The bull is clearly rather enamoured by that cute laurel wreath-type headgear that is being dished out to podium places over in Athens at the moment. He wants one and a gold medal too. And his chosen sport seems to be the high jump. He has added about 10% to the bar height since the lows of last month. And not all of that can be put down to the boost he received last week from that interest rate cut.
The bear has been relegated to the menial task of cleaning up the grandstand and discarding the naartjie peels and empty bottles.
We are still in the midst of reporting season and there have been some cracking results from many companies. I note with interest that quite a few of them have been looking for ways other than simple dividends with which to get the cash across to their shareholders. At least one was honest enough to say that they (the company) really didn’t want to pay the STC tax that a dividend would attract. This means of course that you and I will probably end up paying capital gains tax on the payout.
On the topic of dividends, have you noted the way that the prices of the three bank preference shares have risen? In the middle of July all three were priced to offer a theoretical dividend yield of round about 7.7%. Then, as if they knew what the rest of us didn’t – that a rate cut was coming – the yields started slipping and took a largish plunge on the Governor’s happy news. Theoretical dividend yields are now very slightly north of 7%. I still believe that most portfolios should have a chunk of these instruments. If you hurry you can still buy the Nedbank one before the 27th and receive a 42.8cps dividend the following Monday. If there are no further interest rate changes the Investecs will pay about 427 cps at the end of November.
The rand has been trending weaker against all major currencies since the SARB’s bombshell. It is back to roughly the levels we were enjoying when we were all trying to remember the words to Auld Lang Syne. So far this month it is down about 5% against the pound and the dollar and a bit more than that against others – because the dollar itself has slipped a bit too. It’s probably time to saunter casually into the electronics and computer shops and see what bargains are still on offer.
The office – and indeed the city - has emptied noticeably these last few hours as the migration to Durban takes place. Tickets are trading at hefty premia to face value as the need to witness the ‘bokke hoisting the Tri-nations gets ever more urgent. I would guess that celebrations could be a tad less tidy than a handshake, a posy and a funny hat made out of leaves. Wouldn’t it be great?
Go ‘bokke!
James Greener
20th August 2004
