Even a small dealing room such as ours is packed with screens that deliver a non-stop flood of numbers, charts, pictures and stories. And when your eyes are tired you can turn up the sound on the TV and bathe your ears in a ceaseless wave of waffle punctuated with deeply irritating melody bites. Everyone has an opinion or a view or an interpretation of what these measurements of past events mean for the future. Some of us even hope that the numbers are sufficiently accurate or robust that they will withstand further manipulation. We slave over hot computers and confidently extract trends and talking points.
This week has delivered a deluge of digits to dissect. The most interesting and probably frightening were the SA inflation results which were much worse than everyone had expected. Bearing in mind that this environment of rapidly rising prices has already developed in the face of several interest rate hikes, I wonder why we are so certain that the Reserve Bank will give the lever a solid tug upwards on Thursday. Why do we think that an increase in the cost of money will stop the increase in the cost of food or petrol or medicine or civil servants?
I enjoy the quarterly publication of the GDP numbers. There are dozens of fresh figures and reams of revisions of past data. I spend many happy hours loading them into the database and pressing the buttons that set the programs running. This week’s result reveals that in January to March of this year (yes – that long ago) our economy grew at a rather disappointing rate of 4.7%. The theory states that only when the GDP growth rate exceeds the population growth rate do we all get richer. I would guess that this ‘aint happening yet.
Almost a quarter of the 4.7% was provided by the economic sector labelled “finance, real estate and business services”. This is also the largest sector and comprises almost 20% of the economy. Naturally, the headlines were grabbed by the “construction” sector which continued its winning streak and scored 20% plus growth all on its own. (No wonder the average pe ratio of the JSE sector with the same name is very close to 30!). However, it remains a small contributor to the economy and added not even 0.7% to the 4.7% number. The most important result in my opinion is that the mining sector’s contribution was an appalling negative 0.5%. I don’t believe that it is a coincidence that this is the sector that would appear to have suffered the greatest amount of government interference in recent years. According to these figures the mining sector is now just 6% of the economy but still it should be adding to the country’s growth not dragging it down.
The market has seen a huge tussle between people who seem intent on doing some of that dragging down and those who have fresh batteries in the cattle prod that they keep jabbing into the bull. There were 8 days in May when the daily range of the all share index was greater than 400 points. This is character-building stuff. Suddenly we are all looking eastwards for our cue and the Shanghai index is on everyone’s watch list. I wonder when the JSE is going to suggest that they should open the market at 5 am to get some trading time overlap. This would be an unpopular move with people like me and I would remind them that they seem to be having great difficulties in getting their system to operate for the present market hours without adding anymore.
“And after Bloemfontein, gentlemen of the English touring party, we would like to introduce you to Loftus. Have a nice day.”
James Greener
1st June 2007
