Yesterday’s front page carried a picture and a story about a deputation of trade unionists who visited Governor Mboweni with a complaint about the strength of the rand. Unusually for a South African gathering of protest, everyone in the picture including the Governor is wearing a serious expression. There is no one dancing. Mr Mboweni had even stepped out of the monetary policy committee meeting to receive the delegation. Clearly he was impressed by their story. Just one day after their meeting, the Governor stood before the TV cameras and teased us all with a 30 minute speech before turning over to the last page and announcing a 50bp cut in repo rate. Only the lobbyists could have been expecting that news and mayhem resulted in the markets.
First to go was the rand. At its worst so far it has required only an extra 40-odd cents to buy a dollar compared to a week ago. The thought that exporters would be receiving all that extra loot when they sold their dollars, excited the bulls and they went into a frenzy, buying everything that wasn’t nailed down and driving the all share index up 342 points. Contrary to popular memory, there was a marginally larger one-day move as recently as May of this year but before then one needs to go all the way back to the rand crisis of late 2001 for comparable market moves.
While this was all happening, major markets elsewhere in the world were falling as fast as South African wickets in Sri Lanka. This headwind to any sustained firming in our market continues to blow and strengthen. You will have noted that the US interest rates went up a quarter of a percent earlier in the week. Still, it would have been nice to have been extra long these last 24 hours.
Elsewhere, I think the story of the week is the plan to install cellphones in mini-bus taxis for the convenience of the passengers. Concerns that providing this extra service might further distract the driver from his task of steering his vehicle from the outer lane to a dead stop against the kerb in just 25 meters were dismissed as alarmist. However, at 50c for 12 seconds, MTN is clearly onto a good thing.
With any luck the whole nation will be dancing tomorrow after the test against the All Blacks at Ellis Park. One journalist has assured his readers that the ’bokke will walk it, on the rather dubious grounds that the Kiwis never have much luck in Joburg. We will need the exercise, however, as we dig in for a marathon session on the couch supervising the Athens games. And there’s a GP this weekend as well.
Have a safe one.
James Greener
13 August 2004
