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Market watcher: David Shapiro – Sasfin

Our market was backed by gold shares – but generally gains right across the board.

SIKI MGABADELI: We are talking markets now with David Shapiro of Sasfin. Looking at the markets, the all-share up 0.75% at 48 961. The Top 40 up 0.8%. Gold shares up 1.6% on the day. Harmony, Gold Fields, AngloGold up. Sasol has been quite steadfast, given what it has been going through. Naspers another record high.
   David, what’s going on? How was trade today?

DAVID SHAPIRO: Well, two good days. We’ve still got a little to go to recover Monday’s major loss, but markets are picking up. They picked up in Europe. One of the reasons they are picking up in Europe is that the CPI there – consumer prices – is down. We know this. The ECB is actually meeting at present and there are views that because you’ve got these concerns about a deflationary environment there that they will step up fairly aggressive policies now to stimulate the economy, which would include of course buying government bonds. So markets picked up on the back of that.
   In the United States a private survey came out as well, showing that jobs are being created. It’s not an accurate measure, but if you follow this trend of this private survey it’s still moving positively. So everybody waits for Friday’s number, which is the official number which comes out. But on the back of that there are expectations that we’ll still see plus-200 000 jobs created in the United States. So US markets recovered on that as well as their trade numbers, which came out for I think December or perhaps November – I’m not quite sure. My internet was down. The numbers there were the lowest since December 13 as well, and really on the back of very low imports of oil, especially with the price down and volumes down and that it does help the United States quite a lot. So US markets picked up.
   But our market was backed by gold shares, but generally gains right across the board.

SIKI MGABADELI: Ja, and even platinum shares have been [up] again and Sasol up.

DAVID SHAPIRO: Well, we are seeing support above R400. I can live with that. There is still no end to where the oil price is going. There is a lot of speculation.

SIKI MGABADELI: And that’s a concern, right, that we don’t know where the bottom is here?

DAVID SHAPIRO: It’s far too early to speculate on demand and also to speculate on the end of supply. So there is still a lot of oil finding itself on the markets and who knows where this can go. You’ve got traders also worrying about it, who also help the price down. No-one wants to go long of oil at the moment. But Sasol did find support.
   The big story was of course Naspers, which you mentioned – 4% up today.

SIKI MGABADELI: Eight-month high, I think.

DAVID SHAPIRO: That’s because a number of brokers are coming out and recommending Tencent, having discovered Tencent now. Finally. When you start to find US or global brokers picking [it] up, I think the share can go higher and you are going to see it translate into Naspers.
   Retail as well. We are getting a reduction in the oil or petrol price, and more may be coming, as Mike Schüssler said the other night. So on the back of that the expectation is that it’s going to follow through to retailers.

SIKI MGABADELI: People are starting to ask me that – when are we going to start to see prices come down, and what sort of lag…

DAVID SHAPIRO: It’s going to take time.

SIKI MGABADELI: The petrol price comes down, the fuel price comes down, and automatically…

DAVID SHAPIRO: It takes time to filter through the system, so I don’t think you are going to see it immediately. I was going to ask – do you see taxi prices coming down? Does it happen?

SIKI MGABADELI: No.

DAVID SHAPIRO: Are they bringing down prices? They are getting the benefit. Of course their margins are going to increase, but are they going to pass it through to commuters? That’s a big worry. They’ll have the benefit, so they’ll have more money to spend and perhaps renew their taxi fleet on the back of that.
   Anyway, retailers were pretty strong. And also Imperial did quite well. Of course, it’s the motor industry, so if you are going to have more money in the pocket you’ve got to go and buy a new car.

SIKI MGABADELI: And we had car sales again rising, with the latest data coming out today as well.
   The rand’s at R11.71. It seems kind of to be stuck here.

DAVID SHAPIRO: The euro is under pressure and I think the euro will continue to come under pressure, with strategists there calling it even lower from these levels. If they introduce very aggressive packages to stimulate the European economy that’s going to drive the euro down because it will push rates even lower than they are at the moment. And probably if they don’t introduce those packages, people are going to worry about the euro – and still drive the euro down.

SIKI MGABADELI: What does that mean for us?

DAVID SHAPIRO: That’s a worry because I think even though we have outperformed the euro – in other words, we haven’t fallen as much against the dollar as the euro has, we still have fallen. I still think it will tug down on emerging market currencies, so we would tend weaker. I don’t know where we would go, but I don’t think we would tend stronger. So I imagine it would just chip away at the rand as well if the euro keeps going weaker.

SIKI MGABADELI: David, Mohammed Nalla is very keen particularly on the db x EuroStoxx.

DAVID SHAPIRO: It’s interesting you said the euro, because I was arguing the whole point today, because I’m long of the euro, the db x euro, and the db x US. We’ve done very well out of the US one, not so well out of the euro. And it’s whether Eurostoxx can outperform the fall in the euro against the rand. So I’m very interested to hear what he’s going to say.

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