I suppose that by this time next week we will have shut the doors and wandered off in search of Christmas cheer and some last minute panic buying. Of presents that is, not shares. Anyway, it is pretty difficult to find shares to buy when the index is once again probing record highs. Unless Armageddon hits in the next few days, the All Share index is going to deliver a total return for the year of almost 40%. Not as good as last year’s 47%, but still strirring stuff. This will be the fourth year in a row of such excellent performance from the JSE. It is the sort market that makes us all look like investment experts.
Another area of my expertise is the punching of calculator buttons. So I flexed the digits when I saw that the National Treasury plans to spend not a penny more than R15.1bn on hosting the soccer world cup. This parsimony appears laudable if unlikely. However, if the format is similar to this year’s tournament, we can expect to welcome 32 teams playing between them, 64 games. The taxpayer’s largesse therefore, works out at spending almost R40m per player who is coming here to boot a ball. Or, put another way, we shall be paying around R2.5m per minute of soccer played. Neither of these figures appears to me to be a great bargain.
But I am just an old curmudgeon who is wondering how the business folk of Rosebank are coping with the morass that their precinct has become, now that the digging for the Gautrain has begun in earnest. I still don’t recall seeing which selfless public body committed their ratepayers to guaranteeing that the contractors will get their bills settled, but there needs to be some significant value delivered for all the expenditure and inconvenience we are suffering.
We are at that time of year when bold and foolish analysts succumb to flattery and offer predictions of what the markets have in store. These flights of fancy can do no harm and often generate amusement, particularly when another pundit vehemently rejects the first and supplies his own guess. Such a case unfolded this week when no less an authority than the World Bank (those lenders of last resort to the basket cases of the world) suggested that next year SA would achieve GDP growth of no more than 3.6%. I think this may be rather pessimistic, but if that is all we achieve as we get fully underway with the aforementioned preparations for the footballers, then the share market is going to get messy.
As expected, the US held short term interest rates steady and this put more downward pressure on the US dollar. Our own humble rand improved to better than 7 per USD and the main reaction has been a ratchetting up of the shopping frenzy to gather imported gizmos. By contrast, it will probably be very quiet next Thursday when a particularly late in the year futures close-out event will happen. Many practitioners of this arcane trade will by then be clutching a cool beverage at the braai on the beach and the only close out to worry them will be when the bottle stores shut. Which brings us back to the panic buying story.
I trust that many of you too will be somewhere pleasant and peaceful and friendly by then. Have a great weekend. Do you remember when we called it Dingaan’s Day?
James Greener
15th December 2006
