Today one of my colleagues leaves for the Masai Mara to witness the part of the wildebeest migration where the poor beasts have to cross a croc infested river. He plans to take a trip in a hot air balloon over this particular wonder of Africa. Those of us left behind will have to make do with the slightly lesser spectacle of bears being savaged by bulls. There are a few balloons left over from Watermark’s birthday party earlier this week and of course in this business there is never any shortage of hot air.
With just about two more trading days to go before calendar month end, the All Share performance (including dividends) for August is somewhere close to 8.5%. This is chunky and welcome, but not hugely unusual. On average one can reasonably expect this level of monthly return, or better, twice per year. Perhaps you don’t remember but we enjoyed 9.8% last October so this blip was right on schedule!
Now when they lead the bull away for his drug test at the end of this round, the sample will come up blindingly positive. And the lads in the lab will have no difficulty in naming the substance as rand currency. A potent stimulant that itself has been diluted almost 6% against the US dollar this month. And out there, in the full blaze of publicity, brandishing the syringe for all to see is coach Mboweni. Talk about a gold medal effort! Please rise for the playing of the national anthem.
This week saw another batch of good and excellent results announcements. Pretty well anything associated with consumer spending has been enjoying an excellent year. Have you noted the trend I have discussed before of how numerous companies are seeking ways to return money to shareholders? A few months ago I commented on declining dividend cover ratios. The following hypothesis is starting to take shape.
With the exception of domestic property there is a significant trend away from capital investment as companies and individuals choose not to make long term commitments. The companies have been distributing the excess cash. The reasons for this could provide the material for a lengthy, heated and undoubtedly political discussion around the bar counter.
After several years of fiscal prudence government taps are opening and state spending is growing at something like 15% pa. No wonder SARS are trying to hunt down anyone they believe is “read[ing] the law in such a way that there is no taxation at all”.
Much of this loot is now turning up in the hands of those folk who are delighted to discover and prove that they are born to shop. But somewhere ahead there’s a muddy donga full of slashing jaws and the gas in the burner is running out and the balloon can’t keep up for ever!
What will the Athenians have in store for us on Sunday?
James Greener
27th August 2004
