STATUES OF LIMITATIONS

 Minister Rob Davies has been very busy these last few months alarming as many people as possible with his severely misplaced policies and views. Before even the recent public expression of delight at the weakening rand he had been annoying our very important European investment and trading partners with threats to rewrite the treaties unilaterally. Despite spending this week apparently running around backtracking and putting out fires it is clear that there are now considerably more sellers of rands than buyers. The currency has been dribbling away steadily and its difficulties are the dominant theme for local investors. Inflation is chugging steadily upwards and the chances of Governor Marcus and her team ever cutting the repo rate have now all but evaporated.

With the notable exceptions of Rainbow Chickens and Impala Platinum most companies reporting this week were coming in with growth around 15%. This is both quite acceptable and also far ahead of the country as a whole where second quarter GDP growth was reported at 3%.  Nonetheless the All Share seems to have shelved its plan to keep on climbing and the markets have gone a little quiet.

The unspeakably tragic conflagration that is blazing ever more strongly at the eastern end of the Mediterranean Sea is now also being offered as a cause for the bull’s slight slow down in global stock markets. Even our own recently capped Honorary Doctor Jacob Zuma seems to have found the time to notice that things have turned nasty there and offered some advice on what to do.

So the ENatis database of drivers and vehicles is flawed and nearly useless? I'll bet it is. The only halfway reasonable records will relate to those of us who have been brought up to respect and obey authority, to fill in forms diligently and accurately and who have stayed at the same address for years and years. Unfortunately for us it is in our culture to do these things and that is as good as having a bull’s eye tattooed on our forehead and wearing a T-shirt bearing the message: “Taxpayer”

There may not have been a sardine run here in the kingdom this year, but there is a rash of statues for people to gaze upon. A double life-size image of reigning King Goodwill Zwelithini has been completed and awaits positioning and unveiling. The Zululand district mayor feels sure that she will find a place in Ulundi "where visitors will see it and where it (will) inspire tourists to stop and appreciate it.” The problem is that earlier this week another statue was unveiled in the town. Apparently the same authorities decided that a sculpture of local politician Mangosuthu Buthelezi to mark his 85th birthday would also be money well spent. Reportedly there are already several other statues of assorted worthies dotted around the town, so sites are getting scarce. At the new Durban airport, however, a location for the also newly completed replacement statue of Goodwill’s great grandfather, Shaka, is ready and waiting. The original art work placed there when the airport opened a few years ago was condemned and dragged away. Apparently it failed to convey the man’s warrior-like spirit. I hope the new image doesn’t scare the tourists.

The ‘bokke didn’t look too clever in their second outing against the Pumas at home  and the Wallabies and All Blacks are looking daunting again. I expect warm words of thanks from the chaps at the bowling club tonight for the lesson the Lions gave last week on how to deal with the Blue Bulls. Their team, the Sharks, have been battling to look convincing so far this Currie Cup.

James Greener

30^th August 2013

WILL CHINA REMEMBER US?

Browsing through the charts and numbers this week, one gets the feel of something is stirring. Among the more impressive movers are those depicting the weakness of the rand and local bond market. Both have taken a hammering and one could conclude that foreigners are departing from the latter The JSE All Share, on the other hand seems to have calmed down at the 43000 point level where, in contrast to many developed markets, it is exploring all time highs. It is also the sole member of the BRICS club with a market that is up for the year to date. There has been some sort of BRICS knees-up on our wintry shores this week, with photo opportunities and appropriately themed catered events all round. Now at least India and Brazil are each suffering similar difficulties to us with their currencies. So it is not certain, when the talking began behind closed doors, just who was shaking the biggest slotted tin and offering the brightest buttonhole. Our guys might have been quite startled to learn that joint means every one putting up the money when called upon.

Meanwhile anyone who thinks that international economics and finance is boring should take a look at the delightful squabble that has broken out about whether or not China is in trouble and if so what it means to the rest of us. The starting point for the full enjoyment of this spectacle is to realise that just about all economic data is imperfect, massaged and misleading. The Chinese (like much of the rest of the world) are keen to focus everyone’s attention only on the numbers which tell the better story. Anyone reaching a conclusion drawn from their interpretation of the data is in the end standing on the same very shaky foundation as their opponent. Each claims that specialist local knowledge bolsters their position. However it is rare for any particularly dogmatic and eye-catching forecast to survive the onslaught of subsequent data releases – especially when they are accompanied by substantial revisions to what has come before. If treated properly it is high comedy but makes share selection tricky.

The promise to hold a land ownership audit sadly reveals that we are still not in the position where the nation’s existing land registries can provide that sort of data at the click of a mouse. And as Hernando de Soto, the Peruvian economist notes, people with title, even to the meanest plot on which their shack stands, can borrow money and upgrade their homes. That way lies growth and job creation. Just think what 20 million new DIY market entrants could do.

A special local weather pattern announces itself with a steady and large fall in the barometer accompanied by unseasonable heat throughout the day. Then, suddenly after a brief spell of utter calm at about the time of the first beer of the evening, a ferocious wind squall blasts through from the south west, scattering the prematurely deployed garden furniture and slamming doors left open. The phenomenon is known as a Busta and that's pretty apt. It also strikes me as a fair model for what might be happening in the share market. Does anyone else feel the calm?

Even if tennis star Maria Sharapova fails in her wonderfully cunning stunt to take on the name of her newly launched confectionary brand for the duration of the US Open, already the publicity has been magnificent. Which man on this planet is not keen to unwrap a Sugarpova and pop the red kissing lips themed sweetie into his mouth?

The Lions are going about reclaiming the Currie Cup the very hard way aren’t they. While the ‘bokke are raising what I trust are not inflated hopes.

James Greener

The start of my August long weekend.

FASHION ISSUES

It is always puzzling how easily professional investors can handle losing other people’s money. A company which a few years ago borrowed almost R1bn by issuing a bond has gone bang. Investors in this bond included some of the smarter investment houses in the land and they are now dismissing the default, claiming that it will have no effect on their investments. If that was true then why did they buy it in the first place?

Any member of the JSE (today that means firms not people) that is rich enough will soon be able to rent space immediately alongside the JSE’s own computer. The proximity means that these firms will get JSE prices and information milliseconds before someone like me down here in the kingdom. This clearly highlights that the market is less about raising capital and more about providing a casino-like environment for speculators, traders and their computer programs. Undeniably there are ultra short term price discrepancies and movements that can offer profitable trades. Whether these are triggered by news released publicly or hinted at privately does not matter but it does show that while “insider trading” is considered a no-no then “just next door trading” is just fine! There is some very muddled thinking happening here.

It turns out that tax payers, via an outfit called the National Empowerment Fund, have lent R34million to someone planning to open a shop that will sell luxury goods. The new store owner obviously knows all about her market. Just a day or two later the New World Wealth consultancy released its report that there are nearly 50 000 dollar millionaires in the country     half of whom live close to this boutique. I wonder if she would consider operating a loyalty program offering discounts to any customers who can produce an income tax receipt. Mind you according to SARS there are far fewer top tier tax payers than this. Nevertheless the entrepreneur’s track record leads one to think that it’s going to be a far less risky use of public money than funding the Gauteng Climate Innovation Centre, which proudly wants to “help South Africa reach its potential in climate technologies”. Once again the bureaucrats are confident that they have spotted opportunities where the market has not. And anyway don’t the Chinese make raincoats and sun umbrellas all so much cheaper? 

South African members of parliament get a salary which, relative to the average income of the rest of the nation, ranks them as among the 5 highest paid in the world. Sadly we do not receive value for this expenditure. Here in the kingdom one of their number has dusted off the idea of installing a cable way to whisk tourists to the top of the Drakensberg. Then there's the plan to "fast track" pilots to fly the national airline’s great big passenger jets. Not to mention allowing the SABC to launch a 24 hour news service channel. What about reducing the state payroll by firing the cops with criminal records and the 25% of teachers who don’t work on Mondays!

Isn't that sweet? Our president was invited to come and collect his new smart ID card the other day and was introduced to the four machines that have been acquired to print these things. He immediately named each of them after a woman. Despite his age there is no doubting where his main interest lies.

The natural order of things has been restored and the Lions are back in the Super 15 for next year. However all is not lost for the good folk of Port Elizabeth. The Spanish fashion chain Zara has chosen their city as only the fourth in SA in which to open one of their trendy shops. The people of the Bay can go and swap those uncomfortable crowns for more stylish berets and other smart gear. The Eastern Cape in not just about pineapples and sheep you know. Some of those millionaires are lurking among the spekboom and aloes.

James Greener

The day before Women’s Day 2013