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How to make money when the Rand is weak

by , 16 August 2018
How to make money when the Rand is weak
The JSE remains in its consolidation phase but the current Rand weakness has created opportunities to buy some blue chips on the cheap.

The Rand has followed emerging market currencies lower over the past week on the back of concerns in Turkey. The Turkish Lira has more than halved in value as they deal with their own “Nenegate”.

The main reason for the Rand's significant weakness and volatility is it's more liquid than other emerging market currencies. When there is a blow out in another emerging market currency, money managers head to the Rand to hedge their risk.

The Rand has already recovered from it's weakest and should come back to previous levels.


One to Buy – Buy FSR on the dip

Banks, generally, move in tandem with the currency, a weaker Rand sees them fall and a stronger Rand acts as a tail wind pushing them higher.
 
FSR has pulled back to above its 200-day moving average at R62.27. This will provide strong support for the price. And further Rand strength will see it back above R65.00.
 
Buy FSR below R63.25 for a move above R65 in the short term and R67.75 in the medium term.

What to open and what to close!
  • MTN: Closed out for a 6.33% loss.
  • AMS: Short above R420.00 for a move down to R375.00 


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What to buy, sell and hold – long term
  • Discovery: Place stop loss at R160.00 for a 6.6% gain. Hold
  • Coronation: Buy below R60.00 for a move back to R80
  • ARM: Up over 10%. Place a stop loss at R119.50 to lock in an 8.6% gain.
  • Dischem: Buy below R28.00. Target R33.00
  • Shoprite: Building an uptrend from the R200 long-term support level. Hold.
  • Aspen: Pulling back from Resistance. Accumulate on weakness below R245.
  • Sygnia: Support building above R10.00. Add
  • Santova: Up over 30%. Move stop loss up R3.75. to lock in gains. Hold.
  • Merafe: Accumulate below R1.55. Big Dividend LDT 28 August.
  • Jubilee: Speculative buy below R0.50.       
  • MTN: Accumulate for long term below R110.00.
  • Glencore: Still bullish. Hold
  • Wescoal: Long term buy. LDT today for dividend. Add below R1.80
  • Naspers: Bounced strongly, rally towards R3,800 likely. Hold 

The week ahead:

Local Data:   Retail trade sales (15/08); Capital expenditure by the public sector (16/08)
Results Due: KAP, CRP, COH, EPS (14/08); ADI, CLH, EMI, TRU. EX, GFI, SBK (16/08); FFA, RES, MTA, RNG (17/08);
LDT (14/08): SHFF, WSL, AGL, KIO, SBV, SVN, VVO, LVLTRX

 
 
Best Performers: DRD 12.7%; FFB 9.3%; S32 and RES 8.9%; BID 7.8%; GLN 7.2%
Worst Performers: SFN -10.5%; MTN -7.7%; SHF -6.2; DTC -5.4%; BAT -5.2%;
 
Other Economic data releases of interest…

Tuesday: Average Earnings Index (UK)
Wednesday: CPI(UK); Retail Sales, Crude Oil Inventories (USA)
Thursday: Unemployment Rate (AUS); Retail Sales (UK)
Friday: RBA Gov Lowe Speak (AUS); CPI (CAN)
 
One to Buy – Buy FSR on the dip

Banks, generally, move in tandem with the currency, a weaker Rand sees them fall and a stronger Rand acts as a tail wind pushing them higher.
 
FSR has pulled back to above its 200-day moving average at R62.27. This will provide strong support for the price. And further Rand strength will see it back above R65.00.
 
Buy FSR below R63.25 for a move above R65 in the short term and R67.75 in the medium term.

What to open and what to close!
  • MTN: Closed out for a 6.33% loss.
  • AMS: Short above R420.00 for a move down to R375.00 

What to buy, sell and hold – long term
  • Discovery: Place stop loss at R160.00 for a 6.6% gain. Hold
  • Coronation: Buy below R60.00 for a move back to R80
  • ARM: Up over 10%. Place a stop loss at R119.50 to lock in an 8.6% gain.
  • Dischem: Buy below R28.00. Target R33.00
  • Shoprite: Building an uptrend from the R200 long-term support level. Hold.
  • Aspen: Pulling back from Resistance. Accumulate on weakness below R245.
  • Sygnia: Support building above R10.00. Add
  • Santova: Up over 30%. Move stop loss up R3.75. to lock in gains. Hold.
  • Merafe: Accumulate below R1.55. Big Dividend LDT 28 August.
  • Jubilee: Speculative buy below R0.50.       
  • MTN: Accumulate for long term below R110.00.
  • Glencore: Still bullish. Hold
  • Wescoal: Long term buy. LDT today for dividend. Add below R1.80
  • Naspers: Bounced strongly, rally towards R3,800 likely. Hold 

The week ahead:

Local Data:   Retail trade sales (15/08); Capital expenditure by the public sector (16/08)
Results Due: KAP, CRP, COH, EPS (14/08); ADI, CLH, EMI, TRU. EX, GFI, SBK (16/08); FFA, RES, MTA, RNG (17/08);
LDT (14/08): SHFF, WSL, AGL, KIO, SBV, SVN, VVO, LVLTRX

 


How to make money when the Rand is weak
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