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Turning points are hard to call. Well, turning points are not that hard to call... when you are looking back. Retrospect is the most amazing analytical tool. Sadly, it's not a real tool and it is completely useless to us. We live life going forward, as we experience markets one moment at a time.

Turning points are important though, because it is at those points in time, or in the market, that both maximum opportunity and maximum risk is present. Now, there is no shortage of people out there who claim to know exactly when the market will turn, but there is a very limited number of people out there who have actually got a solid track record of getting that right. I am not one of those.

Too many times have I stood on my soapbox and announced that 'this is it'... whatever 'it' was at the time. Trying to learn from my past mistakes, at least, means that I will be a lot more careful before I dig out that wobbly old soapbox in future.

So this time, I don't want to say that the market IS at a turning point, but I want to say that the market MIGHT be at a turning point. In other words, the market is presenting a us with an opportunity to take a small, measured amount of risk for the possibility of a rather handsome reward.

The S&P500 index is currently down around 9.5% for the month (and just slightly more from the all time highs made at the beginning of this month). The chart above indicates a potential support level for the index. The level has held on two previous occasions and there is a rather good chance that it may hold again. If the S&P500 tests that support level today it will be down just over 11% for the month.

Looking at the local Top 40 Index, we can see a similar (sort of) picture. The market is now down around 15% for the year and has come down to test a previous support level. If this support level holds, just as is the case with the S&P500, it would be a great place to put on some long positions on Index Futures.

In both cases, the risk is somewhat contained as a break below the respective support levels would negate the trade and stop you out, but it the support holds and the market moves back into a bull trend, the reward could be tremendous.

That said, there is no guarantee that this recent rout we have seen is not the start of a much larger and longer term market correction or bear market. For now though, we cannot say. So no soapbox preaching from me today. Just the acknowledgement that there is a high probability trading opportunity present.

I will give some detail as to what I believe is driving the market at present in another blog post in the second half of this week. There are many, many things happening that are creating fear in the marketplace. I think that unpacking them will help us piece together an action plan during these trying times.

Follow @TraderPetri

Naspers rally lifts the JSE. The JSE's largest share got some much-needed relief after MSCI said it wouldn't exclude shares with unequal voting structures from its benchmark indices.

Naspers led a rally on the JSE yesterday after MSCI Inc. said it wouldn't exclude companies with unequal voting structures in their shares from its benchmark indices. A strong rise in Internet and gaming giant Tencent also supported Naspers, which tends to move in tandem with its Chinese associate company.

MSCI Inc. compiles indices that are widely followed and mirrored by investors and inclusion results in tracker funds such as ETFs buying the underlying securities. The vast majority of Naspers's shareholders own its listed, non-voting N shares while its unlisted A shares control the group.

MSCI said while it supported the one share one vote principle, it said its indices should aim to represent the broadest investment opportunity set available based solely on the inevitability of the underlying markets.

Current market benchmarks have served the investment community well over the past decades as an objective reflection of the investable investment opportunity set available to international institutional investors," said Remy Briand, MD and chairman of the MSCI Index Policy Committee. "As of today, we do not believe that preferences and constraints on voting rights, among other governance considerations, should impact the definition of the investable universe underpinning these benchmarks as equity securities with no or unequal voting rights are still investable for most investors."

Tencent rose 5.8% in Hong Kong, paring its losses for the year to 34%. The share has been under pressure due to changes to online gaming rules by China's authorities, while the trade war between the US and China has also weighed on the stock. However, US President Donald Trump appeared to soften his stance this week, saying there could be "a great deal" with China, although he stands ready to impose more tariffs on Chinese imports if there isn't.

Naspers closed 9.4% up at R2595.68 yesterday. The stock has shed 25% this year.

Naspers bounces big time on news that MSCI will retain the MSCI Global Investable Market Indexes UNCHANGED and launch a new Index Series reflecting the preferences of investors on unequal voting structures.

-- Michael Avery (@MichaelJAvery) October 31, 2018

Trump said maybe he can be friends with China = Tencent boom = NPN boom = Indi25 boom

-- Simon Brown (@SimonPB) October 31, 2018

That will put some fire back in Naspers

-- Roeloff Horne (@RoeloffHorne) October 31, 2018

Implats progresses with restructuring as production picks up. The platinum producer says it's in talks to sell or outsource its 1 Shaft at Rustenburg as it eliminates high-cost production.

Impala Platinum is proceeding with a restructuring of its operations as it sticks to its commitment to eliminate high-cost production. The platinum producer says it's already in talks to sell its 1 Shaft operation in Rustenburg.

In a first-quarter production report yesterday, Implats said it had entered a Section 189 restructuring process for 1 500 workers as it starts the process of outsourcing or disposing of the Rustenburg shaft, which is scheduled to be put on care an maintenance next April.

We remain steadfast in our resolve to eliminate high-cost production at this business, aligned with our lower future metal prices outlook," CEO Nico Muller said. "so it stands out better."

Tonnes milled across its operations rose 1.9% to 6.87-million tonnes over the quarter. It said the increase was largely due to a much stronger operational performance at Impala Rustenburg, which achieved its highest first-quarter mill tonnage of 3.15-million tonnes since 2013.

Platinum concentrate across its operations was maintained at 349 000 ounces as the increased production from its Rustenburg operations was offset by lower volumes from Two Rivers in the Bushveld complex and Mimosa in Zimbabwe. Gross refined platinum production increased by 8.2% to 369 000 ounces from the first quarter of last year when its Impala and Zimplats operations were affected by scheduled furnace maintenance.

Implats said revenues benefitted from a weaker rand and improved palladium and rhodium prices over the quarter, with a 14.2% increase in revenue per platinum ounce received. Its safety performance was also better, with a 9% improvement in lost-time injury frequency rate.

Its shares rose 10.3% to R27.02 yesterday.

Tonnes milled at Impala Rustenburg increased by 5.6% in Q1 2019 compared to the previous corresponding quarter, reflecting the positive outcomes of various initiatives implemented at the operation to improve safety, production and cost performance. #Implats pic.twitter.com/yXqTRpoxFv

-- Implats (@Implats) October 31, 2018

The curse and cost of State Capture: Nedbank gives KPMG the chop. Each centimetre of credibility the post-State Capture KPMG SA management has attempted to claw back in the rehabilitation of the firm's battered reputation continues to be thwarted by endless setbacks.

Just two weeks after Business Leadership SA lifted the suspension of KPMG's membership, the firm took a lead role in the public release of Advocate Terry Motau's sensational report into the plundering of VBS bank.

And then, on Monday, Nedbank Group Limited and Nedbank Limited announced it was rotating KPMG out the door. KPPG's contract ends on 31 December 2019.

Daily Maverick has also reliably learned that KPMG is vacating its head office located in Parktown, Johannesburg. The building will be offered for rent from 1 November.

Before KPMG SA made yet another cameo in Motau's "The Great Bank Heist" report, the firm announced that Chief Executive, Nhlamulo Dlomu, would be vacating her post only a year into her tenure. Dlomu is to take up a global role alongside KPMG Global chair Bill Thomas and the global management team.

"Given the scale of the reputational challenges facing both KPMG and the industry, the board has decided that a new chief executive from outside the firm, with strong industry experience, will optimise prospects of rebuilding trust," a KPMG statement read.

Responding to the Nedbank ditching, KPMG released a cool riposte saying the decision "is part of the industry-wide move towards mandatory audit firm rotation, which seeks to ensure objectivity and robust auditing services are provided to all public interest entities".

KPMG SA executive Chairman, Professor Wiseman Nkuhlu, responded:

"It is always disappointing to lose a client, but we remain very proud of the work that we have performed for Nedbank over many years, and of the diligence and professionalism of the team who served them."

He added that KPMG itself was a "very different business from a year ago" as major changes had been introduced. These included governance and leadership, the client roster, quality as well as culture and ethics.

"I am confident we are taking the right steps and that this is being recognised by clients," said Nkuhlu.

He said the firm's readmission to membership of BLSA was "a welcome recognition of the changes we are making and has bolstered our determination to continue taking all measures to restore trust in the firm".

KPMG has haemorrhaged clients since it was implicated in State Capture through its work for Gupta entities.

Those who have dropped KPMG SA include Barclays Africa, ABSA, Sasfin, the Auditor General of South Africa, Wits, Foschini, Munch Re, Hulisani, Sibanye Stillwater and Redefine Properties. DM

Mzukisi Qobo: What did the investment conference deliver? More than 1,000 delegates attended the investment conference held in Sandton last week. The conference was initially announced during President Cyril Ramaphosa's maiden State of the Nation Address in February 2018, where he identified measures to be undertaken to boost the economy. These included the Jobs Summit, which took place in September, the establishment of the Digital Industrial Revolution Commission, and the establishment of the Youth Employment Services, among others. The economy was to be the centerpiece of his presidency, with partnership and collaboration between government and the private sector as the driving force of economic change.

During the investment conference, Ramaphosa reinforced the theme of partnership to achieve a social compact that will help address South Africa's economic challenges.

The conference was marked by a positive mood and enthusiasm. It felt that South Africa was reconnecting once again with its potential. References to the 2010 World Cup by Ramaphosa in relation to the Infrastructure Fund that is in the offing sought to relive a nostalgic era when South Africa was a highly promising country.

There were various moments of gooseumps as investment pledges were announced in multiples of billions of rand. Animated discussions were on the roll at various sectoral breakaways about South Africa's potential. Government ministers and business leaders were transformed into evangelists of hope. Mining was sold as a sunrise sector, especially now that the Mining Charter has been signed and the controversial amendments to the Minerals and Petroleum Resources Development Act (MPRDA) are withdrawn. The sins of the past were forgotten and forgiven. Various opportunities in agro-processing, infrastructure, and venture capital were promoted.

There is indeed much to be excited about Ramaphosa's pragmatic push for new investments in South Africa while also being determined to tackle socio-economic challenges that require redistributive policy approaches. The road ahead, however, is long and arduous; and success hinges on concrete actions, beyond the boardrooms and conferences, that government takes to create a sense of certainty about the direction of change. Real change is what South Africans are hoping for, which explains much of the impatience and cynicism, especially with the proliferation of commissions of inquiry and summits.

Ramaphosa is walking a tightrope in making a strong pitch for investment and also pushing for the need to take socio-economic inequalities head-on, especially around the vexed land issue, which he underlined during his opening address at the conference.

Commendably, unlike the first two presidents (Nelson Mandela and Thabo Mbeki), Ramaphosa has avoided for now having different messages to different constituencies - international and domestic - and keeps it consistent. He has been consistent about the need to overcome patterns of asset inequality and to redistribute land for the benefit of historically marginalised black South Africans.

Previous leaders, especially in the early years of South Africa's democracy, feared threats of disinvestment if the country was seen to be veering towards redistributive policies. Abroad, they would amplify neoliberal positions, and at home they would talk a more Leftist language, and the results at times would yield policy confusion. It is important to stress that redistributive policies are an integral part of economic reforms; and one of the tasks of the leaders is to be imaginative about how to balance competing interests and priorities, and how they deploy resources at the disposal of the state to deliver economic and social value. There is a sense that Ramaphosa grasps the long-term costs of not addressing socio-economic inequalities today, and postponing the sensitive issue of land reform.

At the conference, Ramaphosa called upon the private sector and the investor community to be part of the solution. The earlier policies that emphasised trickle-down economics, according to which the markets will produce desired economic outcomes, left the socio-economic legacy of apartheid and its spatial arrangements intact. They also did not achieve the desired levels of capital formation, and broad spread of economic gains to black South Africans. The structural inequalities, poverty, and joblessness among black youth remained unaddressed. Ramaphosa cannot lean on the same policy approaches that were sub-optimal and leave socio-economic challenges and patterns of exclusion in asset ownership to be solved by future generations.

At the investment conference, Ramaphosa called the South African private sector to lead the charge in investing in the country. Indeed, many South African companies pledged a new injection of capital into the South African economy. Some cynics have argued that these pledges, which were to the tune of R130-billion, were already in the pipeline. Even so, the fact that they were in the pipeline demonstrates a rising confidence and appetite to invest in South Africa. Companies that pledged include the mining giant Anglo American and the rising star Bushveld Minerals; the tech start-up Rain; auto companies Nissan, Volkswagen, and Mercedes Benz; and telecoms company Vodacom.

Government will need to work a lot more with the South African business community to build bridges and overcome the trust deficit. Importantly, such a partnership should produce a sound and credible road map that will fix the economy and tackle the country's growing socio-economic strain and levels of inequality.

The investment conference should not be seen as a once-off event, a magic wand that will open the floodgates of investment, but as the first step in a series of bold moves that government needs to take to drive long-term social and economic change in the economy.

Government needs to keep the momentum by demonstrating more decisiveness in reforming the economy, in eliminating wastage in government, in cutting red tape, and in rebuilding institutions that are damaged. DM

Mzukisi Qobo is deputy director at the NRF Chair on African Diplomacy and Foreign Policy, University of Johannesburg.

EVITA'S FREE SPEECH: Ep. 166: Evita & the bare cupboard (Video).

Squid deal boosts Premier Fishing. The acquisition of Talhado Fishing Enterprises in May came just in time for Premier to benefit from the exceptional catch rates for squid last year.

Premier Fishing says the squid industry has experienced exceptional catch rates over the past year, while the market for SA squid remains stable. So, it's purchase in May of a majority stake in Talhado Fishing Enterprises, the country's biggest squid harvester, was well timed. The acquisition has increased the number of Premier vessels utilised for catching squid to 22 from 4.

Reporting back for the year to end-August, the fisheries group said exceptional catch rates, increased sales volumes and the consolidation of Talhado from 9 May resulted in an increase of 431% in operating profits of the division.

Its lobster business also had a good year, with increased landings due to good catch rates as well as a bigger size mix for south coast rock lobster. The increased landings resulted in stronger sales volumes and prices were also higher, mitigating the effect of a slightly stronger rand in the first half of the year.

The group's small pelagics unit reported lower revenue and operating profit due to lower catch rates for pilchards, while its hake unit also reported a drop in operating profit due to unexpected repairs and maintenance work on a fishing vessel.

For the year, revenue rose 20% to R491 million and operating profit increased by 41% to R92 million. Headline earnings per share fell 9% to 31.6% due to a higher average number of shares in issue following last year's listing on the JSE. It's increased its dividend by 67% to 25 per share.

Its shares rose 4.1% to R3.80 yesterday.

South Africa's Premier Fishing reports strong year after acquisition of squid business - IntraFish

-- Fishing Watch (@FishingWatch) October 30, 2018

Santova held back by weak trade winds. The logistics group says lower billings are a result of the weak SA economy but recent offshore acquisitions should put the wind back in its sails.

Santova says a dip in billings in the first half of its financial year is reflective of the tough SA economy, which remains the biggest contributor to overall billings. The unfavourable economic environment has also had a negative impact on trade volumes, further exacerbated by a 2.1% strengthening of the dollar against the rand in the six months to end-August.

Still, the logistics group has grown earnings, thanks to improved buying power, the containment of administration expenses and a big decrease in finance costs after it repaid one of its two Medium Term Loans. The profitability of its SA business was also helped by a 10.9% increase in profit at Santova Financial Services.

The offshore contribution to group profitability was positively impacted by a very strong performance from its Australian businesses and the benefits of merging its UK logistics business with WM Shipping. This was offset by a small drop in profitability in the Netherlands due to lower margins and higher administrative costs. Tradeway Shipping in the UK also reported a drop in profit off the high base set last year.

Gross billings declined by 1% to R1.95 billion over the period and revenue increased by 2.9% to R163 million. Headline earnings per share rose 2.1% to 21.13c. t

Santova said its debt to equity ratio improved to 25.5% from 46.5%, resulting it an 22.8% increase in its net asset value per share to 301.53c.

It said the outlook for the second half of the year remained uncertain due to the ongoing political, social and economic challenges facing SA. However, it said the benefits of its two most recent acquisitions in the UK and Singapore should start to be felt.

As the group enters its annual peak trading cycle the board is optimistic that the group's geographic, business activity and currency diversification will help to provide a solid platform for future growth," Santova said.

Its shares declined 1.3% to R3.15 yesterday.

Not saying SNV not a good company, but have never been able to see why it should be more highly rated than Value Group (VLE), other than having an offshore element and perhaps better (chance of) scaleability. VLE seems to still keep doing better on almost all metrics.

-- Ross Malt (@RossMalt) October 30, 2018

Imperial gets all clear for Motus unbundling. The logistics and automotive group says its first quarter has been tough but the businesses are well positioned to ride out the weak economy.

Imperial Holdings says its two main operating divisions are well positioned to deal with the uncertainties, volatility and current "ambiguous" environment as it prepares to unbundle and list its automotive business separately.

In a statement ahead of its annual general meeting yesterday, Imperial said its logistics business would likely report flat revenue and operating profit for the six months to end-December, while Motus was expected to grow revenue, operating profit and headline earnings, before taking into account any costs related to the proposed unbundling.

The group's shareholders voted unanimously in favour of the unbundling at the AGM.

The group said the technical recession had placed most sectors under pressure. Challenging trading conditions had been exacerbated by a prolonged volatile rand. Imperial Logistics, which generates just under a third of its revenue in South Africa, had been affected by reduced volumes and competitive pressures, particularly in the manufacturing and consumer businesses. However, it said its gain rate on new contracts and renewal rates on existing contracts remained high, with an encouraging pipeline of new opportunities.

We continue focusing on rationalising our operations thereby taking out inefficiencies, complexity and cost to counter the negative impact of the economy," Imperial said.

Motus had maintained market share at just under 20% in a highly competitive market, with national vehicle sales declining marginally in the three months to end-September. It said the trend of consumers trading down to entry-level models was continuing.

Imperial said its positioning as mainly a distributor of pharmaceuticals and consumer packed goods in Africa outside of South Africa had stood it in good stead. However, its German shipping operations had been negatively affected by significantly lower levels on the River Rhine for a prolonged period. Also, the implementation of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) had resulted in much lower vehicle production volumes in Logistics International's automotive business. It said production volumes were expected to pick up towards the end of the calendar year.

It expected both Imperial Logistics and Motus to grow revenue, operating profit and headline earnings per share for the full year, subject to one-off costs related to the Motus unbundling. Imperial Logistics was likely to perform better in the second half of the year due to one-off factors that will affect first-half earnings.

Motus lists on the JSE on 22 November, while Imperial Holdings will change its name to Imperial Logistics.

Imperial's shares declined 6.8% to R158.96 yesterday.

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Mouton family trust mops up cheap PSG shares. PSG's shares are trading at a discount of about 18% to the value of its underlying investments and are down 21.5% this year

The Mouton family trust has taken advantage of weakness in PSG's share price to buy more shares.

The Dana Mouton Trust, named after PSG founder and chairman Jannie Mouton's late wife, bought 5 500 shares on 24 October at an average price of R210.92 each. PSG's shares have fallen 21.5% this year and are trading 29% down from their 52-week high. The group is worth R257.80 per share using its sum-of-the-parts (SOTP) value, which includes the value of its listed and unlisted investments.

Mouton is a trustee of the trust while his sons, PSG CEO Piet Mouton and non-executive director Jan Mouton, are trustees and beneficiaries.

In the six months to end-August, PSG grew recurring earnings per share by 22% to 503c, while its SOTP value at the end of the reporting period was R272.94. Its share price continues to trade at a discount of about 18% to the value of its underlying investments. Its biggest investment is its stake in banking group Capitec, while it owns sizeable stakes in PSG Konsult, Zeder and Curro, among other holdings.

It closed 0.8% higher at R212 yesterday.

Moutons buying PSG shares.. Always a good sign.

-- Keith McLachlan (@keithmclachlan) October 29, 2018