Now that’s an alarming idea. It seems that a portion of the crowd that turned out at the airport to jeer the spectacularly unsuccessful national soccer team, requested the Football Association President to allow them the opportunity “to sjambok a few”. Wisely, he declined, but I trust this will not set a precedent with disgruntled investors asking Mr Loubser of the JSE if they might have a few minutes in a quiet place with their stock broker and a large stick. And after today’s dreadful performance by the Proteas in Australia they should perhaps be thinking about padding up before emerging into the arrivals hall when they return.
Income seekers may have noticed that Standard Bank will next week list a Retail Deposit Note on the JSE. This novel instrument offers cash investors the opportunity to obtain an interest rate which will be slightly higher than normally available for “retail” amounts of money. Initially the first three month period will likely offer slightly better than 7%pa. Because it is new, there are some unanswered questions about trading costs and liquidity when it begins to trade. I have therefore not felt ready to prepare a write-up about the instrument, but I do have, on email, the glossies and the prospectus sent out by Standard Bank for those who would like to see them. Applications to participate in the initial offering need to be in early next week.
This was one of those weeks when we were treated to a quarter hour TV show hosted by Governor Mboweni. If only his producer would realise that there is just one sentence that holds any interest for everyone excepting a few gung-ho junior wannabe economists. Just tell us the decision in the opening line please (no change in this case, again as expected) and the rest of us can get on with over-reacting to the news. A similar scene was enacted in Washington when Sir Alan raised US rates by yet another quarter percent. Immediately thereafter he sank a cold beer and a warm sausage roll at his farewell party and tottered out the door of the Fed with his cardboard box of personal effects to begin his retirement. The very next day the Old Lady of Threadneedle Street asked if he would mind coming round to her place as she wanted to ask him a few things. What a guy, to be in such demand at his age.
Connoisseurs of market indicators will point to the fact that a local paper whose main headline is normally devoted to lurid and bloody crime reports, chose to tell its readers that the All Share index had broken through 20 000. This, they will tell you is akin to being given market tips in the lift by the cleaning staff. It is a sure sign, apparently, of the end of the bull market. The rest of us will have to wait and see. But think about this. If the market were to suffer as much as a 25% correction, the index would fall to around 15 000. This is still double its level it was at when the most recent leg of the bull market began in 2003 and still no lower than it was in June last year. Now that’s not comforting for new investors who have just entered the market, but for anyone who has steadily been compiling a portfolio over the years it’s certainly not a train smash. So keep a bit of liquidity and let’s wait for that buying opportunity shall we? And that’s another sign of the end of the bull phase. This old bear is getting soft.
James Greener
3rd February 2006
