Could this explain the recent surge in SUF and Messina Ltd. buying?
Article is a bit long, but intriguing...
Geoff
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Top Financial News
Thu, 31 May 2001, 6:36pm EST
Investors Look to Platinum Shares to Fill Void Left by De Beers
By Robert Brand
Johannesburg, May 30 (Bloomberg) -- Anglo American Platinum Corp. Ltd. and other South African platinum shares may extend recent gains as local investors, flushed with $3.3 billion from the sale of De Beers, look to hedge their holdings against a drop in the rand.
Trading in De Beers shares ceased at close of business today following the purchase of the world's biggest diamond company by a group led by the Oppenheimer family. The company will be removed from the exchange Thursday.
``The interest in platinums is largely because there's not much else on the market after De Beers,'' said Bruce Anderson, chief investment director at Fairheads International Asset Management in Cape Town, which oversees about 800 million rand, including de Beers shares. If the price of the metal holds up, ``platinums have still got some way to go.''
The bid from the Oppenheimer family, Anglo American Plc and the Botswana government values De Beers at about $17 billion, 50 percent more than Anglo American Platinum, the next most valuable company on the JSE Securities Exchange. De Beers represented 8.5 percent of the value of the 526 companies in the Johannesburg All- Share Index, and about 7 percent of trading.
Platinum shares were the first to attract investors new found wealth as they sell their output in dollars, providing a hedge against a weaker rand, analysts said. The South African currency has fallen 4.7 percent to the dollar this year after dropping 18 percent in 2000.
``Probably the average guy who had De Beers shares is just buying other rand-hedges'' such as platinum companies, said Peter Major, a fund manager at HBD Asset Management.
Records
The Johannesburg Platinum Index of eight platinum miners has climbed 18 percent this month to a record 30,397 today. That is more than four times the 4.3 percent increase in the Johannesburg All-Share Index.
World No. 1 platinum producer Anglo American Platinum has gained 20 percent since May 1 to a record 414.20 rand today. No. 2 platinum miner Impala Platinum Holdings Ltd. soared 25 percent to a record 472.60 rand in the same period.
The rally in platinum stocks is likely to continue if the price of the metal remains high, said Anderson. Platinum recently traded at $618.5 an ounce after falling as low as $557.5 an ounce on April 2.
Other stocks attracting investor's attention before the De Beers de-listing were Industrial companies, especially those with substantial foreign earnings.
``Some of the better-quality industrials have been re-rated in anticipation of De Beers disappearing,'' said Andre Crawford- Brunt, a trader at Deutsche bank Securities in Johannesburg.
Among those are Bidvest Group Ltd., one of South Africa's top ten diversified industrial companies whose businesses include freight and travel services, said Crawford-Brunt.
Sasol Ltd., the biggest maker of motor fuel from oil, climbed 1.7 percent to a record 78.50 rand today, while Sappi Ltd., the largest producer of glossy magazine paper, gained 1.4 percent to 78.60 rand, near its record 79.50 rand set two weeks ago. Both are seen as rand-hedge stocks, said Major.
Some investors may look outside the equities market to invest their De Beers windfall, said Anderson.
``Some people may switch into the bond market, which may be a good bet with the interest rate outlook,'' he said. |
