Views Article – Sharenet Wealth

South Africa

Take Advantage Of ZAR Weakness: Update

A couple of weeks ago we looked at how you can take advantage of ZAR weakness, and with the recent slump in the rand, we think it worthwhile to revisit our findings.

Below we look at the performance and the correlation of the overall Resources Index and the rand –  notice the correlation between a weakening rand and performance of the Resources Index:

image1

Credit: Graph Provided by Sharenet Advanced Online Charts

Shares likely to do well in the current economic environment:

Top 10 Rand-hedges (% of Earnings earned offshore) are ranked for you below – contact us for the full list:

image2

The SA resources counters often react quickly and are subject to stable commodity prices. As such,  we prefer AGL & BIL (Large cap, foreign-driven/priced, easy-to-trade, positive momentum).

Below is a breakdown of revenue per commodity:

image3

ARI, S32 and EXX look attractive, have underperformed, and are showing positive earnings momentum and analyst following. This could also be included in longer-term views.

Below is a breakdown of revenue per commodity:

image4

Analyst upside estimates:

image5

General commodity outlook:

Bloomberg’s estimate for China’s CPI according to a May 2018 survey is 1.8%, and we expect this slight pickup in CPI to support the general Commodity trend.

Below is a comparison of China’s YoY (Year-on-Year) Inflation vs Thompson Reuters Commodity Index:

(Click image to enlarge)image6

Call us on 021 700 4815 to see how we can position your portfolio to take advantage of the weak Rand.


Stephan

Stephan Maritz
Head of Trading and Portfolio Analyst 

Stephan heads up Sharenet’s trading desk and is a full-time trader and portfolio analyst, also responsible for equity research across industries. Stephan developed his passion for the markets while working in the Stockbroking division of Standard Bank and is especially passionate about CFD trading. Stephan studied at the University of Stellenbosch and completed a BComm Honours (Business Management) with a focus in Portfolio Management and Bonds. He has also passed the JSE Equity Trader’s Exam, RE5 (Representative) and RE1 (Key individual) Exams as well as the Registered Persons Exams (RPEs) in order to give advice on equities.
 


Like this article? Get more like it and exclusive market alerts before the general public by subscribing to free Sharenet newsletters using the form below.

Register

We want to get to know you

* Required Fields