Perhaps the most important market developments this week were the slide in the rand and the surge in inflation. Other items like the third quarter GDP numbers, the abandonment of talks between telecoms players and the money supply figures have had some impact as well. But Governor Mboweni has told us repeatedly that he is particularly focussed on by the first two parameters. It is hard to imagine that he will not have all the ammunition he needs to increase interest rates next month. Even though the pundits point out that despite the earlier interest rate hikes, the GDP growth of 4.7%pa is still excellent, I am sure that money that is more expensive will have an effect on growth in due course.
The forbidden word “Recession” has begun to make its first appearances in US newspapers and I think that portfolios should be getting more defensive. This does not, however, mean buying shares in arms manufacturers despite the example set by our probable next president who allegedly has often used this type of business as a source of income. What I mean here is to search for shares with dependable income streams. Traditionally this means primarily the food, drink and drug industries where presumably their customers do not rely on credit.
Maybe it is also time to have a closer look at the falling yields being experienced by some of the property counters. The distributions from most of these shares are deemed taxable in the hands of the investor, which makes them no different from a three month cash deposit offering say 10% pa interest. And there is no danger of capital values sagging when the tenants decide they no longer can afford the rent.
The headline that [ex-head of the National Intelligence Agency] “Masetlha [was] not guilty of breaking the Intelligence Act.” made me pause for a moment. Do we now have laws about how clever government employees should be? Are state officials obliged to have an IQ above or possibly even below some hurdle rate? All very odd.
I am appalled by the idea that broadcasters have been squabbling about getting exclusive rights to record the proceedings at a political party conference. Is there a new genre of soporific TV on the way? The cooking channels already offer quite enough images of sticky fingers and stuffed turkeys.
If it were not so tragic, the news that it is now impossible to calculate the consumer price index in Zimbabwe would be very funny. With no goods on the shelves, there are no prices, no consumption and so no index. Inflation has become a meaningless concept. Down here south, of the Limpopo, however, it is mainly just the electricity supply that is noticeably erratic. There appear to be plenty of stocks of just about everything else. In particular, second hand cars are well offered. Showrooms and car lots are springing up everywhere. Soon there will be a battle between people looking for space to plant bio fuel crops and people needing to park cars that might one day need that fuel.
Tidemarks is washing up the beach early this week because I am going to the Kruger for a few days. Based on what has been happening to prices recently, not even a polar bear sighting in the park will be as surprising as what I have witnessed sitting here at my desk. Peregrine falcons don’t swoop as fast as the all share index has and spitting cobras don’t strike back as sharply. It will be very relaxing.
James Greener
29th November 2007
