Our internet connection went on the blink this afternoon just as I was about to press the SEND button on this edition of Tidemarks. The news from Telkom was grave. Technicians, they said, were being dispatched. I had visions of encampments of those candy-striped shelters being erected over manholes around the suburb and the blow torches being pressed into service as water heaters for the coffee. Chunky men in corporate t-shirts sitting on low stools with large blue handsets pressed to their ears. Black leather tool boxes snapped open and small cardboard note pads snapped shut. Our communication with the outside world depended on these guys. On a Friday afternoon. It looked bleak. But then, as you can see, we suddenly rejoined the globe, caught up with the markets and completed this letter.
There are half a dozen theories as to why the market at its worst point gave up almost 5% of its value this week. The word from the big institutional brokers is that there has been considerable foreign selling. These wicked overseas sellers are always a favourite bogey man and there is a little evidence to support this. The full picture provided by the JSE data will become clear only next week. Another favourite is that there is a “huge structured deal being done”. Usually this explanation is offered to the dealing room with lowered eyelids and knowing nods after a long whispered phone call. Screen watchers claim to be able to spot the “waves of stock” surging across the ticker.
Other more prosaic reasons may be found in the opinion that there has been a quite sudden turnaround in consumer sentiment and the main story in Biz Day this morning ran with this theme and gloomy quotes from some tame bears. This kind of thing can quite easily spook local sellers who almost all will have substantial book profits that they suddenly feel like banking. That petrol price is really starting to make its presence felt in the pocket of almost everyone who doesn’t walk to work.
I have no idea if this is the beginning of my long awaited decent sized correction. So far, the pull back has not yet erased even a fortnight of the All Share’s gain, although there have been some spectacular falls in certain shares, particularly Sasol and BHP Billiton. I think we shall need to be very vigilant next week to see if this action is either going to continue or whether we are just being offered a buying opportunity.
All this excitement in the market has quite diverted my attention from preparing my proposal for a Competitiveness Action Plan for the Local Competitiveness Fund of the Kwazulu-Natal Local Economic Development Support Programme. I have picked on this particular flock of tax-consumers before. There seems to be no end to their optimism that bureaucrats can make people’s lives better by spending their money for them. They are unlikely to accept my proposal for their Plan. It is short, cheap (free in fact) and contains suggestions like: resign, get real jobs and give the money back and come out here and see what actual competition is all about.
I am afraid I can’t get enthusiastic about this cricket series of Australia versus the rest of the world. As well as being uninteresting it also increases the chance of injury for players whose skills and fitness we are so sorely going to need later in the season.
May it rain on us this weekend.
James Greener
7th October 2005
