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Friday 11 December
Shares in south Africa exposed Old Mutual (OML) and Investec (INVP) remain firmly in the dumps today, down another 7-8% on worries about the fallout from President Zuma’s surprise ousting of respected finance minister Nhlanhla Nene (trying saying that quickly after a few Christmas drinks). Removing him (moved elsewhere is the party line) after just 2½ years and installing the unknown David van Rooyen is a decision that has sent the ZAR to all times lows and resulted in foreign investors running for the savannah, worried about the impact on an already troubled yet key mining sector. Could a US rate hike make matters even worse for the rand next week? Work to do to restore confidence.
OML broken below Oct 2014 lows 164p which would lead to another near 20% decline to levels last seen in May 2012. INVP trying to get late 2014 resistance to turn support at 440p, a break of which could see a similar 20% fall to Jan 14 lows. And with commodities being so topical of late, as if the likes of platinum miner Lonmin (LMI) didn’t have enough to worry about with depressed metals prices and a troubled few years forcing it into a ridiculously discounted life-support designed rights issue. Shares at fresh all-time lows.
Mike van Dulken, Head of Research
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