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While the Cape roasts, Trump has upset Paris! - Three to buy, one to sell

by , 21 September 2017

Last week local news was dominated by developments around the #Guptaleaks. New revelations seem to jeopardise President Zuma and that served to strengthen the Rand. To top it off, S&P held our foreign currency rating a notch below investment grade, which drove the Rand below USD/ZAR 12,80.

At about the same time, President Trump pulled out of the Paris accord, still denying any link with climate change. In disbelief Cape Town is experiencing the driest conditions on record. Thankfully, rain is reportedly on the way.

Our market was softer by 2% across all sectors; Global Markets were mixed.

Best Performers: Mr Price, Tongaat, Capevin, Nepi and Foshini.

Worst Performers: Harmony, Sibanye, Assore, DRD Gold, Transhex and Brait.The anticipated dip during the run-up to the futures closeout materialised. Without any market drivers, and on a purely technical basis, I would expect the market to rally over the next 10 trading days. See comment on the ALSI Future below.

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You do no work.
You never study a chart.
But you could rake in fast, repeatable Forex profits like...
  • 52% in just ONE day - 9 March 2017
  • -18.18% in ONE day - 6 April 2017
  • 54% in just ONE day - 4 May 2017
That's an astounding 91% gain, including a small loss, in less than 2 months
 
If you want fast, recession-proof gains like these, you must respond today
 
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3 to Buy
 
 
After our sell call at R27,00 the share has fallen to R15,00, the rights issue will take placed at R11,28. This provides a good short-term buying opportunity, but I don’t expect the share to get down to the take-up price; I think R14 will be the right buying level. If it does not trade that low by Thursday, this week buy anyway up to R15,75. Currently trading at R15,00.  
 
Buy this healthcare stock while it’s in a dip
 
Mediclinic released results that were better than market expectations. The stock price reacted sharply, rallying to over R150, but it is now back in buying territory at R130. The headwinds felt on some of their acquisitions and Middle Eastern business seem to have subsided. New clinics and hospitals are planned in SA and internationally, which will provide diversification, are being bedded down. Buy at current levels – R130.
 
Captialise on this short term futures trade -cautiously!
 
As indicated in the preamble, the futures close out is typically positive for the market. So, I like to pick up a few Alsi Contracts in the week before hand. Currently trading at 46 500, Buy some contracts over the next few days, but don’t get overexposed. And remember, the ALMI contract is a mini Alsi with exposure of R46,000 per contract. Increase exposure towards the end of this week to be positioned for a rally next week. 
 
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1 to Sell
               
There’s much better value in the markets than Life healthcare right now – Switch!
 
Many clients may still be holding the Life Healthcare following our buy recommendation in April.
 
However, Medi-Clinic’s priced decline has made it more attractive. Consider switching, i.e Sell Life Healthcare, buy Mediclinic.
 
Updates              
  • Coronation: move stop loss to R69 to lock in 10% in two weeks and hold take profit at R74 for a total gain of 18%.
     
  • Dow Jones short: was closed out for a small loss.
     
  • Mondi: remain short at R135.  
     
  • Nedbank: Buy call at R214,00 has rallied nicely, hold with stop-loss at R216.
     
  • Kumba: closed at stop loss R152.
                                              
  • Richemont: Maintain position - Long at R108,00.
     
  • MTN rally has petered out, it is holding at support of R120. Hold
     
  • Massmart: Add at current levels
     
  • Tiger Brands, results released were in line with expectations. Maintain exposure.    
Director of Prodigy Asset Management
    
P.S. Do you have an Old Mutual Policy? Prodigy Asset Management has recently been approved as an independent Investment Manager for Old Mutual Retirement Funds: Speak to us now about improving the returns on your policy.
 
(This article is an extract from Prodigy’s weekly Investor Digest. For more information contact Gavin McCarter on gavin@prodigyam.co.za.

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While the Cape roasts, Trump has upset Paris! - Three to buy, one to sell
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