At last we are getting some useful rain here in Joburg. It was terribly dry and hot over the holiday period and those of us who wandered in to work found it difficult to keep alert. The market did jump around a lot but generally, it was on very slim volumes and so some of the prices recorded were probably not all that reliable. Popular market lore has it that the market usually surges in January as people return from the beach refreshed and optimistic. Allegedly, fund managers also begin to plan to invest the forthcoming year’s cash flows. This is a warm and comforting legend that like most “common knowledge” is gloriously unsupported by any evidence
The New Year has so far not been without interest, however, as both the gold price and the oil price have tested record highs. These moves seem to owe less to a declining US dollar than to actual demand for the commodities in the face of uncertainty and scarcity. The oil price often responds short-term quite sharply to data releases about the size of the US fuel stockpile. That this should go up and down from one day to the next does not surprise me at all, but it does appear to cause outbreaks of panic amongst owners of Hummers and other thirsty cars. Actually, I was a bit startled myself this week when my trip to the diesel pump resulted in the card being hit for an amount of more than R500 for the first time. I am entirely the wrong shape for a bicycle.
The outbreak of violence in Kenya is deeply distressing. Some commentators suggest that it is unavoidable that SA will feel fallout from this implosion of a continental neighbour. That is probably true, but there is always a range of factors in play, each of which will cause different reactions in every market player and so it is hard to isolate and identify which price move is due to which event. So far, I don’t think that I can yet detect any sign of an African sell-off.
The market is currently not even 10% off the all time high it achieved three months ago. While this has been unpleasant for a few buyers, it does not yet constitute either a proper bear market or even a good buying opportunity. Please just be patient.
Those of you in need of a more cultural way to find market protection could take note of the woman in Mpumalanga who has been taking handfuls of soil from the grounds of her local police station. It seems that her son has suffered from regular arrests at this time of year and scattering the sample in her own yard will protect him from further attention by the cops. Compared to its previous premises in Diagonal Street, the garden space outside the JSE is very limited, but one might be able to find a scoop of sand to sprinkle on the share portfolio.
Eskom have announced that a “summer of load shedding” is a certainty once the country gets back to work. This is not good news. I wonder if a truck load of their lush indoor horticultural display at Megawatt Park might protect this office from darkness and blank computer screens. This particular feature of life on the southern tip somehow makes me more bearish than usual.
Traffic volume and company announcements will begin to grow in volume from next week. I am looking forward to only one of these. As ever it is fascinating to see what is going on in the economy and who is managing best to take advantage of opportunity. I think that businesses that have customers who don’t need debt to finance their purchases will have a happier new year than others. And cricket teams that can take 20 wickets in a test match will also enjoy more support.
James Greener
4th January 2008
