Friday, 20 June 2008


The precise moment of midwinter occurs tonight in the wee hours. For me this is always a very important moment and I delight in the thought that the hours of daylight will now start to increase and summer is on the way. On the other side of the equator the position is reversed and perhaps this explains the huge bear activity as they prowl the markets fattening up for hibernation. There are, I think, no true southern hemisphere bears. Except for me, of course.
No one can deny that the JSE is also in a bear market. The market index that excludes the mining and resources shares has lost almost 10% in just over a month. Another move like this and it will be threatening to break below the lows it attained in January. The All Share index, which is heavily influenced by the heavy hitters in the mining sectors is down a comparable 7% or so in the last few weeks but the difference is that the January lows in this index are still a long way down. Anyone glancing at this chart might think that is has not been too bad on the JSE and begins to wonder why their portfolio does not echo this observation. The simple reason is that most prudent portfolios do not have the index weighting in these big gorilla shares. This is one of those times when I remind myself that attempts to categorise and average shares and prices in the stock market is not always useful. Sometimes the behaviour of the mavericks overshadows the index.
The message that the price of oil is terrifyingly high and that it will impact every corner of everyone’s life is now sinking in fast. There is a growing acceptance that fuel prices will not fall anytime soon and people are beginning to try and work out what changes are going to happen to the economic landscape. Even mainstream newspapers are carrying articles about people altering their spending patterns. It seems unreasonable to expect that almost any company will be immune to these seismic shifts and the trick of course is to decide which ones, if any, are likely to be beneficiaries. Low end food stores might well see increased traffic. They would be advised to dim the lights to decrease the possibility that you are recognised in the aisles by your friends. I wonder how the luxury car market is really doing at the moment? There are certainly plenty of pre-owned models on offer. And office talk often dwells on housing price horror stories (for sellers that is).
So the electricity price negotiations between Eskom and the unfortunately named Nersa have come to an end. I suppose that third significant figure in the percentage increase was tacked on to try and fool consumers into believing that the bargaining was so tough that even a half percent was fought for. Almost the first response from Eskom has been to reassure the country that not all the extra loot will be funnelled into executive bonuses. Some of us are sceptical about this. We are also unimpressed by the seemingly never ending squabbles that are being fought both at the national broadcaster and in the ranks of the judiciary. In both cases what we the public want is for these matters to be dealt with speedily and cheaply in a way that leaves both institutions more fit to carry out the tasks we have assigned them. Their internal disputes are boring.
Almost as boring as the lists of excuses that are offered as to why this nation of almost 50 million can not find 11 men capable of putting a large ball in the back of a net on a regular basis. I am looking forward to the clash of the previous and current ‘bok coaches at Newlands tomorrow.
James Greener
20th June 2008