Posted: 2006-09-26 23:50 JSE report - Tuesday 26 September 2006  Presenter: Lindsay Williams Guest(s): Lavan Gopaul On the JSE shares worth almost R9-billion trade, and the all share is up 0.7% to 22,162 points. Resources shares are up 0.3%, gold shares are up nearly 2% and platinum shares are up 3.2%. Financial shares are up 0.75%, banks are up 0.4% and the industrial market is up 1.4%. With Lavan Gopaul from Cortex Securities in Durban LINDSAY WILLIAMS: The R153 government bond was up eight basis points, the yield falling to 8.57% at the close. The rand is unchanged at 7.66 against the US dollar, the rand is 9.71 against the euro, the rand is 14.50 against the pound. On the international currency markets the dollar is 117.10 against the Japanese yen, the euro is 1.2685 against the dollar. The gold price is almost $592 a few dollars up from last night’s New York close, and platinum is also up $2 at $1,130 an ounce. The oil price is $60.70 a barrel after falling below the sixty level. The European stock markets are up between 1% and 1.5% with the London FTSE up 1.3%. In the United States of America it’s just coming off the boil - the Dow Jones holding onto 11,600 points up 0.2%, the S&P up the same amount and the Nasdaq just going negative by a couple of points. With the September closeout last week volumes are coming back to the JSE. Lavan, R9-billion isn’t a bad start to the week? LAVAN GOPAUL: A fairly busy day on the JSE. We opened with a very negative tone - some mining shares like Anglo American and BHP Billiton were hammered at the open, both of those lower by almost 3%. The market clawed back quite nicely, fairly decent gains coming through on some of the gold shares - Gold Fields and Harmony pushing up almost 4.5% with a fairly strong gold price. Also, we saw fairly decent demand coming through for some of the industrial shares - Barloworld pushing ahead by 5%... LINDSAY WILLIAMS: Yes, up 5.2%. What was that all about - do we know anything there? LAVAN GOPAUL: A couple of issues. After the closeout last week, and some of the mining shares being hurt badly in the UK yesterday, we saw appetite for Barloworld, Bidvest and Imperial, and fairly decent buying. There may well have been a specific story on Barloworld, but I’m not aware of anything. We also saw traders deciding between resource shares, banking shares and industrial shares. Of course with the financial and related shares a number of participants are scared ahead of the SA Reserve Bank MPC meeting in two weeks. Some of the resources shares were hammered, so of course they shunted their cash towards the industrial market… LINDSAY WILLIAMS: Quite a strange day today - the R153 government bond rallied eight basis points, to finish with a yield of 8.57%. I don’t know if that’s people having become a little bit short of the market that are covering their shorts ahead of the CPI data which comes out tomorrow - certainly the local industrials took heart, also a couple of the local financials. Sanlam for example stood out for me up over 4% on the day… LAVAN GOPAUL: In the bond market we’ve seen huge demand coming through - some participants were labeling that overseas buying. I think there’s probably a few punters positioning themselves ahead of the inflation data - of course maybe covering a little bit ahead of that data. In terms of the rest of the market - one eye has been kept on the currency market, and of course with last week’s futures closeout you will find some of the index arbitrage traders are having to unravel their positions from last week. It’s typical to find bits of strange activity a few days after closeout… LINDSAY WILLIAMS: It really seemed a little bit squeezy today - in other words it looked as though things had got a little bit short betting on the market going down after closeout, and people having to cover. After the JSE proper close, the futures market went on considerably - and closed up nearly 1.4% on the day where the actual market only closed up 0.7% - so the futures was double the percentage gain of the real market. It looked a bit technical to me… LAVAN GOPAUL: I think some of it might have been technical. Also, you mentioned participants still playing bits of last week’s game - some of the carry-over from the futures closeout. Bear in mind it’s a busy week with inflation data, as well as the unit trusts closeout looming - I think a number of players are also angling to be a part of that. LINDSAY WILLIAMS: A share that always fascinates me is PSG - they advise with a “reasonable degree of certainty” that their headline earnings per share for the six months ended 31 August will be between 133% and 153% higher than the previously reported headline earnings for last year. PSG goes from strength to strength! LAVAN GOPAUL: They’ve done very well. Obviously it’s from a period where a number of bankers and investment houses have seen fairly decent income flows, so it doesn’t surprise us to see a statement like this. Some of the players in that market have felt the pain over the last three months, but PSG is a fairly decent online business, and of course those earnings speak well of their business success. LINDSAY WILLIAMS: Super Group out with their results after the market closed reported a trading profit of R889-million for the 15 months to the end of June 2006 - so we can’t really compare these results, and because they came out late we haven’t had a really good chance to have a look. Revenue for the period totaled R12.4-billion, and cash generated R1.1-billion. Do you like that one? Richard Hirsch was talking about that as a potential because it’s been under a cautionary… LAVAN GOPAUL: I can’t recall if it’s under cautionary. In terms of transaction income it’s not a huge play, but of course the stock keeps ticking over during some of the most difficult market trading conditions. In the last three or four weeks this counter put on at least R1 or R1.50 spiking from about R10.50 to almost R12 a share. Today Super Group put on another five cents, but that announcement has come through probably after the close... LINDSAY WILLIAMS: Yes, it came out quite late. What will interest people that like a company with a bit of cash on the balance sheet - their balance sheet remains strong with net cash and cash equivalents of R842-million. That’s not a small amount of money! Let’s see how the market reacts tomorrow. Some clues from SA Reserve Bank Governor Tito Mboweni last with the Quarterly Bulletin and when he spoke to the National Assembly the day after - he more or less said although interest rate rises were to curb domestic demand that hasn’t really worked so there probably will be another one. Are you expecting CPI data to confirm increasing demand - therefore to point towards another interest rate hike? LAVAN GOPAUL: That’s something we are very concerned about - we’re keeping an eye on the inflation data as obviously that’s the key to whether interest rates are likely to go up. Month on month we’re expecting about 5% in terms of August to July CPIX data - the SA Reserve Bank inflation targeting range is 3% to 6% - so we are getting very close to the upper limit. Of course given the rumblings from the Governor I think there’s a good likelihood of a 0.5% interest rate increase in October 2006... bh/met Comments Related to this transcript: Comment on this transcript... Name : Email : Comments :