Market watcher: David Shapiro -Sasfin

Platinum shares very strong, gold shares weak.

SIKI MGABADELI: Well, when global sentiment turns negative it certainly does. We had the ECB saying sorry, Greece, we don’t think we’d like your Greek bonds for your funding. That was last night.
   Then today we are a little bit up. Europe down, US up. So maybe people are [overtalking]… Bridgestone, everybody was down, up in arms.

DAVID SHAPIRO: I think you just have to take one day at a time and hope you can eventually draw a line through the curve or through the fluctuations. But today we picked up towards the end, and I think that was on the back of a stronger US market. Markets picked up there on job data improving.
   Remember, tomorrow we’ve the very important job numbers. And also a lot of M&A activity taking place.
   And then the oil price stabilised. We saw a big drop yesterday, but it seemed to stabilise today. Sasol – yesterday when we were talking about it I said it was rather surprising that against the background it had fallen 1%. But today it made up. It was up 5%. But I was looking at the numbers over the week. It opened at R430, it’s R450 today – so still a gain of 7% on the week.

SIKI MGABADELI: But it had been up just over 11%, right. since…

DAVID SHAPIRO: Since its low. And then mixed pictures on the mining market. It’s very hard there to reconcile some of the movements with the fundamentals. The platinum price does nothing, the rand goes very strong – when I came here it was below R11.30/dollar.

SIKI MGABADELI: It’s R11.26 right now.

DAVID SHAPIRO: Platinum shares very strong, gold shares the other way, gold shares weak. So it’s all over the place.
   Just on the rand story, the one story that I did pick up was that the Swiss central bank was buying euros to weaken the Swiss franc. [Overtalking] …The fact that the Swiss franc has gone so strong and they are trying to perhaps temper some of the gains I think caused the Swiss franc to go up.

SIKI MGABADELI: What did they think was going to happen?

DAVID SHAPIRO: Look, you have to confirm that story. I’m trying to investigate what pushed the euro up. But the rand also gained in strength. As interest rates remain high here, long interest rates, it’s still very attractive for foreigners to come in at a time when perhaps other emerging markets or other previously high-yielding currencies are not that high any more. So money is shifting here, maybe from the Aussie dollar – who knows where it’s coming from? But we see its strengthening bias. Just looking at the trends, this could probably go to R11.20/dollar, even lower than that at the moment.

SIKI MGABADELI: What did you make of the ECB’s decision? Some are saying they might be shooting themselves in the foot by playing hardball.

DAVID SHAPIRO: I think this is brinkmanship, this is negotiation. I don’t think they want to give ground, just in case some of the other neighbours, some of the other southerly nations, start to get ideas as well. But I like the Greek minister. I think he is trying hard, he is articulate, he puts a strong case. Whichever way it goes, Europe has to do something. They can’t continue the austerity programmes.

SIKI MGABADELI: All right. We’ve mentioned the US jobs data out tomorrow – non-farm payrolls. What are people expecting we are going to see?

DAVID SHAPIRO: I still think it’s in the 230 000, 250 000 region, which is a pretty good number. They’ve just continued this trend of adding more jobs and moving towards lower unemployment, and also towards a rate rise. But the number they watch is to see if there is any inflation in those numbers – in other words, if they are employing with increases in hourly rates, because that’s what Janet Yellen is worrying about, because there is not enough inflation there and there is still slack within the labour system. And only when the slack is gone will she start to believe that they have utilised all the capacity and they can start increasing interest rates.

SIKI MGABADELI: Tencent…bond-raising.

DAVID SHAPIRO: Interesting. I think they are starting to attract a lot more attention to Chinese internet players. That has been dominated by Alibaba, but Tencent is still very much in focus. Remember, it’s listed in Hong Kong. It’s not listed in the US. But still, I like it and I still think it’s going to gain. It’s hovering around its all-time highs, not showing any kind of weakness at all.

SIKI MGABADELI: Interesting. Well, have you been load-shed today?

DAVID SHAPIRO: At Sasfin, yes, right from ten. And I had the generator right outside my window, so I had to shut the window, no air-conditioning, but we did have power. We were able to [work].

SIKI MGABADELI: Ja, I was also [load-shed] – from 10:00 to 14:00.

DAVID SHAPIRO: I’m just worried that I will see an SMS from my wife as I leave the studio – load-shedding!

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