Petri Redelinghuys of Herenya Capital Advisors on the market’s posture, commodities, Telkom (TKG), and Reinet (RNI).

The market is going through a volatile period, seesawing between conflicting news headlines and multiple shifts in sentiment on a daily basis, seeming increasingly like the norm. One may wonder how the experts view the situation, and while it’s impossible to give a definitive answer to the question, here’s an expert’s viewpoint on a few topics.

Commodities

Since the beginning of the conflict in the Middle East, we’ve been seeing a pattern of weakening commodities, which also coincides with the U.S. dollar growing stronger. This comes as a result of priorities being shifted towards risk aversion, which tends to make U.S. Treasury bonds and equities a more attractive investment. This risk aversion is in part due to conflicting headlines regarding the conflict, where headlines of de-escalation are followed up with news of escalation, often within the same day, which makes it nigh impossible to predict the market’s short to mid-term trajectory.

Opportunities

As the market increasingly slows down, in favour of going into a wait-and-see stance, it might seem like a good idea to buy quality shares at a discount rate. And you’d be correct! However, it’s important to note that most investors prefer to play it safe at the moment, and would rather wait and collect interest on their money than commit without clarity.

Telkom (TKG)

We see Telkom as an example of a quality share. In the last decade, we’ve seen Telkom turn its fortunes with new leadership, structure and business model. With their ongoing modernisation efforts, and recent trading statement in mind, we believe that the company has legitimate momentum to continue growing from here.

Reinet (RNI)

Reinet, Johann Rupert’s investing company, dropped by 10% today following the sale of several assets, without investing the cash anywhere else. While it’s normal to see a drop in share prices, when an investing company sits on a large pile of cash with no clear goal, we see the magnitude of the drop as an overreaction by the market.

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*Please note that these trade ideas form part of a larger weekly plan and the value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. The risk of loss arising from trading in Contracts for Difference can be substantial. You should carefully consider whether such investments are suitable for you in the light of your circumstances and financial resources.