There is almost as much nonsense being written about tomorrow’s triple seven date as there is about the market. My view is that it is merely one of the few occasions when we agree with the USA on how to write it down. In years to come people on this side of the Atlantic will wonder what happened in New York on the 9th November. One day too there be a time when we look back at the time that the big bear market of 2007 or 2008 or ? began and recognise with perfect clarity the warning signs. Right now, of course, every possible warning sign has turned out to be wrong. Interest rate hikes, declining confidence, imploding housing markets, messy wars, strikes and snow on the highveld have all failed to stop the buying. The All Share has not quite yet returned to its habit of setting record highs each week, but the June scare seems to have gone away. Even the rand has been lurking below 7 to the USD which might indicate that overseas buyers are returning.
The market is also the scene of several large corporate actions that are sewing dismay and confusion among shareholders as the prices of old favourites seem to drop suddenly. In most cases, what has happened is that the holding has spawned shares in a newly listed company. Although these are commonly recognised as unbundling transactions, the investment advisors are scoring points and big fees by dreaming up all sorts of different names to describe the events. Adding to the mess is the fact that the registration system fails to allocate shareholders the new shares immediately they are created and so portfolios seem to be out of balance. I wonder if this rash of disposal of so-called “non-core” assets to shareholders is a sign that the directors feel that now is a good time to pass them on because the future as they see it is not so rosy.
The SABC, Telkom and the government are spending public money to encourage us all to vote for Timbuktu as the sole African site to be one of the seven wonders of the world. I have no view on the appropriateness of this candidate but suggest that there are other amazing things on this continent that deserve nomination. Like SA’s crime statistics, or Zimbabwe’s inflation, or Nigeria’s fuel shortage or even the Gautrain.
Last week’s letter brought the greatest response that I have ever enjoyed. I was very touched to see how many people were concerned that I am joining the flow of refugees leaving Joburg. I assure everyone that there will be phones and computers where I am going and that provided people don’t mind dialling a different number and using a new email address it is my intention to carry on my client friendships and relationships unchanged. For some of you the trip to visit me will be a bit more onerous and the view from the office will be different. For a large number of reasons I don’t think the move will take place until early next year, so we all have lots of time to see how things might work out.
The first weekend in July is always packed with sporting event to supervise from the armchair. The only certainties are that the opening stage of the Tour de France will be won by a man on a bicycle, the Durban July will be won by a horse and that both winners will be tested for suspicious substances. I guess that rain at Wimbledon and Silverstone is a good bet too. But most importantly, it would be especially gratifying if the ‘bokke give the Wallabies a hiding, after all the nasty things they have said about us.
James Greener
6th July 2007
