A sovereign credit rating downgrade of SA’s local currency debt by Moody’s seems close to a certainty as they issued a statement recently, pointing out the obvious frailties within SA.
Moody’s 2018 Sovereign Outlook maintained a negative outlook for SA, specifically referring to SA’s politics as a major concern. The Moody’s delegation had an unscheduled visit to SA this week which highlights the agency’s concerns.
Many, including ourselves, see this as an inevitable downgrade which is expected in about 2 weeks.
It may therefore be prudent (and opportunistic) to have less exposure to Banks and Financial stocks at the moment. Personally, I would take a short-term holding in one of the gold shares, more specifically Anglogold (ANG) or Sibanye (SGL).
The ideal would be to take these positions in CFDs over the short term as I think there is major upside potential in the coming few weeks until the elections.
Below graph shows the recent diversion of the Financial Sector compared to the ALSI:
credit: Graph Provided by Sharenet Advanced Online Charts
Trade ALSI From 0.3%
What to watch today:
WHL 19-week trading update
Telkom 1H18 results
Novus 1H18 results
ANC special BEC meeting on Saturday 11th
University of Michigan Consumer Confidence Index
Analyst and Securities Trader
Daniel is a full-time analyst and securities trader, and is responsible for equities research across industries. Although he grew up in a small town in the Klein Karoo, Daniel has always been interested in both locally and internationally traded companies. Daniel has been actively investing and trading on the JSE and other global exchanges since starting his Bcom Investments Degree at the University of Stellenbosch, which he completed in 2014. During his studies, Daniel worked as an intern at Kruger International in Johannesburg in 2015, gaining valuable experience from Hein and Mia Kruger. He is currently a CFA candidate.