Thursday, 03 October 2024
Time Published: 08h07
A global easing cycle and central bank stimulus has been supportive of our analysis, and subsequent recommended positioning. Whilst there have been tactical/ultra short term opportunities on both the long and short side across sectors and asset classes, some of the biggest moves have been driven by existing positioning by fund managers (a lack of exposure), which has been turned to aggressive buying on the back of the Chinese authorities injecting stimulus into their economy.
Specifically, mining and resource shares have turned from medium term oversold to ultra short term overbought - this is a good thing for clients who took the opportunity to buy into weakness. Here, trade ideas in Kumba Iron Ore and Exxaro Resources as well as view on African Rainbow Minerals yielded strong performance within a relatively short period.
On the global stage, Alibaba rallied by more than 57% since we highlighted the share. Again Chinese stimulus helped the share advance from $73 to $116.
In the retail space, my view that MRP was extended was dead wrong as the share kept trucking higher however I was able to navigate Truworths on both the long and short side. Shoprite have clients an opportunity to sell above 314 (later downgraded by an institutional house) while Woolworths also gave clients an opportunity to participate on the long side.
In the financial sector, my preference has been for insurers over banks. Here, FirstRand was a great short/sell opportunity (published) while clients were alerted buy/long opportunities in both Old Mutual and OUTsurance which added alpha.
Tencent exceeded my 2nd target of HK$435, which was supportive of outsized gains in both Naspers and Prosus. (More comments on Naspers early next week).
As always, we want to approach every opportunity on a case-by-case, or trade-by-trade basis by relying on the data and price action as a guide.
Lester Davids
Analyst: Unum Capital
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