Johannesburg - With the JSE All-share index having breached the 30 000 level, traders are adopting an increasingly tactical approach in their allocation as stock-picking becomes more important.
In his weekly note to clients, Stanlib portfolio manager Paul Hansen points out that since August 25, the MSCI World Index has gone up 13.9% in dollar terms, while the JSE All-share index has risen 13.6% in rand terms or 19.6% in dollar terms.
Historically, these are considered large moves in a short period of time.
Hansen advised: "If one wishes to commit new funds to equities now (especially local equities), then perhaps a more prudent approach would be to phase it in over a period of a few weeks."
Fin24.com takes a look at some of the trades on offer, including more tactical long/short recommendations.
Standard Bank online share trading isn't buying the Paladin Capital story as an alternative entrant into the education market, and recommends that investors continue to look at Advtech if they want exposure.
Paladin Capital, the investment vehicle of PSG, has exposure via its investment in the Curro education group. "Curro is in the process of setting up a number of new schools.
"Management has indicated that it plans to have between 15 and 17 schools by the start of the 2012 school year. It could take a number of years for these schools to fill up and become profitable as a result of their relatively high fixed cost bases," the firm advised clients.
Hot tips from those in the know The Standard Bank price target for AdVtech is 665c, with the stock trading at around 620c.
For the punters, stockbrokerage Barnard Jacobs Mellet (BJM) suggests that on the pharmaceutical side, Adcock Ingram will outperform Aspen.
Adcock trades on a price to earnings multiple of 13 times earnings, while Aspen is on 18.
Since the start of the year, Adcock has gone up 16% from 5 400c to 6 280c, while Aspen has risen 22.5% to 9020c.
"Traders should look to short Aspen (R90.00) and go long (on) Adcock (R62.50). Fundamentally, Aspen looks fully priced given the recent share price performance and is discounting very significant earnings growth," said BJM.
Gold stocks are in at derivatives trading firm Global Trader, while banking stocks are out. Through its TradeIdeas.co.za platform, the broker recommends long positions on Harmony, Gold Fields and AngloGold while suggesting short positions on Standard Bank and Absa.
Ernie Gruhn, technical trader at Imara SP Reid. was also cautious. He suggested: "The JSE overcame early profit taking to grind out marginal advances, as the overall index consolidates its position ahead of the 30 000 point area after adding 0.20% or 60 points.
"As of yet, there are no signs of reversal in short-term trend indicators and remaining exposure should be retained, but available evidence also suggests that additional exposure taken on at current levels will not enjoy a strong reward."
- Fin24