In this podcast, long-time buddies and radio show hosts David Shapiro and Alec Hogg discuss the state of the South African stock market and the value of the rand. Shares and the currency have taken a pounding amid coronavirus panic, but stockbroker Shapiro reckons the worst might be over. That is good news for South Africans digesting the news at the end of March that it now takes about R22 to buy one British pound, just under R20 for one euro and more than R17 for one greenback. In fact, instead of running from markets, more investors appear to be looking for opportunities to buy stocks, Shapiro tells BizNews founder Hogg. – Jackie Cameron
As usual David Shapiro joins us. David how are clients reacting to market movements?
___STEADY_PAYWALL___
The inquiries we’re getting at the moment are intense. A lot of people are phoning but there’s no panic. The panic is over, it happened a long time ago. People are just asking for updates of what’s happening in the world. I also think that there are more people looking to come into the market – looking for opportunities – than to get out and that’s a very important sign.
I’m not by any means calling the bottom of the market but the reaction of people now suggests that perhaps we’ve seen the panic out, it could go on for a bit of time before we start to see the trend around. Remember markets are always forward looking so a very interesting observation. Even the rand I think has seen the worst. So it’s picking up from where it was.
What I haven’t got a grip is on the bond market. Yes I know that there was an initial shock there, yields did kick up, but I’m not sure where they are at the moment. I’m still trying to find out. I’m pleasantly surprised. I was looking at Transaction Capital. We know Transactional Capital Finance is in the taxi industry – and associated with that – and it’s quite incredible that year to date, this share – which has been so well followed and so well supported – is actually down about 40%, year to date since 1st January, simply on worries about how the taxi industry is going to be affected by this lock down and by what’s happening. It’s the only gauge we have that gives you an idea of how people feel about what GG Alcock was talking about. So again it’s down about 7.5% today.
Just getting back to your area of focus – the markets here in South Africa – we saw the Rand take another tumble on Monday morning, but you say that it started to improve a bit. The whole Moody’s decision was surely baked in already?
To a large extent. The Rand is just as we talked – 17.80 and you can’t go against the Pound but it’s off its worst levels. Even looking at the stock markets, we haven’t got the sell off that we anticipated. Remember we had some good days last week. So my own view is that things will stabilise from now on and I’m talking about the market. I’m looking at the futures in the US as well. So there’s no sell off there either. I think those are something from the past.
Even against the worst news when it comes to the virus, that we can expect 200,000 deaths. The markets kind of said okay well we can accept that. It’s already baked into the market. So all I’m trying to say is – not looking at the human factor – from a financial point of view I think that we’ve probably passed that shock value.
We’ve still got Ping An’s Alain Peddle on the line, I’d just like to bring him in again quickly. Alain do you think that the rest of the world is underestimating the impact, given what the financial markets are doing?
This is a tough one to call. I think it’s how quickly everyone gets back to work is the million dollar question. And then I think they see where the markets move from there.
