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Trade insight example

Nedbank Group Ltd

24 November 2014 

Banks and insurers have been particularly busy in the acquisition space of late, specifically in emerging markets. In October Nedbank acquired a 20% stake in ETI, now transferred to Ecobank Nigeria. There is some renewed interest in the transaction last week with Old Mutual earmarking over R4.3 billion for African expansion and acquisitions, with Nigeria, Kenya and Ghana as key areas of growth.

Technical analysis

Nedbank seems to be displaying an inverse head and shoulders pattern after the three month downtrend leading up until mid-October. Whilst the price has reversed from its recent low of 21296c and reverted back to previous highs, the neckline of the pattern has not been broken with the corresponding increase in volume, questioning the strength and sustainability of the most recent move up but still keeping the pattern in play.

A pattern of this nature would have been expected as a sign of a reversal at the end of a downward trend, whereas here it seems part of a more long-term trend, which in this case is up, supported by the 200 day moving average (red line). This does create a certain amount of uncertainty and the expansion of volume with a corresponding move up would be the verification technical traders may be looking for in line with the bias to the upside. - Leigh Riley, Premium Client Manager

Nedbank Group Ltd, 21/11/2014

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