Tomorrow the Earth passes through an equinox when we will be half way between the shortest and the longest day. For the JSE, however, the longest day ever occurred yesterday when it processed a record massive R19.8bn worth of turnover. This was caused of course by the September closeout event. At one stage almost R100 million’s worth of deals were going through the exchange every minute. That’s huge. Also huge is the bull that has been stampeding through the equity market, taking the All Share index to just 1.5% of its all time high.
This beast has, I think, been stung into action by the equally large bear that has been tearing our poor currency to shreds. So far this month the rand has fallen more than 6% against all the major money units. There are probably quite a few reasons for this dreadful sight and they will include the falling commodity prices; the intemperate remarks from the trade unions’ conference about how they would run the economy; the re-appearance from legal limbo of a man who is keen to be the next president and some more disappointing economic numbers.
Another disappointment was felt by some of the more adventurous investors who have been enjoying the Over The Counter (OTC) market in unlisted shares. This is not a market that is used by novice or uninformed folk, but nevertheless the regulators waded in to close it down, waving platitudes about investor protection. Certainly the settlement procedures are primitive, with actual cheques and certificates changing hands and no big brother with deep pockets promising to step in if something goes awry. However, many of the companies that trade OTC have businesses that are far less risky and much more transparent than some of the gems that appear on the JSE boards. Where was nanny when investors in the JSE-listed JCI group companies went all wobbly?
Then there is another politician telling us all very gravely that it is “difficult to predict the economy on a day to day basis”. Really? And what is her record on any other time scale? About the same as mine, I’ll bet. Unimpressive. Consider that the current dire and deteriorating measures of the health of the US economy were not widely predicted by any of last year’s forecasters.
Today’s discussions are suddenly all about hard versus soft landings. This has nothing to do with the space shuttle, which fortunately enjoyed a soft one, particularly after the scare that bits might have fallen off it and were drifting about in space. What a hard landing economy will look like I have no idea, but apparently, there are a few hedge fund managers who could get the conversation started, having very swiftly just lost several billion dollars in bets on the price of gas. However, even this has failed to worry the Wall Street punters. That market is surging ahead, as the Fed quietly left interest rates unchanged. Our own Governor is more exuberant and has been doing plenty of talking and finger-pointing at various gatherings in recent days. So far, however, he has failed to fulfil my forecast of an unscheduled rate rise.
It is a long weekend here in SA and I am going fishing. I forecast many large fish coming to the net and several bottles opened. Soft landings all round.
James Greener
22nd September 2006
