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... and away they go

03 July 2006 Angelo Coppola

The petrol price reached a record high on Tuesday 4th July. One wonders whether it will react in the same way as our market did and retrace to more normal levels? A lot has happened in the last week, and here is a snapshot of some of the more interesti

According to the Nedcor Economic Unit the rand gained back some lost ground last week to close at R7,15, R9,09 and R13,22 respectively against the US dollar, the euro and the British pound on Friday from R7,41, R9,29 and R13,51 at the previous weeks close.

Some recovery in emerging markets, a weaker dollar and stronger gold prices all supported the rands improvement. The local bond market weakened further on speculation of higher domestic interest rates, following the release of higher than expected producer inflation for May.

Meanwhile the seasonally adjusted Investec Purchasing Managers Index (PMI) has continued to ratchet up, reaching 59.8 index points in June from 57.6 in May.

The Investec PMI has only bridged the level of 60 twice in April 2002 and July 2005 but may do so again if current favourable conditions persist, says Andr Roux, head of fixed income at Investec Asset Management.

New sales orders were the strongest contributor to the sectors performance, with the seasonally adjusted index increasing from 63.7 in May to 65.7 in June. Demand conditions are clearly supporting the manufacturing revival, says Roux.

Output, however, weakened marginally, with the seasonally adjusted business activity index declining from Mays 60.3 to 59.5 in June.

I guess it was bound to happen.

The tighter market has also brought some flotsam to the surface, and it appears that at least one fund manager is experiencing some internal combustion.

It also appears that fund managers are again preaching the diversification approach to investments, something that most investors generally dont do, in good or bad times.

According to Stanlib the issue of diversification was raised in recent nationwide presentations to investment advisers when it was noted that Stanlibs highest allocation into listed property in its five risk-profiled funds was just 15% and in one instance was down to 10%. Makes you think doesn't it?

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