Although the holidays are drawing to a close, it seems that most people’s interest in the markets is about equalled by their excitement about the forthcoming local government elections. That is – nil. The JSE welcomed us back with a whole new classification system for shares and indices. This does not appear to have got off a great star. But I suppose that in time we will be used to seeing Anglo being lumped into the same sub-sector (general mining) as Kumba and Scharrig Mining. And is it a sign of the times that the JSE has just three listed food retailers but five home improvement retailers, and a dozen apparel retailers?
The first headline of the 2006 in Biz Day declared that the “Rand (is) set to be king of currencies this year”. This is a fine illustration of the new year excitement that infects market wizards still under the influence of the sparkling grape juice. In fact the year started pretty well for the market with the all share index (if it is still called that) getting within a whisker of 18 500. But it was not such a happy new year for King Sigcau of the Xhosas, who died at the age of 79. This is doubtless a sad occasion for his family and subjects but it provided an opportunity for a politician to begin his own year with the foolish statement that “more needed to be done to improve the medical care of traditional leaders.” We all of us would be pleased if medical care improved for the everyone in the nation, but some of us are certain that this will never happen while the state is responsible for it.
I rather fear that the markets will also see more interference this year from people who think they can price and allocate resources much more effectively than can a willing buyer and a willing seller – not forgetting the eager broker. Two fine examples of poorly used funds came to light this week when a body that would appear to be failing in its task of running an HIV prevention campaign and the National Youth Commission (no, I don’t know what they do either) both seem to have run into money troubles. Unlike listed companies, they cant blame the newly implemented International Financial Standards for their mess.
Neither (yet) can Gautrain use that excuse, The project (pork barrel?) was reported this week to be “grinding on” with financial talks. One hot topic at these talks is expected to be “private-sector contributions to the project”. I’ll bet. While there are legions of folks keen to show us how to build a railway set for just R20bn, the queue to provide the cash is much shorter. Taxpayers, whose representatives believe that we are unconcerned with trivialities like “return on capital”, are advised to hide their wallets as we are doubtless to be nominated the financiers of last resort.
I expect that it will all get a lot busier next week and I may even have to come in to the office a bit earlier so as to avoid some traffic. But that will be fine if it means that turnover picks up. It is difficult to see where anything is going if it doesn’t move much. This early in the year however, we are already getting exciting signals from gold and the rand. Both are strong with the numbers in the first case going up (to $550?) and in the second case going down (to below R6/$?). Lets hope that there will be no “sporting” declaration here.
James Greener
6th January 2006.
