Capio Capital Market Overview and Trade Ideas In Asia regional bourses are trading mixed this morning with the Hang Seng & Kospi index outperforming. The Nikkei, Shanghai Composite and ASX lost ground. The Hang Seng trades slightly up, fighting for its 5th straight day of gains. Gains were seen in the property space amid reports the government may move to relax the ‘double stamp duty’ imposed on buyers of a second home. Investors took into account the new federal budget in Sydney with utility & healthcare stocks the laggard. Healthcare spending will see a reduction. Banks were hurt after Macquarie, Westpac & NAB traded ex div. Telco’s weighed on the Nikkei with investors keeping an eye out for Sony’s results released after the close. In the US markets edged higher with the S&P trading at new intraday high as investors digested retail sales numbers. The Dow recorded its 5th day of gains while the Nasdaq ended the day down. Rackspace Hosting & shares of McKesson rose after earnings topped estimates. Homebuilders also advanced after news Fannie Mae & Freddie Mac won’t have to lower the limits for home loans. Coffee maker, Keurig Green Mountain jumped after Coca Cola increased its stake in the company. Whirlpool fell on the back of a broker downgrade while Tripadvisor gave back some of Monday’s gains. In after hours trade, investors punished Fossil and Take-Two Interactive after both companies pointed to a poor earnings outlook Look out for numbers from Macy’s, Deere and Cisco Systems today. European markets gained ground, managing to brush off a downbeat consumer sentiment number out of Germany. Thyssenkrupp jumped on the back of an increased earnings outlook with AstraZeneca grabbing some attention on the possibility Pfizer may raise its bid for the company. Telecom Italia saw its quarterly revenue miss estimates while French planemaker, Airbus, beat analyst estimates. EasyJet weighed on the London bourse as investors digested the company’s results. Vodafone also disappointed on reports AT&T may acquire DirecTV. The Top40 ended (-0.11%) lower yesterday, falling from its record high close of 44315. The financial sector however bucked the trend (Resi - 0.04%, Fini +0.42%, Indi -0.27%). NED lagged the banking sector after its trading statement showed a weaker NIR number. Investors failed to take comfort in a better impairment ratio. Insurers outperformed. ABL continued to slide with the lender falling another -6.7%. LON (-4.8%) was hard hit as the miner will push ahead with plans to reopen mines after employees were attacked by striking workers. The resource sector closed flat with a weaker gold price hurting ANG & GFI. SOL (+1.1%) gained on the back of a higher oil price but a stronger Rand weighed on the rand hedge counters. Value traded at 5pm was around R 12.5bn with the currency at R 10.31 vs. the USD. Trading Ideas 1) Short MTN under R220, the share has been downgraded by Deutsche Bank from a buy to a hold and worldwide telecom shares have also been down significantly. We believe with the strong Rand its operations in Africa will also struggle and will push the share price down. 2) Technical Trade: Short NED from R234. In high interest conditions we believe this stock is a strong short. 3) Long CFR from R100. Strong support at R100, we believe this stock is oversold, stop loss at R99. Results due tomorrow, expected - CFR: to report 2014 FY tomorrow (Expect EPS EUR3.72 +2.3%, BB Consensus EUR3.765). No change to our 1Y TP R115.00 (HOLD, but will be getting close to BUY territory). Stock has been under pressure last week on firm ZAR.
Posted on: Wed, 14 May 2014 07:23:45 +0000
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