It must be like travelling to the Himalayas for the first time. Everywhere you look you see a new high. It must be simply lovely up there and you begin to have grave doubts about the sherpa who told you that it was much too dangerous to join the ascent party. It would be far safer, he said, to sit tight here at base camp and watch the whole thing through binoculars. Safe yes, but very unexciting.
The JSE All Share index looks as if it could record a 10% gain in May, but then of course we have about the same figure for the year-to-date as well. Remember that at the end of April we were back to where we had started in January and we had no inkling of the cliff face ahead.
The heavy lifting on this month’s expedition has been done by the rand hedge stocks which have been gleefully dancing to the increasingly fainter tune from the rand. Its rather dramatic weakness must be very gratifying for the assorted trade unionists, textile manufacturers and miners who have been calling for someone to do something. Just who has done what, we can’t be sure. But our currency has so far this year declined 7% against the Swiss Franc and more than double that versus the US dollar. I think that might be quite far enough for the moment please.
Like most US economic parameters, the greenback’s strength has defied predictions. Dollar bears are now bleating that a surprise result in the French referendum on Monday will change everything. Maybe even an expected result will also have undreamt of consequences. It may take a while for the euro to regain its potential reputation as a world-beating currency unit.
In a straw poll taken amongst my colleagues this week, the overwhelming view was that the rand will never again get below 6 to the USD, and that 7 will be the next big figure. That sort of seems right to me too, but I can’t help noticing that our long bond yields are now almost 450 basis points higher than the US ones. This is up from a low of 325 basis points and might just entice some foreign buying from investors seeking yield.
Uncertainty about the name of the places we live in is also adding to our stress levels. Recently the President himself berated Grahamstown for using an unsuitable handle. The President believes that Colonel Graham was a pretty bloodthirsty and unsavoury character and quite the wrong person to name a major seat of learning after. Last weekend’s explorations introduced me to a map filled with unfamiliar Ms and Zs and way too many vowels and I am now quite downhearted to think I might soon be unable to pronounce my home town too. I wonder what sort of fellow this Chief Tshwane was. Peaceable and benevolent, no doubt.
However, if there’s one thing we can be sure of, it’s that just before the test season begins there will be a bust-up in the ranks of those who claim to run SA rugby. What a sorry mess. And the idea that anyone in government can improve matters is utterly terrifying.
James Greener
27th May 2005
