There’s another long weekend coming up. Well yes, I know that the holiday is on Thursday only, but what self-respecting hard-working South African financial professional fails to add in the Friday and make a decent break out of it? It’s not as if the three days before that will be easy. On Wednesday the market will be holding one of those futures close-out events. When the previous one occurred in March, the all-share index peaked at levels not again reached in more than two months. Now we are again at record highs and one idly wonders if history will repeat itself. I can be sure, however, that turnover will be chunky and could well surge over R10bn. Exhausting.
Once again it is the currency sensitive sectors which are responsible for getting the bull all fired up, and this is despite the rand backing off from its recent weak points. All this talk of a “natural” level for the rand makes me wonder how such a level might be determined. Does the dollar price of commodities – especially gold and platinum – have an influence on determining that level? I am sure you have seen that the price of Krugerrands and that cute gold price proxy ETF called NewGold have made medium-term new highs in the last few days. Frankly I believe that the rand’s exchange rate with other currencies is one of the more reliable economic indicators that we can watch. Think of it as the country’s share price. It is set in a reasonably transparent and very liquid market with multiple participants. I also believe that for that reason it will be volatile and will rarely settle at any level for long whether or not that level is deemed “natural” or not. It is pleasing to think that the market has been sophisticated enough to shrug off the knowledge that we too now probably have a dodgy vice-president.
I wonder for how much longer are the telecoms companies going to manage to get away with such incredible profits? Both Telkom and MTN announced results this week and showed combined profits of over R16bn. That’s serious money. Enough to enable every one of us in SA to make more than 200 calls each, even at the current obviously exorbitant charges.
And in case you missed it, Governor Mboweni’s performance on Thursday included the announcement that there would be no change in interest rates for the present. Oddly, despite everyone professing that this was exactly what they expected, the equity market ticked down quite sharply after the news as if it had really been discounting a rate cut. Once again the Governor’s TV show was preceded by interviews with hapless pundits who had been persuaded to forecast its outcome. Not good viewing. I trust that the sport this weekend will be more exciting.
The confident predictions that the ‘bokke will hand a thrashing to the Uruguayans this weekend fills me with dread. Humility is not SA rugby’s strong suit. Have you been considering going along to the celebration dinner for the 10th anniversary of our world cup win? At two grand a head I am surprised that the organisers need to assure guests that they will receive a 5 star dinner on a plate!
James Greener
10th June 2005
