NOT ALL AW­FUL, AS LONG AS YOU’RE NOT MIN­ING

Financial Mail - Investors Monthly - - Analysis - Maarten Mittner

t was another tor­rid month for min­ing stocks up to the mid­dle of Au­gust. For­mer mar­ket stal­wart An­glo Amer­i­can lost another monthly 4,88% and is down 30% so far in 2015.

The JSE’s Resi 10 in­dex has dropped a more mod­er­ate 1,67% in Au­gust, but is still 16% down year-to-date. This has had a neg­a­tive ef­fect on the all share in­dex, which is down 2,85% in the month and strug­gling to re­main pos­i­tive for the year, gain­ing only 1,61% so far in 2015.

Among the min­ing losers, Lon­min is ahead of the pack, hav­ing lost more than 70%. Iron ore pro­ducer Kumba has shed 60%.

Then there are the win­ners. Re­tailer Christo Wiese’s prow­ess as deal-maker was again proven by the Stein­hoff buy­out of Pep­kor from Brait. Wiese re­mains a size­able share­holder in Brait.

Some port­fo­lio man­agers have said they were caught flat-footed by Wiese’s moves. Share­hold­ers are smil­ing, though, as Stein­hoff has gained 30% this year and Brait 77% in the Vir­gin Ac­tive and New Look Lon­don deals.

The trick with Wiese is to in­vest in his com­pa­nies be­fore they take off. The hot punt now is Stel­lar Cap­i­tal Part­ners, al­ready 23% up to mid-Au­gust, but still of­fer­ing po­ten­tial value.

The rand con­tin­ues to be buf­feted by the stronger dol­lar and China’s de­val­u­a­tion of the yuan, los­ing 10,16% against the green­back year-to-date. An im­prove­ment is not pre­dicted for the near fu­ture, and the rand is ex­pected to cross R13/$ over the short term.

A stronger dol­lar in an­tic­i­pa­tion of US in­ter­est rate hikes, and a weaker euro, re­main the trend in for­eign ex­change mar­kets. Mar­kets were sur­prised by the yuan’s de­val­u­a­tion. It seems that pre­dic­tions of China be­com­ing a con­sumer so­ci­ety have been over­stressed, and the de­val­u­a­tion in­di­cates that a re­bound in the man­u­fac­tur­ing sec­tor in China re­mains a pri­or­ity.

Global eq­uity mar­kets look de­cid­edly wob­bly at present. The Dow Jones is in neg­a­tive ter­ri­tory on an an­nual ba­sis. It is down 1,62% to mid-Au­gust and 2,36% year-to-date. The per­for­mance of the FTSE 100 is also flat. But there are bright spots. Shang­hai has lifted 19% year-to-date de­spite the volatil­ity and the Nikkei has added 17,7%, again prov­ing that eq­uity mar­kets like stim­u­lus mea­sures of what­ever form.

Mar­kets could po­ten­tially get fur­ther sup­port from the lower Brent crude price, which has again dipped be­low the level of $50/bar­rel. The price is down 13% so far in 2015.

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