When I arrived at the office this morning there was a largish helium balloon hanging over the busy Jan Smuts Avenue intersection. It was tethered to the handrail of the nearby pedestrian bridge but the gusts of wind were sweeping it perilously low over the traffic. Motorists were being provided with possibly an even greater hazard than the usual suspects that stop in the crossing to offload passengers. I missed catching the advertising message that it carried, but began to think about the possibilities that the blimp might have for this industry.
While a warning about the perils of inflation would be obvious, it is currently unwarranted as the CPI and PPI numbers that came out this week remain pretty benign. The fact that helium is an inert gas, less dense than air, seemed to be a promising metaphor conjuring up images of investors doing nothing but watching their portfolio values climb to the stratosphere. But then what would become of the message if the balloon were to puncture suddenly? Best not to go there.
And on the topic of not arriving, what has become of Barclays’ long awaited bid for ABSA? This saga threatens to run for as long as the second telephone network farce or the arms deal offset mystery. If Barclays have not yet arranged their currency for this trade, then the deal is getting more expensive by the day. Curious.
Whether or not the market is expensive is the key question on everyone’s mind as we come to the end of a month which boosted the all share index by around 6% so that the index dividend yield is now a slender 2.6%. Also perturbing is the index pe ratio at a tad under 15, a level it did not reach even in 2002. But of course the “e” part of this ratio is rising spectacularly as company after company publishes very satisfactory earnings growth figures, so perhaps things are still OK for the moment. I would rate the market as a hold, with precious few buys around.
One of the more frustrating trades at present is the New Gold debentures that continue to be very efficiently priced at almost exactly their theoretical level of 1/100th of the rand price of gold. As the dollar price has soared to $450 and beyond, the rand has surged in sympathy, so that New Gold has done nothing but skulk around 2670cps level since it was issued! One day we gold bulls will reap our reward!
The tide will be out next Friday as I shall be in the Kruger Park for the week. Yes, it will be rather hot! Please remember not to try to contact me by email and call Paul Davis or Charmaine Marcia (011-325-4228) if you have a query about your account or wish to place an order. They do have my cellphone number if you need to contact me directly.
And now we are all leaving the office for a drink or two to wash down the prawns that are to be braaied by the master of seafood, Mr Davis himself. The excuse is that it’s getting close to Christmas, but I think that none of us want to be able to remember to switch on the TV tomorrow afternoon when the ‘bokke meet Scotland.
Have a great weekend also.
James Greener
26th November 2004
