Last week I jotted down the idea that one should be keeping a careful watch on the market. To the extent that this week the All Share index failed to set a new record high I was correct, otherwise, not much happened except the continuing threat that some volatility is imminent. At a level of 16, the overall average PE ratio is high but not terrifyingly so. This is another way of saying that a break-out on the upside is not impossible; but it will cause bears like me to get even more fretful and crabby.
The currency markets have been lurching about with the dollar showing some quite unexpected strength and the rand sagging back above the 7 per USD level. News that the Chinese currency is at its strongest ever versus the USD is probably also important.
Reporting season is hotting up and analysts are flitting from one company presentation to the next. Occasionally someone will ask the CEO a question but this is done mainly to delay and annoy the rival analysts who are eager to get closer to the waiting comestibles outside the auditorium. The poseurs will then grab just a bottle of water before bolting ostentatiously for the office to report to their clients. While some companies have been trying to inject a note of caution into their reports, the growth that they have been enjoying is still very strong. Wise analysts realise that in these bull market times they need do little more than dutifully regurgitate the wonderful numbers contained in the company handout and so can remain at the bar and buffet until asked to leave! Everyone is a buyer anyway.
People looking for a sign that the good times are going to end soon will note that new listings are coming to the JSE even more frequently than commuter railways are coming to Joburg. Compliance officers world-wide will be using the Gauteng provincial government as a case study on how to keep a secret and not allow inside information to leak ahead of a major announcement. The news is that some very kind gentlemen from Malaysia are going to spend R18bn of their own money to build a sorely needed monorail transport link between Joburg city centre and Soweto. A visibly excited politician proudly declared that peak-time trains would run every three minutes and that there will be 44kms of line servicing 39 stations. I estimate that this level of service will require almost 50 sets of carriages and locomotives. The price sounds like a bargain as does the two year completion date. Clearly, their planners see no problem with servitudes, rights of way, skills and materials shortages. Naturally, critics and sceptics have already appeared. A taxi industry chief has predicted violence if the new service causes his passengers to defect. Laughably the national Department of Transport has complained that they too were surprised by the announcement and want to see if it aligns with their national and local strategic transport plans. Their what? These are the chaps who have installed a computer system that has all but destroyed car registration and driver licensing.
It seems that the African Development Bank is starting to get suspicious that the main intention of the Chinese in increasing their presence is to exploit the continent’s minerals and not to address poverty. No! You think? Surely not.
The curtain-raiser game ahead of tomorrow’s final will be a demonstration by the management of SA Rugby that they have a very poor grasp of the off-side rule. They are a talentless mob who look pathetic when they strut about in their undeserved Green and Gold jackets.
Go Bulls.
James Greener
18th May 2007
