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Port Elizabeth - Main indices ended the week lower as most of our big companies' share prices buckled under selling pressure.
Large capitalisation favourates such as Anglo [JSE:AGL], Angloplat [JSE:AMS], BHP Billiton [JSE:BIL], SABMiller [JSE:SAB] and Sasol [JSE:SOL] declined as much and 5% and more during the last week.
Its in human nature to seek reasons for any event and investors and market commentators love to rationalise price movements.
Searching for that single elusive factor that drives markets up and down leads to forgetting the real reason why shares suddenly fall by 5% and 6% within a few days - share prices were pushed to high.
There were no surprises during the last week. The uncertainty whether the US will start to taper off its policy to stimulate the market is exactly the same as a few weeks ago, while the economic conditions in SA have not changed either during the last week. A week is only 168 hours long and nothing of great importance happened in the financial world.
In fact, most economic and market news were positive and rather a reason for higher share prices, if they were not too high already. Figures by StatsSA showed that both consumer and producer inflation were lower in recent months than a couple of months ago, while retail sales picked up 1.3% in October compared to the dismal growth of only 0.1% in September.
Company news were mostly positive as well. Heavyweight counters such as Anglo and Kumba Iron Ore [JSE:KIO] both had good news for investors: Anglo outlined a solid, basic no-thrills plan to improve operations and return over the next few years and legal action about the Sishen iron ore mine's mineral rights removed uncertainty that has been dogging the iron mining gaints for several years. Kumba also announced that it plans to increase production significantly.
But, when shares are too high, they tend to pull back a bit. Spare a thought for speculators who prefer derivative instruments with gearing of around 10 times. Those on the long side of the market lost much more than 5% or 6% last week.
The week ahead
The drama for control of Adcock Ingram [JSE:AIP] continues to bring excitement to the market. Latest reports that the Public Investment Corporation (PIC), the single largest asset manager in SA due to its control over government employees' pension money, is not at all keen on the deal might see the Chileans heading home with nothing.
The PIC and Brain Joffe's Bidvest [JSE:BVT] together hold more than 25% of Adcock's shares which means that Chile's CFR will not be able to get the 75% of the votes it needs to force a buy-out of Adcock.
More analysts are also saying that the deal is not good enough, especially that shareholders will end up with CFR shares - not listed in SA - for a large part of their Adcock holding. As Joffe said a few weeks ago: "Adcock is the larger company and it must rather buy CFR."
Adcock shareholders are due to vote on the deal on Wednesday, if the meeting goes ahead.
There is little other important company news expected this week. The market will mostly look towards the US to see what the Federal Reserve comes up with in its policy meetings set for this week.
Large capitalisation favourates such as Anglo [JSE:AGL], Angloplat [JSE:AMS], BHP Billiton [JSE:BIL], SABMiller [JSE:SAB] and Sasol [JSE:SOL] declined as much and 5% and more during the last week.
Its in human nature to seek reasons for any event and investors and market commentators love to rationalise price movements.
Searching for that single elusive factor that drives markets up and down leads to forgetting the real reason why shares suddenly fall by 5% and 6% within a few days - share prices were pushed to high.
There were no surprises during the last week. The uncertainty whether the US will start to taper off its policy to stimulate the market is exactly the same as a few weeks ago, while the economic conditions in SA have not changed either during the last week. A week is only 168 hours long and nothing of great importance happened in the financial world.
In fact, most economic and market news were positive and rather a reason for higher share prices, if they were not too high already. Figures by StatsSA showed that both consumer and producer inflation were lower in recent months than a couple of months ago, while retail sales picked up 1.3% in October compared to the dismal growth of only 0.1% in September.
Company news were mostly positive as well. Heavyweight counters such as Anglo and Kumba Iron Ore [JSE:KIO] both had good news for investors: Anglo outlined a solid, basic no-thrills plan to improve operations and return over the next few years and legal action about the Sishen iron ore mine's mineral rights removed uncertainty that has been dogging the iron mining gaints for several years. Kumba also announced that it plans to increase production significantly.
But, when shares are too high, they tend to pull back a bit. Spare a thought for speculators who prefer derivative instruments with gearing of around 10 times. Those on the long side of the market lost much more than 5% or 6% last week.
The week ahead
The drama for control of Adcock Ingram [JSE:AIP] continues to bring excitement to the market. Latest reports that the Public Investment Corporation (PIC), the single largest asset manager in SA due to its control over government employees' pension money, is not at all keen on the deal might see the Chileans heading home with nothing.
The PIC and Brain Joffe's Bidvest [JSE:BVT] together hold more than 25% of Adcock's shares which means that Chile's CFR will not be able to get the 75% of the votes it needs to force a buy-out of Adcock.
More analysts are also saying that the deal is not good enough, especially that shareholders will end up with CFR shares - not listed in SA - for a large part of their Adcock holding. As Joffe said a few weeks ago: "Adcock is the larger company and it must rather buy CFR."
Adcock shareholders are due to vote on the deal on Wednesday, if the meeting goes ahead.
There is little other important company news expected this week. The market will mostly look towards the US to see what the Federal Reserve comes up with in its policy meetings set for this week.
