In just a three day working week there should not have been a lot of opportunity for much ebb and flow. However, things did happen and the gold price gave up about as much ground as the ruling party gained while the rand bounced through a range of more than 40 cents against the USD and slightly more against sterling. I believe that while the poor old rand could stay “stronger for longer” (vile phrase) we did see its strongest peak back in December. I may also be on my own in putting a non-zero probability on The Governor next week squeezing interest rates up a tick or two – nothing dramatic.
The All Share index is down for the week but this doesn’t tell much of a story as there was quite a large dispersion between individual shares. On a weighted basis, Sasol (one of my favourites), Naspers and Telkom led the pack, but Anglo, Billiton and MTN overwhelmed them on the down. In fact, the down list is predominately resource shares, despite the weaker rand. It really isn’t easy is it!
After last week’s scribblings about valuations I was challenged to find those areas which were least off-putting. I began by looking at year-to-date returns and like this week’s results, the All Share performance of 5.3% (including dividends) fails to tell of 34% from Metals, 28% from IT Hardware and -20% from Golds!
I checked out the worst performers to see if they were looking ready to recover yet. However, using the same sort of method that I described last week, this year’s losers still look like poor value. Perhaps the platinums look marginally better than the golds or the mining financials but still not at all tempting. Unless of course the rand swoons completely.
Sectors which caught the eye, oddly enough, included this year’s winners – which begs the question of why we didn’t spot them earlier. So Transport, Engineering, Automobiles, Investment Companies and General Retailers are offering relatively the better values and so I guess we should be delving into the shares behind them to see what lurks. Of course remember that there are only 165 constituents to the All Share index, which means that most of the candidates are left out in the cold. Sort of like last Wednesday really.
