Nerina Visser: China walks away from SA platinum deal; Telkom, Vodacom

Nerina Visser, head of Beta Solutions at Nedbank Capital joined CNBC Africa's Power Lunch to share her insights on the biggest news in the markets today. Focusing on the current position of global markets, Aquarius Platinum's announcement that it will no longer be selling its stake in a Chinese deal, as well as the news that Government is considering selling its Vodacom stake, and that Telkom will be retrenching staff this month. – LF.ALEC HOGG: We are joined by Nerina Visser, as promised; she's the Head of Beta Solutions at Nedbank Capital. Beta Solutions Market the general market movements..NERINA VISSER: Yes, market sectors, so really your, if you think of the capital asset pricing model, there's the Beta, which gives you your relative exposure to the market and you Alpha, which is the excess returns. Really it is a play on how do you get solutions that give you a better performance in the market or a particular sector or of a particular geography, so really focused returns..ALEC HOGG: Well, I'm glad you've got a title because we were going to call you Encyclopaedia or….NERINA VISSER: You can just call me Nerina, its fine..ALEC HOGG: Last time I saw Nerina she was on a stage, explaining to very smart asset managers about the intricacies of the financial markets, so that's why she's an Encyclopaedia, you see..GUGULETHU MFUPHI: Just say she's smart, Alec..ALEC HOGG: Smart Alec very clever, moving onto the markets today, under pressure..NERINA VISSER: Yes..ALEC HOGG: Pretty much across the board and what is interesting is when the markets come into this frame of mind new listings always seem to get under a little pressure as well. Hey presto, Quantum down seven percent. Anchor down five percent, so it's almost like the traders are also getting nervous..NERINA VISSER: Alec, I think the keyword or the term that you used there was 'frame of mind'. I think global markets are currently experiencing negative sentiments and when that is the frame of mind, it is almost as though market participants will look for any excuse to sell down further and to be on a negative footing. What could be considered just, sort of regular news under regular circumstances, is suddenly also interpreted as negative news. It's interesting that you mention the woes, maybe, of newly listed companies because they don't have the track record as a listed entity that many of the others would have. It makes it a lot more difficult to take view that it is based on some, sort of historical performance and, I think that just be one of the reasons why they would come under pressure..Typically, they are also relatively smaller companies and your smaller companies often battle during times of nervousness. Markets tend to migrate to where there's more liquidity, so typically your small caps will be the biggest hit on the baselines..ALEC HOGG: It's an interesting pointer but the most important SENS' announcement for me, this morning was Aquarius Platinum. I'm sure you read that one, where it did the deal with the Chinese. They had to postpone the deal on numerous occasions, and now the South African authorities have not been able to get their act together, so the Chinese have walked away..NERINA VISSER: To be honest, Alec I have not looked at it in a lot of detail but I think there are a couple of interesting themes or trends that we pick up through something like this. I think one of the first to look at is the role that China is playing in South Africa and to understand and appreciate that China has got its own agenda. Its agenda is often quite different than what both South Africa and the Western world would have as an agenda, so we need to appreciate that sometimes we experience something, which has got nothing to do with us, in terms of a decision that is made. I think it also talks to the impact that it has, when our Government is not prepared to actually, act quickly enough. In your intro, you talked about the terrible accident that we had yesterday, here in Johannesburg and immediately there's the call for increased regulation, as if that will solve the ills of the world..I think we tend to look at the Government to control more, to regulate more, and then when they do, we are also up in arms. It's almost 'damned if they do and damned if they don't'. Unfortunately, I think they focus so much on process and on doing the right thing at the right time. That the opportunities, sometimes move in markets because markets only have a limited opportunity set, and I don't think that Government, necessarily moves fast enough to capitalise on those opportunities..GUGULETHU MFUPHI: I want to come back to that example that Alec made, with regards to authorities and the state involvement, when it comes to investment in South Africa. How big a role does that play with regard to investment decisions? Is it easy to just stick with the local companies and hope that they get some kind of FDI, despite the Government not encouraging that?.NERINA VISSER: It makes it difficult. It definitely does but I think what one needs to do, as with so many other things, is focus on the things that you can control or focus on the things that you can dictate, or analyse, or determine and, unfortunately the role of Government does not necessarily fall into that category. I think that when it comes to investment decisions one needs to acknowledge that there is this unknown factor. A very good example of that, for me, is at the moment, where we are heading for our medium term budget statement next week and then, of course we've got our NBC meeting in November, so we've got two major, new players, from Government side in the financial industry. A new Minister with his first term MTB next week and then, of course we've got a new Governor of the Reserve Bank..Although both of them come with a very strong track record and a very good track record, this is the first time that they will be on a fairly large domestic stage and, as much as they would like to have some continuity to sort of show that there's continuity. You must also acknowledge that they want to impress their own, personal stamp on the role that they're playing, so markets are somewhat uncertain. Not quite sure, what to expect, and I think, in particular around Eskom and the required recapitalisation of Eskom, there's going to be a lot of focus on Minister Nene's budget presentation next week..ALEC HOGG: He's got to find money somewhere..NERINA VISSER: Well, that's the interesting market related issue that has started to be rumoured and speculated on, and that is that Government…they refer to it as selling of non-core assets and the one particular one that has been muted is the stake in Vodacom. That they could sell the stake in Vodacom and use that….ALEC HOGG: Vodacom?.NERINA VISSER: Yes, the Government actually owns almost 14 percent of Vodacom, so I'm not even talking about their 40 percent stake in Telkom. This is a direct stake that they have in Vodacom..ALEC HOGG: They've held onto it with [unbundling? 06:26]..NERINA VISSER: Yes, and that represents a possibility for freeing up a lot of capital that can then be redeployed to recapitalise Eskom..ALEC HOGG: We were hoping they'd sell Eskom, SAA, SABC….NERINA VISSER: I think that's what we would like to see but I think we also need to acknowledge that Government will probably not move that fast, on something as massive as that and certainly something, which they see as a strategic resource for South Africa. Maybe repositioning their own investment portfolio, because that's essentially, what Government has and this is not via the PIC. This is the direct stake of the Government. That might actually be quite a shrewd move for them to consider..ALEC HOGG: Well, another shrewd move would definitely be to get rid of their stake in Telkom because yesterday we had a very feisty young man, called Clyde Mervin in the studio..GUGULETHU MFUPHI: Yes, the Communications Union..ALEC HOGG: Yes, with his red shirt as well..GUGULETHU MFUPHI: I saw him..ALEC HOGG: He was feisty but I also think that they've got a different agenda and it must be very difficult if you're in Government and you own 40 percent of Telkom and you've got people like Clyde on the other end, who is telling Government to re-nationalise Telkom. That's their only option..NERINA VISSER: Yes, because we're looking for them to go from 40 percent to zero. He's looking from 40 to 100. I do think that there's a possibility also that we might see some further reduction in the stake in Telkom but the Vodacom one would make a lot more sense. I do also think that Telkom has actually managed to turn itself around quite successfully. Just at the moment there's negative news flow around it, obviously because of potential retrenchments and, at the same time, refurbishing their gym, which doesn't sit very comfortably, certainly with somebody like your guest of yesterday. If we look slightly longer term and bigger picture, I do think that Telkom has actually been a very good turnaround story and, from that point of view, I guess Government is being rewarded, to some extent, for sticking with Telkom..ALEC HOGG: Market believes the story, doesn't it?.NERINA VISSER: Yes..ALEC HOGG: It believes the turnaround story. I don't know if we're seeing it on the bottom-line yet or in the actual numbers yet..NERINA VISSER: Not all of it. I think the first signs of it, is there and I think, if anything, I would use any negative sentiment around it now, as a buying opportunity because I do think that for the longer term Telkom is actually in the right space and in the right place..GUGULETHU MFUPHI: Well, currently down by four-point-five percent today, at R49.00 apiece, maybe, if you've got R50.00 to spare, Alec..NERINA VISSER: There is, maybe from a technical point of view. I must also just say, they shot up very sharply and it's a bit of a double top at the moment, so if you're slightly risk adverse I would say, just wait for a clear direction because if we consolidate at this level, it would actually prepare it for another strong run up. But if it actually turns around and breaks significantly below R49.00 then we are going the other way, so just a bit of trading advice from our trading desk, I must stay tuned to that..GUGULETHU MFUPHI: Well, on that note that's where we'll wrap it up with Nerina. Thank you so much Nerina. Nerina Visser, Head of Beta Solutions at Nedbank Capital.

Nerina Visser: China walks away from SA platinum deal; Telkom, Vodacom

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