 40 down in a similar region at 46 787 points. It’s blood red across the JSE, except the gold index sort of firming slightly – but it’s not really firm when you are talking about gold at the moment.

David Shapiro, what was driving these market losses today?

DAVID SHAPIRO: It was twofold, I think. US markets are down, European markets are down. Concerns about comments that came out of Draghi, worried about global growth and obviously hinting at more stimulus measures. On the other hand, you’ve got a US Fed governor now confirming that the time is right to raise rates. So you’ve got these two different central bankers there, both of whom affected the market. Draghi’s comments I think had more of an effect.

And we are seeing commodity prices coming down, worries about China, worries about whether there is sufficient demand to keep prices up. Oil came down – I think 2.5% today. Copper is at a level that we haven’t seen since 2009. But big drops in commodity shares.

Anglos fell below R100/share, down 7, 8%. Glencore’s at I think new lows now, having clawed its way back from previous lows, now fallen back to that. And it’s generally across the board. Kumba down. And I think that’s having a very negative effect on the mood on our market.

We would have been worse if it wasn’t for two very heavyweight – when I say heavyweight, Naspers and SAB – both of those were up 1%. Together they make up about 20% of the JSE. So where you get two shares that make 20% up, it just seemed to temper the fall in the overall index.

But Arcelor Mittal – I can’t remember, I haven got the numbers.

HANNA BARRY: The numbers aren’t telling the full story. Arcelor Mittal down 16, nearly 17% actually.

DAVID SHAPIRO: Which points to troubles within this economy. And I think we are starting to see it across the board. There seems to be a very, very broad selloff, in companies that have held their own up to now.

Allied Electronics – I can’t remember all the prices, I didn’t write them down – was down about 20%. Caxton down about 8%. And so on right across the board.

HANNA BARRY: Interestingly Stefanutti Stocks surged at first when those results came out. We saw it go up sort of 9% and then it was up 7% much of the day. I’m looking at it now – it’s down nearly 12%. We know things are not good in construction, but that’s quite a swing.

DAVID SHAPIRO: It’s not a big trader. You can only find one or two trades that actually can swing the price that much. It’s not a liquid stock.

But overall we’ve seen retailers under pressure. There’s the odd one – I think Foschini was up today. So you are finding the odd share that seems to buck the trend. But generally there was a big selloff. A difficult day to trade.

A lot of results came out today as well – almost impossible to keep up because every one of the shares has got its own description of earnings, from adjusted core headline to diluted, normalised, none of which you understand. And as an accountant, it’s just absolutely infuriating to try and get some kind of standard. You can choose – these are our results, this is what we report to the Receiver of Revenue, this is what we report in terms of the Companies Act, but these are our real results. These are adjusted for all the mess-ups we made.

HANNA BARRY: Exactly. And we just move on. It doesn’t fit into neat little boxes. You did mention the Foschini Group, with first-half results out today. Quite nicely up on an increase in cash purchases –I believe alongside some new store openings as well. I guess in this tough environment for retail, cash is probably a safer bet than credit sales. So Foschini’s cash sales up slightly to 46%. Are you a fan of TFG?

DAVID SHAPIRO: They are coming from a low base and they are not very expensive. My worries are around the consumer in South Africa. We heard from Tumisang that mining is down. Manufacturing seems to be a little better, but certainly not at levels that are going to propel this economy further. So I’m concerned. Somewhere it’s got to start impacting on the consumer. We are not getting a flood of tourists coming in here. So it’s difficult to reconcile the real economy with some of the numbers that we are seeing and when it’s going to fail. But Foschini – very, very good result relative to where we are in this economy. Look, it’s probably one of the cheaper ones. Whether you go in terms of this kind of market on that side I don’t know. I’m a bit cautious of buying retailers.

HANNA BARRY: Also some strong results from Mediclinic. That hospital group is of course just expanding all over the place, now creating the largest hospital group in the United Arab Emirates, doing that combination with Al Noor, also buying a stake in Spire Healthcare in the UK. That’s a good business.

DAVID SHAPIRO: Here we had the adjusted – I don’t know – headline earnings, whatever it is, 19% or whatever it is. But I like the group very much, and I like what they are doing. They’ve externalised this business now – it will be listed in London. But a very good result. I hold them because I think this is not the end of their expansion trail. I think they are going to continue to add hospitals. They’ve got Rembrandt, the Remgro Group, behind them. They’ve got deep pockets and have up to now financed them. So it still remains a favourite of mine. These are the businesses that you must buy – those that are spreading geographically and not confined to just one area like South Africa. But at least they are covered in Switzerland, the UAE and now the UK.

HANNA BARRY: Briefly, Distribution And Warehousing Network Limited, Dawn, which is a manufacturer of hardware and kitchen products, etc. Perhaps not the most exciting company but what was interesting in its results today, it said that two of executives, its CEO and CFO, were repaying bonuses totalling R7m to the company because of poor performance. That was a decision taken by the board and agreed to by the management. I thought quite encouraging. That share price up 18%, for what it’s worth.

DAVID SHAPIRO: Well, they came from a loss to a profit. Again, coming off a very low base. But also trapped in a difficult industry. This is a business that historically has been very well run. It’s just been caught in circumstances. But I think that’s a very noble gesture. I’d like to see our bank men do that as well. [Chuckles]

HANNA BARRY: Me too. Thanks, David.

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