The rand is now at a two month high versus all of the major currencies. Aside from neatly destroying just about every prediction about its future, this also is apparently the reason why I will not be able to write that the All Share index set another record today. Although of course, it did do so on Tuesday. Even The Star newspaper departed from its usual lurid stories of bloody violence to tell its few remaining readers that the 24 000 level had been broken. The figures of foreign transactions in the bond market allege that substantial net buying is taking place. If this is true, then this would be a good reason for the strengthening currency. The current (well, the last 2 days) fashion in the share market however, is that a strong rand equals a weak JSE market.
For a while, it seemed that investors decided that the sight of President Bush’s party getting a thumping was decidedly bearish and pressed the “sell” buttons. Now, after 24 hours, the world is quite used to the idea and the bull is back. Even though the Democrats’ victory was not a surprise, I have yet to read a commentator that can decide if the new political landscape will be a good thing or a bad thing for the US economy, the dollar and the markets. In the meantime, it is fun to see the president being nice to all his new “best friends’.
If there is a market story, it is the news filtering out of the inquest into banking charges. Certain witnesses it seems have been observed sobbing copiously into their handkerchiefs and allowing the unthinkable to escape their lips. People sitting close enough have heard them whisper that just perhaps some fees may have been a tad ambitious. Without making any promises, the tear-stained faces suggested that when they next meet their competitors under the motorway bridge at midnight, they might discuss this issue. As a result, the banks’ index did retreat a bit. But not by much. Perhaps investors have noticed the signs that suddenly the banks are finding short-term funding not quite as costly as it has been.
Aside from that, there was no real theme to the week except for yet more rather good company results. In particular the cement business is flying. Is there any suburb in the country that does not have heaps of building rubble and materials outside every third house in the street? Equally as numerous are the new listings that are coming to the market now. Close relatives of the sole owners of these soon-to-be-listed companies should be looking forward to well-stuffed Christmas stockings this year.
The Old Lady raised the UK base rate by 25 basis points to 5%. This move will not have gone unnoticed by our own Ou Vrou in Tshwane and they will be ordering fresh calculator batteries in time for the December meeting of the MPC. One immediate local spin off from the UK increase is the 4% increase in the annual dividend payment paid by the Investec sterling preference share.
The ‘bokke begin their northern hemisphere campaign at Lansdowne Road tomorrow, and I trust that it will all go according to plan. Although some of the lads do seem to have difficulty in remembering it for the full 80 minutes. Firstly, however, they will need to remember that they are not wearing green and gold for this match.
Have a great weekend.
James Greener
10th November 2006
