Monthly Archives: February 2019

Relative Strength

Analysing the market is mostly about trying to determine where the best opportunities lie. There are about 400 shares listed on the JSE, but which of these offer the best opportunity for profit? So finding the best share invariably means comparing one opportunity with another.

There are very few indicators which do this better than the comparative relative strength.

This indicator (found at the bottom of a chart in ShareFriend as “CRSI”) is simply a formula which divides one datastream by another and then draws a graph of the result. For example, the price of Dischem was 2694c at the close of trade on 14th February 2019. On that day, Clicks closed at 17700c. So if you divide 2694 by 17700 you would get 0,1522 – that is a relative strength point. Read More

The Showdown Continues between Sibanye and AMCU

In the middle of January 2019 we ran an article under the heading “Showdown with Sibanye” in which we pointed out that what we see as an inevitable showdown with the union movement in South Africa was being fought out between the Association of Mining and Construction Union (AMCU) and the Sibanye group.

Neal Froneman (CEO of Sibanye) and Joseph Matunjwa (President of AMCU) are going head to head in a battle that could easily turn out to be a harbinger of a wider confrontation between the government and the union movement after the elections.

AMCU initiated a strike at Sibanye’s gold operations in November and then expanded that through a sympathy strike to its platinum operations. By way of response, Froneman is attempting to show that AMCU is no longer the majority union at its gold operations – a move which would make their strike there illegal. And now, in his most recent move, Froneman has initiated the retrenchment of 6670 workers and the closure of additional unprofitable gold shafts. Sibanye says that these retrenchments are unrelated to the on-going strike, now in its fourth month, and that they emanate from the unprofitability of the shafts concerned – but they will certainly have a massive negative impact on AMCU members. Read More

The Confidential Report – February 2019

The American Economy

The Federal Open Markets Committee (FOMC) in America raised rates on 19th December 2019 by 0,25% to take them to 2,5%. This is the ninth 0,25% increase in rates since rates began to rise in January 2016. This came after rates were stable at a record low of 0,25% for seven years from January 2009 – following the 2008 sub-prime crisis. The steady, gradual increase in US interest rates since the beginning of 2016 means that US Treasury Bills (T-bills) are becoming more and more attractive to investors relative to the government bonds of other countries, including South Africa. This tends to cause funds to flow out of emerging economies like ours and into first world countries. The steady rise in US rates also means that the FOMC has confidence in the strong recovery of the US economy. This has positive implications for the base and precious metals which South Africa exports. Of course, it also puts pressure on the rand – which directly impacts the fuel price and, in the medium term, the inflation rate. Read More

The Rand Barometer

The South African rand is one of the most heavily traded emerging market currencies in the world. On average more than R50bn worth of our currency changes hands every trading day. This makes our currency a favourite for international currency speculators because they know that they can take up or sell out of a large position in the rand very quickly. It also means that our currency responds very sensitively and immediately to any event among the emerging market economies – even if that event has little or nothing to do with South Africa. Read More

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