Archive for the What the Experts say Category

Obama good for resources

Although markets have already priced in his victory, the election of Barack Obama should provide some support for commodity prices and the JSE in the short run, analysts say.

Americans elected Obama as their president on Tuesday, handing him an historic victory over Republican John McCain. Continue reading Obama good for resources

Economic commentary – Jac Laubscher, Group Economist: Sanlam Limited

 6 October 2008

The global financial crisis Part 2: Reinventing the financial system

The financial crisis that has engulfed the world since August 2007 has yet to run its full course but it is has already irrevocably changed the financial landscape, especially in the Anglo-Saxon countries. The investment banks that have been part of the US financial architecture for more than seventy years have disappeared, the world’s largest insurer is now 85% in government hands (at least temporarily), important mortgage finance institutions in the USA and the UK have been nationalised,  more than one institution has been forced into being taken over by another institution with a more healthy capital position, and the use of public funds to recapitalise the banking system seems inevitable. Continue reading Economic commentary – Jac Laubscher, Group Economist: Sanlam Limited

Economic commentary – Jac Laubscher, Group Economist: Sanlam Limited

1 October 2008

The global financial crisis – Part 1: Implications for the real economy and financial markets

Every week a new chapter is written in the unfolding drama that is the global financial crisis which has been gripping the world since August 2007. The possible future course of the crisis, the effect it could have on the real economy and the extent to which even countries that are not directly caught up in the turmoil (including South Africa) will suffer contagion, are regularly being overtaken by events.

The central point brought home strongly during the past week is that systemic problems require systemic and not piecemeal solutions. Hence the US proposal, which was not successful, to use taxpayer funds ($700 billion) to remove the impaired assets from the balance sheets of institutions, hopefully reducing counterparty risk, restoring trust in the system and freeing up the flow of funds. Continue reading Economic commentary – Jac Laubscher, Group Economist: Sanlam Limited

Efficient Research – JSE All Green

The JSE All share gained a firm 2.19% (28 028) yesterday, as all the main indices closed in the green.  The local bourse ignored the stellar Producer Price Inflation figure for July (18.9% y:y) and interest rate sensitive indices advanced. Financials ended 3.05% stronger with Banks increasing 3.8%. Read on

The NICE decade for equities

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In today’s newsletter we have a view from Max King of Investec on global equities and we share some thoughts on the local market from Sanlam Senior Equity Analyst Andrew Kingston

The NICE decade for equities

Max King, global strategist, Investec Asset Management, examines the long-term outlook for global equities

Mervyn King, the Governor of the Bank of England, recently warned of “the end of the NICE decade.” NICE is an acronym for Non-Inflationary Credit Expansion, but it was also pretty nice for consumers and governments. Continue reading The NICE decade for equities

Are volatile equity markets providing opportunities?

Significant declines in the FTSE JSE All Share, down 13.57% since only the end of June, have seen many investors abandoning ship. Others are now contemplating whether it’s time to significantly down weight equities in favour of more defensive asset classes. This correction has been marked by aggressive selling out of resource stocks (down 27.46%) into financial stocks particularly (up 9.28%) and relatively flat returns for industrials (down 0.91%). Read on

Efficient Research – Resources to the Rescue

The resources sector (+2.5%) was favoured again yesterday, as commodity prices bounced back from year-to-date lows on renewed tension (especially surrounding the Russia/Georgia situation) and some pullback in the dollar.  The All share advanced 1%, to close just above the 27,000 points level. Gold miners jumped 2.5% and platinum miners advanced 0.9% after having been slaughtered earlier in the week. Read on

Efficient Research – New CPI Basket Complicates Outlook

The Monetary Policy Committee (MPC) of the South African Reserve Bank, decided this afternoon to leave the Repo rate unchanged on 12.0% per annum. The market (including ourselves) expected rates to be kept on hold. Despite the breather, consumers should remain cautious, as the Governor did mention that “we are not out of the woods yet” Read on

Efficient Research – Consumers in for a Rate Breather?

The JSE all share closed 0.42% higher yesterday as the bourse managed to close just over the 27 000-point level on the back of firmer commodity prices.  Resources were up 2.25% with BHP Billiton gaining 1.8% (R222.02) and Anglo American increasing 3.3% (R413).  The Gold mining index (+6.67%) was favoured, supported by the higher gold price, after it took a beating the previous two days. Read On

Resources Rebound

The JSE All share ended the week’s first trading day in green territory, up 1.20% (27 320).  The bourse was supported by a strong performance in Resources (+3.17%) as a weaker U.S. dollar and higher oil prices buoyed commodity prices. Read on

Red Week for JSE

Having read Thebe Securities’ most recent news letter reminded me that “no trend lasts for ever and that markets tend to overshoot….and that every trend creates the seeds for its reversal.  Although caution is necessary, it is just possible that we have seen an example of these two.”

The JSE remained under pressure on Friday and the All share index dropped 1.6% to close the day below the 27,000 level on 26,996 points. For the week the market lost 2.2%. All the major sectors closed in the red on Friday, with financials (-2.2%) and industrials (-1.8%) leading the downside. Banks lost 2% on Friday, after the recent strong run in this sector….  Read on

Efficient Research Party also on JSE

What a bounce! The JSE made a huge recovery yesterday to end its four day losing streak, as the all share index jumped 4.16%, supported by a spectacular rise in financial (+6.7%) and industrial (+7.4%) shares. Financial shares in most global markets performed strong yesterday supporting sentiment towards the local banks.   These sectors have been under a lot of pressure from the last quarter of 2007 and it seemed inevitable that we should see some recovery in them – as the market saying goes, nothing goes up (or down) in a straight line! Read on

Efficient Research – Oil Price Plummets

The price of oil recorded its second largest one-day drop ever seen, following the statement by Mr Bernanke that the U.S economy faces the dual threat of slowing growth and inflation, which points to lower U.S. demand for oil. Intraday the drop amounted to $6.44 per barrel (-4.5%), while compared to yesterday morning, the cooling was somewhat softer at $5.4 per barrel (-3.8%). The Dow Jones remained under pressure and dropped 0.8% to below the 11,000 points level. This came as Mr Bernanke painted a gloomy picture for the US economy including troubled financial markets, declining house prices, a weaker labour market and higher oil prices (in general).

Efficient Research – Oil Price Plummets!

The price of oil recorded its second largest one-day drop ever seen, following the statement by Mr Bernanke that the U.S economy faces the dual threat of slowing growth and inflation, which points to lower U.S. demand for oil. Intraday the drop amounted to $6.44 per barrel (-4.5%), while compared to yesterday morning, the cooling was somewhat softer at $5.4 per barrel (-3.8%). The Dow Jones remained under pressure and dropped 0.8% to below the 11,000 points level. This came as Mr Bernanke painted a gloomy picture for the US economy including troubled financial markets, declining house prices, a weaker labour market and higher oil prices (in general). Read on

Economic and market analysis 7-11 July 2008

The big question for the economy this coming week is whether South African share markets will continue to follow the rest of the world. Therefore, what will happen to commodity prices and especially oil prices, the Dollar/Euro rate and inflation expectations? Read more