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    Market Wrap

    The JSE All Share index touched 26000 this week. Today it ended slightly down, but there are many share prices are trading up at new 12 month highs, giving an indication that liquidity has returned and investors have been willing to increase their risk levels.

    Gold in US dollars remains above the important $1000 level. In New York this morning it has moved up to over $1017. Gold has been above $1000 before, but given its steady advance over many years, without spiking up, the ongoing trend appears to be intact.

    The price of oil has also been in a steady upward move this year from its low of around $34 / barrel at the end of 2008 it has steadily moved up to its current $70/barrel having traded up to $74.

    Bond yields have drifted lower on strong demand. The yield on the shorter term government bond, the R154 has come back to 7,24. The medium term R157 with a maturity in 2015 traded at 8,06% and the R204 with a maturity in 2018 at 8,57%.

    The rand has been incredibly strong over the past few weeks and indeed this year, but lost some ground today, still trading at R7,44 / US dollar, R12,09/pound and R10,95 / euro. This is concerning the Reserve Bank and may push them to lower rates next week, despite the 5% cut already in 2009.

    The rally in local share prices, bonds and the rand has largely been a function of global investors piling into risk assets and in search of yield and dollar returns. In a meeting today, an investment manager reiterated what I spoke about yesterday, saying that in discussions in London last week there are now no bears, “everyone” is bullish.

    Furthermore we are also starting to see the sentiment changing from one of selling on the rallies, to buying on the dips.

    The manager also mentioned that given last years scare on liquidity, global managers are now far more aware of how liquid their portfolios are. Therefore they are increasing their exposure, but with a finger on the trigger, willing to pull back quickly if need be.

    Locally a number of shares made new highs, especially the retailers. This list included Mr Price, Shoprite, Clicks, Foschini, Spar, Pikwik, and Cashbuild.

    On that note have a fantastic weekend

    Kind regards

    Ian de Lange
    021 9144 966

    Permalink2009-09-18, 16:57:49, by ian Email , Leave a comment
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