It has been another one of those weeks when the black cloud of disappointment has blown in. It seemed as if everyone had a story of violent criminal events that had occurred close to themselves or someone they cared about. Exacerbating my fear and despair is the feeling I have that those who should be doing something about this are unconcerned that the folk of this country are being overwhelmed by lawlessness. At times, the official indifference verges on hostility as if it is the victim’s fault.
I think that some of the sudden severe collapse in the value of the currency is the result of people both local and offshore deciding that it is time for their money to depart the southern tip where the financial news of the region has deteriorated quite alarmingly recently. In addition to warding off the unofficial felons, businesses in SA are being assailed by regulators and legislators of every stripe. One of the newest targets in the crosshairs of the do-gooders are the pension funds who are supposed to have done their members ill when they indulged in the suddenly reprehensible yet legal practice of “bulking”. Just how the fund’s members and beneficiaries will benefit from having massive fines imposed on the fund has not been explained.
One example of the nonsense that these bureaucrats can dream up appears from time to time in this business when a corporate announcement appears with the stern and capitalised admonishment that the document is not to be published or distributed in a list of certain countries. Someone has decided that the investors in those places are of a far too delicate disposition to be able to cope with the news in the announcement. The irony is that theses items are distributed electronically – precisely the perfect medium for instantaneous and global dissemination. A similar idiocy can be found on the JSE’s own website where their much touted SENS news service appears with a five minute delay! SENS was created to ensure that all investors could get potentially market-moving company announcements simultaneously. Now it seems that only those who subscribe to one of the commercial news distribution services can be so privileged. But anyone without an internet hook-up will need to wait for the morning newspaper to learn that the CEO of their favourite company has fled with the petty cash and his secretary.
Mind you, being close to the news flows and price feeds is not necessarily a boon. We have seen even more of the extreme see-sawing activity in he markets this week when almost every day provided a daily range for the all share index in excess of 500 points. In these times short-term traders are exciting but difficult people to share a trading-room with. Yet anyone looking at the daily closing levels will have seen quite modest moves of less than 2% and felt that the market was consolidating and firming a tad. This data also fails to reveal the great difference between the resources shares that have surged mightily in the wake of the weak rand and the banking sector which has swooned on the same news. Retailers have also had a bad time, which was not helped when the central bank released discouraging news about our current account deficit. The chief central banker fanned the flames during a parliamentary address with mutterings of further rate hikes.
It is all turning nasty remarkably quickly.
James Greener
23rd June 2006
