Unum Market Commentary: JSE Recovers On Bargain Hunting + Potent
Despite being down on the week, South African equity markets managed to stage a short term recovery to bounce back from it's mid-week week lows as bargain hunters sought the opportunity to accumulate. Another factor that drove the recovery was a rebound in Chinese markets following a prolonged sell-off. For the session, the All-Share Index added 0.74% while the Top 40 was higher by 0.90%. Leading the way higher was banking group Investec that announced a demerger of it's Asset Management business. This saw the stock higher by 9.3% on the day as investors welcomed the development. Also in the winning lane was South 32 and Sappi that added 4.36% and 3.84% respectively. On the downside, the selling pressure continued for Aspen Pharmacare (-17%) while UK property group Hammerson lost 1.45%. In Europe, markets were in the green as the DAX, FTSE 100 and CAC 40 added 0.57%, 0.31% and 0.46% respectively. This morning, Asian equities start the week off on the back foot, with the Hang and Seng and Shanghai Composite down over 1% however the Nikkei has bucked the trend with a 1.1% gain.
JSE Major Sectors
Resources 10 +1.84%
Industrial 25 +0.36%
Financial 15 +0.96%
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For the week ahead, there is plenty of data on the local economic calendar with SA Consumer Confidence for the third quarter being the first local release of the week tomorrow at 9am. For the rest of the week's local and international data, you may view the Unum Capital Economic Calendar here: unum.co.za/economic-calendar/
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In currencies, the South African Rand trades as follows:
USDZAR +0.28% to 14.94
GBPZAR +0.20% to 19.54
EURZAR +0.18% to 17.38
Gold trades at $1199
Platinum at $793
Brent Crude Oil at $77.97
International Markets
This morning, Asian equities are as follows:
Nikkei 225 (+1.19%)
Hang Seng (-1.69%)
Shanghai Composite (-1.03%)
Latam Markets closed as follows:
Merval 25 (-0.46%)
Bovespa (+1.76%)
INMEX (+0.56%)
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Company News
Investec Limited - Investec proposed demerger and listing of Investec Asset Management business
Overview
Following the Group’s announcement on management succession made in February 2018, the Joint Chief Executive Officer (“CEO”) Designates, Fani Titi and Hendrik du Toit, have been working closely with the Investec Board (“Board”) and current members of the Group executive (Stephen Koseff, Bernard Kantor and Glynn Burger) in order to ensure a smooth transition of leadership. In conjunction with this process, the Board together with the executive directors, have conducted a strategic review of the Group to ensure that it is positioned to enhance the long-term interests of shareholders, clients and employees.
Through the strategic review the Board has reached the following conclusions:
- The Group comprises a number of successful businesses operating across two core geographies, with different capital requirements and growth trajectories; and
- There are compelling current and potential linkages between the Specialist Banking and Wealth & Investment businesses, however, there are limited synergies between these two businesses and IAM.
The Board has further concluded that it is now appropriate to demerge and publicly list IAM (“the Transaction’”). The Investec Specialist Banking and Investec Wealth & Investment businesses will remain part of the Group’s current Dual Listed Companies structure (“the remaining Group”). The Board believes that this Transaction simplifies the Group and focuses IAM and the remaining Group on their respective growth paths, which will enhance the long- term prospects and potential of both businesses for the benefit of their shareholders, clients and employees
(extract from Stock Exchange News Services Announcement)
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Potential Trade Ideas
MMI
Weekly Chart View: Following a break of the downward trend line and short term price appreciation from around R16.22 to R17.66, the price has subsequently retreated to re-test the breakout level with a strong bounce off the trend line support going back to December 2015. This test also potentially creates a double bottom and an opportunity to take a buy/long position.
Coronation Fund Managers
Weekly Chart View: The price action for CML signals a medium term bottom, with the strong price action at it's year-to-date lows. Over the last 6 weeks, 5874c has been tested and a break above this level could see the share price make a bullish medium term reversal. The Relative Strength Index is signaling bullish divergence - an early technical reversal signal. This creates an opportunity to potentially take a buy/long position.
Aus miners:
BHP Billiton (-0.66%)
Rio Tinto (-0.29%)
S32 (+1.73%)
FANGs
Facebook (+0.59%)
Amazon (-0.99%)
Netflix (+0.98%)
Google (-0.35%)
FTSE Miners:
Anglo American plc (+2.28%)
BHP Billiton plc (+0.68%)
Glencore plc (+0.68%)
Alibaba Holdings (-0.48%)
Tencent Holdings (-3.09%)
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The Unum Capital Trading Desk
Please contact the Unum Trading desk for any trading related queries : 011 384 2929
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