“Exchange controls may be lifted” says the headline. I wonder who really cares anymore. Supposedly, without controls, cash will stream out of the country and the currency will crash. Somehow I doubt it. Whether there are restrictions or not, if the government does anything silly, the money finds a way to flee. And I wonder if there is currently very much appetite for overseas investment beyond what is already legally there. As long as we can dig stuff out of the ground to sell to people who are desperate for it, our rand will likely remain a sturdy little fellow.
But what about all the “blocked rands” left behind by the emigrants over the years? Some estimates suggest that there could be as many as R20bn of them. I’m not so sure. While I have no wish to impugn the integrity and administration procedures of the banks, I have to say that not many people these days have any idea what a blocked rand is and what you can and can not do with it. I am pretty sure that one way or another plenty of these “blockies” have leaked away or been legitimately moved or used up with holidays to the Kruger and Plett. There are many aspects of exchange control that baffle the finest financial minds. Just try to get someone to provide exchange control approval for a Trust to buy an “Inward Listed Security” – like Itrix.
Less sturdy were the spirits of people trying to read and trade the share market this week (or the bit of it that has passed so far). Although most local financial data and results released this week have ranged from excellent to OK, share prices took their cue from overseas markets and swooped and soared like a peregrine falcon on drugs. It is possible that the all share index will set both the year’s high and the year’s low in the same week.
These unpredictable wild gyrations are one good reason why this letter does not commit itself to recommendations of what to buy and sell. Another is that once the page had been filled with dozens of lines of the required disclaimers, there would be no space left for anything else.
I would not, for example, be able to share with you the thoughts from a friend about the perks tax payable by a on a R750 000 benefit received by using an air force plane for a mid-eastern shopping trip. This looks like an excellent topic to cover when you compile your “Tips for Trevor” email. My own suggestions will run more along the lines of “please take me off your mailing list”. Nor would there be space to invite you to consider just why a dismissed vice-president would be termed a “key dignitary” at the opening of parliament. Dignity is not the word that comes to mind.
But now what comes to mind is a short break down at St. Lucia where, if the fish don’t bite, I’ll fly my kites. And see what I can do about SAB Miller’s complaint regarding low beer consumption because of a cool summer.
Keep good care of the markets for me please. Keep an especially close eye on the 10 year US bond. I think it will be the first harbinger of trouble.
James Greener
19th January 2006.
