There have been a number of crises in the markets and in due course each one is given a catchy name such as “emerging market crisis” or “Asian tiger crisis”. Apparently, we are in danger of sliding into something that may become known as the “Icelandic crisis”. Aside from allegedly being home to energetic geology, important drinking, breathtaking women and legendary fishing, some of us are surprised to learn that they have a currency and a stock market and that both are in difficulties. The island’s stories are moving from the Discovery Channel to CNBC.
South African cricket, on the other hand is in danger of appearing on the Cartoon Network.
Against the background of the news that the trades unions are unhappy with the idea of a luxury metro train service linking the airport to Joburg and Pretoria, came the headline that thousands of minibus taxis are about to be scrapped. No one has explained how the largest groups of commuters are expected to get to work. I am certainly not bullish at the prospect of having fleets of 18-seater busses flitting through the traffic.
The All Share index is piling on the points and is within striking distance of 21 000. I have no idea when this bull market will end. All my previous attempts to call it have ended up with my face covered in omelette.
Last year the government spent R407bn. This money came of course from you and me, either in the form of taxes, duties, imposts or loans. For the same period, the nation’s Gross Domestic Product was R1 523bn. Divide the first number by the second and you get 27% as the state’s share of GDP. That’s the highest it has been this century and in my view, way too much.
Good news of a kind can be found in the fact that for the fiscal year just ended, it looks as if government spending will be matched by its income. In other words, no deficit! So in theory they should not have any need to borrow money so then the price of money, i.e. interest rates, ought to go down rather than up. This is another reason why many of us are puzzled by the Reserve Bank’s stated intention to hike interest rates soon.
But as all we market players know, it is pretty well impossible consistently to predict accurately the future levels of any price or statistic. Who, for example, believed that the rand could go better than 6 to the USD in 2006? I forecast a rush by locals to the travel agents to book up overseas holidays at all-time low prices. The other side of that coin is that all those game lodges and resorts will be whistling for foreign tourists and there might be some bargains on offer. This means that the main concern this year would seem to be planning and taking holidays and staying away from the office as much as possible.
And that’s sort of why this week’s Tidemarks is a bit early. I am going away. Again. This time I shall be wearing a suit and another one of those silly grins as I attend my daughter’s graduation with an Honours degree. I forecast celebration.
That’s one call that should be correct.
James Greener
5th April 2006
