I thought that this week would effectively consist of just three working days. I was wrong. It has been so quiet (although volumes aren’t all that low) that time has dragged and it has felt much longer. Excruciatingly slowly the All Share index has inched up above 20 000 again and today has even breached the all time high set early in February. So that’s another bear sighting shot to pieces. All you can see and hear are horns and hooves clattering through the market. Already the month has delivered more than a 5% return with the financial sector doing most of the heavy lifting. The weaker rand has failed to excite any of the usual suspects among the so-called “rand hedges”. MTN, the cell phone company and the JSE’s 10th biggest by market capitalisation, set a few hearts a ‘flutter with the release of its results and hints that corporate action of some sort could be forthcoming. With both debt and equity relatively cheap at the moment, it is hardly surprising that predation is such a popular sport. About five dozen shares on the boards are currently sporting cautionary notices. Even if investors are battling to find shares to buy, the corporate raiders appear to be hard at work.
A local morning newspaper is promising that in May it will feature “Bond Traders” in one of its occasional surveys. Purveyors of everything that is expensive, exotic, ostentatious, pretentious and tasteless are already clamouring for advertising space in that survey. Anxious for a sight of themselves in print, bond traders will be keen readers of that edition. In one of my previous lives, I masqueraded as a bond trader. I more or less mastered the bit about buying high and selling low. However, I never donned any yellow braces, nor did I appreciate the worth of mis-priced options and I definitely never acquired a low and speedy vehicle. I eventually withdrew from the floor and assumed the pose of a bond analyst – a species that will never merit a Business Day Survey of their own. Just a Reserve Bank Bulletin and a calculator that handled compound interest were our requirements.
I see that another exchange traded fund (ETF) is coming to the JSE. This will be a Satrix product, that will track the Resources 20 index (RESI20). It will join the well-seasoned Satrix 40 that mimics the Top 40 index and the Satrix Indi 25 and Satrix Fini 15 that follow their own specific sector indices. The new offering will compete with the existing NewRand ETF that holds a portfolio of the shares that are sensitive to the exchange rate – many of which are of course resource shares. I am a great believer in and supporter of these ETFs. I appreciate their low dealing costs when compared to traditional Unit Trusts and I enjoy the way that they usually outperform any conservatively selected portfolio in a bull market. However, I am anxious about their proliferation and note that the liquidity of the more specific ones is not wonderful. Once there are too many of them, the problem of selection soon begins to rival that of choosing individual shares anyway! My favourites therefore remain Satrix 40 and NewGold – the very efficient rand gold price tracker.
At least the clutch of medals our athletes are carting home from Melbourne may rattle together loudly enough to drown out the sound of Shane Warne flapping his jaws and getting the Proteas all over-heated and distracted.
James Greener
24th March 2006
