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Sasfin Securities David Shapiro joins the BizNews team as Monday night’s BizNews Power Hour co-host, with the veteran analyst outlining that markets have had a solid start to the week after a period of concern. Commodities came off strongly during the latter part of last week with the JSE All Share Index negatively effected due to the lopsided weighting of resource counters on the local bourse. Shapiro and Bronwyn Nielsen touch on a variety of topics during the discussion, with the rand and Shapiro’s ‘pick-and-shovel’ stock picks the main talking points. Visibly excited, Shapiro talks us through his first experience in a Tesla, of which he is extremely complimentary. – Justin Rowe-Roberts
David Shapiro on what is happening in the markets:
It’s difficult to put it all together and to decide where to go. Look, the one thing that is improving is markets are a little steadier because we had a bit of a scare last week. We weren’t quite sure where we were going – particularly with what was happening in Afghanistan and the Fed minutes about pulling back and tapering. So all of these things did shake the market. In fact, there was a lot more bad news than good news. I’m still struggling to find the good news, but markets held up and it’s a good sign to see this morning that even Asian markets are improving quite a lot. So I still think we going to…I don’t want to say limp through to the end of the year, but we’re probably just going to ratchet up very slowly into the new year. And the other good thing is that I think commodity markets have stabilised because what we saw on our market last week was a big shake up in commodities, which was also a bit of a scary move. So I’m hoping that there is some base being formed in and the buyers are returning and things are getting steadier.
On where the rand is heading:
Well, I don’t think anyone is an expert in currencies. I think you hold yourself out to be an expert. You’re setting yourself up for failure. I’m watching it carefully. I’m more of a commodity bull than a bear. I think that we will find a level and things will pick up because I’m basing this on the themes that are dominating the global economy, which is around climate change. I think we got to renew not only the digital economy – not only the environment – but also the physical economy. These are market moves after some very strong upward moves, you get corrections. I’m taking my lead from mining bosses – I think you’ll find commodity prices steady. That will still dictate the level of the rand. So I think we’ve had the shock with R15.35 (against the dollar) – I would probably guess it will level around the R15 level. I’m not a pessimist to the R18 level because with that will come some very serious movements in global markets.
On the financial sector, specifically the banks:
I don’t analyse it to a point where I can really differentiate, to an extent. I must say that most of my investment focus is offshore. But of course I keep a very watchful eye on what’s happening in South Africa. You’ve heard me before, I like to look at the macro picture. It doesn’t mean I don’t go into the micro level and look at businesses individually, but I’m still more concerned about the macro level and I haven’t seen anything in ABSA or in Standard Bank’s results that gets me excited. It shows me that businesses aren’t going out with expansion in mind and borrowing – they are not saying we need money to build new factories to expand our operations. A lot of the businesses might already have money – certainly the mines have. That’s the purpose of a bank – it’s really to fund expansion, not really to fund consumption – because that’s dangerous lending. So I’m still not convinced that we’ve seen any element of that yet. And when that starts to happen, then I’m going to get bullish. And the other story – where I do like financials, is on the payment side of things.
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