STANLIB's Weekly Focus 04 February 2008
EXECUTIVE SUMMARY OF STANLIB’s WEEKLY FOCUS
"DEAD CAT BOUNCE”…OR FOR REAL?
* Not surprisingly, amid fears of US recession and the electricity cuts in SA, foreign selling of SA shares spiked sharply in January, resulting in a net outflow of R9bn, the highest single monthly outflow on record.
* The JSE All Share Index started February on a great note; the index jumped no less than 8% and is now 14% above its low of 23rd January.
* The mining shares, in particular, have caught fire and are up a whopping 24% from the lows just ten days ago and a mere 5.5% below the all-time record high seen in October
* Of course the big question is whether this market recovery is merely a ‘dead-cat’ bounce, as usually occurs in bear markets, or whether this is for real.
* The JSE bull market remains intact….
SNIPPETS OF INFO
* January 2008 was the worst month for hedge funds in 10 years (Financial Times).
* The STANLIB International Property Fund has risen 8% (in USD) from its low in January and is now 22% below its February 2007 peak.
* Base metal prices surged strongly last week, as severe winter weather and power supply problems caused huge disruptions to production in China.
* The rand has fallen 8.7% against the dollar since the end of 2007.
Economic Update
* Despite the higher than expected consumer and producer inflation numbers, the Monetary Policy Committee (MPC) decided to keep rates unchanged, with the Repo rate remaining on hold at 11% and Prime at 14.5%.
* CPIX inflation rose by more modestly, with the annual rate increasing to 8.6%y/y, from 7.9%y/y in November.
* In December 2007, SA Producer Inflation (PPI) increased to 10.3%y/y from 9.1%y/y in November.
* In the United States the Federal Reserve showed yet again how committed they are to avoiding a US recession by cutting interest rates by a further 50bps.
* The US market shed 17 000 jobs in January this year, which was a far cry from the expected 70 000 gain.
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