I am very heartened by what I saw described as “the worst possible German election result”. That fact that no one has emerged as a clear winner is excellent. The voters have shown that they don’t care who runs the country and actually prefer it if no one does. It means that the politicians will all be so busy squabbling about who has power that no one will be able to exercise any, and the population will be able to get on with living without interference. Add this development to the news that Germany does seem to be slowly clawing its way out of the economic morass brought on by unification, and you wonder if there might not be an interesting investment story developing there. Keep an eye on the JSE’s new Itrix fund based on a European share index.
One of the best performing securities in the last few months is the JSE (Pty) Ltd unlisted share that has trebled in price since its appearance in July. Those who have long been involved with the exchange and its services failed to realise what sense it makes to buy into a monopoly. (This is the same reason so few of us bought Telkom.) Turnover in the equities market has recently been regularly exceeding R9bn per day; numbers previously seen only at close-out events. The JSE must be making plenty of cash. I wonder if they are contemplating a dividend.
But to return to that trading volume. Some really big trades have been going through the market. Some evidence points to fairly large foreign selling – particularly in the bond market. This means that local buying is eagerly absorbing the stock as prices have certainly not been plunging. Neither has the rand. The experienced amongst us feel we can smell big changes a-coming. But maybe it’s just the long awaited rains that we so badly need.
Mind you, my bearish nature was cheered by the front page report of a portfolio manager seeking to reassure investors that small cap shares “will not take (a) dive again.” Such public confidence has a terrible way of biting back. Just ask me – writing this note every week.
I have received a kind invitation from the South African Post Office to attend a Corporate Breakfast, during which their 2004/5 financial results will be presented. This can mean only that the results are likely to be a whole lot better than their ability to deliver a letter. The puzzling bit is that the invitation carries a large colour sketch of a Krugerrand falling to the bottom of a wineglass filled with sparkling water. The significance of the image eludes me but presumably this promise of largesse is what elevates the meal to “corporate” status.
The woes brought by Hurricane Katrina failed to soften Sir Alan’s heart and he cranked US interest rates up another notch. With the even stronger Rita now bearing down on President George’s own state, the folks in the USA must be starting to worry about who they have offended to be getting into all this trouble.
This edition of Tidemarks is going out a day early because the public holiday, rather inconsiderately, is not.
James Greener
22nd September 2005 (The Vernal Equinox)
