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Running for the Exit ‘en Mass' - One to Buy with one to Sell

by , 31 October 2017
Running for the Exit ‘en Mass' - One to Buy with one to Sell
The mid-term budget spooked many investors as it was thin on detail, but exposed an unexpected gap between income and expenses.

These events typically create spikes in the currency. History shows that this is not the time to panic, however the risk of further downgrades has certainly increased and now look unavoidable.

We have consistently suggested that you regularly review your offshore investment exposure.

See our trading ideas below.

Last week’s movers and shakers…
  • Best Performers: S32 9.3%, NHM 8.8%, KIO 8%, SGL 7.3%, SAP 7%
  • Worst Performers: BGA -7.3%, NED -6.3%, TFG -6.2%, SBK and MRP -6.1%
Resources rallied on the back of a significantly weaker Rand while Banks and Retails bore the brunt of the Rand sell off. We see a few short-term trading opportunities on the back of the volatile Rand lining up.

One to buy
FirstRand: Buying the bounce for a quick trade
FSR and the other banks have been under pressure on the back of a weaker Rand. Even though they offer value at these levels, they are at the whim of currency volatility and could be hurt by another downgrade...
Nevertheless, we see some Rand strengthen in the next few weeks which may support a nice short-term pop in FSR from the R52 level to above R54. 
Speculative trade idea: Long FSR below R52.25, target R54.25 stop loss at R50.75
PPC – deeply discounted
With suiters lining up to snatch PPC’s assets on the cheap and a deep discount to the replacement cost, the share appears to have bottomed and more upside is possible. Buy at R7,00.
One to sell
Pioneer: second profit warning!
The decay at Pioneer Group seems to be accelerating and it now appears that earnings for 2018 will also be impacted. After a trading update in August which indicated that earnings will be down, the group has issued another profit warning. Earnings for 2017 are now expected to fall more than 50%. 
Current rating appears very generous and will be out of line once the results come through. Avoid Pioneer until fortunes improve. Current Price R120.
Shorter Term Ideas
  • Platinum: Closed for a small gain
  • PSG: Increase stop loss to R255 to lock in 9.09% gain. 
Long Term Ideas 
  • Santova:  Buy dips below R3.30 Results expected 31 Oct.
  • Implats: Place a stop loss at R35.50 to lock in a 9.23% gain. Hold
  • Sibanye: Up 5.88%, place stop loss at R17.00. Hold
  • Merafe: Rising nicely, up 14.19%. Hold
  • Steinhoff: Price consolidating. Buy in low R60’s.
  • Jubilee: Nicely in the money. Hold.
  • African Rainbow: A gain of almost 30% since August. Hold.
  • AECI: Buy dips below R105.00
  • MTN: Still stuck in a range, buy below R122.50.
  • Glencore: 29.5% open gain and running - Hold
  • Wescoal: Long term buy. Add below R2.15
  • Naspers: Still running higher, up over 45%. Hold
  • Richemont: Open gain over 19%, maintain stop loss at R120. Results Due Friday. Hold 

Have you used your 2017 Investment Allowance?
All your offshore investments allowances expire at the end of 2017. Prodigy can invest your funds securely offshore. Please contact my colleague Gavin McCarter without delay before you miss out. gavin@prodigyam.co.za

Running for the Exit ‘en Mass' - One to Buy with one to Sell
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