Economic & Market Analysis

The question whether the JSE will recover during November is uppermost in our minds. Professor Chris Harmse and his research team at Dynamic Wealth have, among others, the following to say at this time:

“Despite a slight recovery of almost 12% in the JSE ALSI (between its lowest level of 17 812 points on 24 October 2008 and the closing at 20 030 points on 7 November 2008), the news of South Africa’s credit rating being revised from a stable to negative outlook– due to the large deficit on the current account of the balance of payments, as well as negative indications that commodity prices will stay under pressure – may cause the volatility on the JSE to continue. Nevertheless, we expect a recovery in share prices in November driven by further sharp decreases in the price of petrol,  slower increases in food prices, sharp decline in the inflation rate, a stronger rand and international portfolio interest in South African shares. The somewhat more positive sentiment globally after the combined efforts by various countries to curb further recessionary pressures should also support commodity prices over the next few months. Therefore resources stocks on the JSE may hold its own.

TECHNICAL ANALYSIS

The Top 40 Index dropped a hefty 48.5% from its high on 22 May, and is now very close to the technical support level of 50%. It seems as if the Top 40 Index is establishing a base for 2008 – the low possibly being made on the 27th October. If the Index does not drop through the low of 16 122, the Top 40 Index will rally into 2009. Accumulating some shares at the current levels should be considered.” Read on