The largest ever container ship to visit our ports glided past my window a few minutes ago and into Durban harbour. From what I could see it was pretty much empty and the news is that she will sail on Monday after loading 7000 containers destined for foreign parts. Well that’s a nice sign. Exports greater than imports, but that does mean more upward pressure on the rand which seems to worry lots of people.
Federal Reserve Governor Bernanke in Washington also caused a great deal of worry in some parts of the world by confirming that he has ordered the printing presses to roll off $600bn worth of crisp new paper money. This, he will lend to the US government who have decided that they will do the spending that their citizens have very annoyingly declined to do ever since they lost their jobs and the value of their homes collapsed. Although, as some commentators have pointed out, $600bn these days is not really such a large sum of money, (really?!) it has to go somewhere and maybe a good chunk of it will flow into the stock market. Therefore we have seen some hefty buying on Wall Street as speculators fill up with shares so as to have something to sell at much higher prices when the fresh money arrives. And then of course with more US dollars in the world that means that fewer units of everyone else’s money are needed to buy a dollar which is another way of saying their currencies strengthen. So here we go around again!
Soon after entering the stock broking world I received an unforgettable lecture from my mentor and boss all about the various rands that existed. In particular it was important to know about the financial rand – now sadly deceased, it was great source of broker’s revenue – and the blocked rand, which Minister Gordhan seems to have just killed off as well. As the years passed fewer people in the industry knew about the blocked rand and what you were not supposed to do with it. Being a great believer in human ingenuity and self-interest I was never convinced that the total sum of blocked rands languishing here in SA was as large and threatening as some calculations suggested. I was sure that leakage was rife and that most emigrants had long since found ways to get their money to join them in Perth or Toronto. Our quaint triple currency is now just a topic for some eager researcher to turn into a thesis.
I am appalled by the news that the JSE has effectively created a mini-board where investors of only a certain racial classification will trade shares that are similarly classified. Even if the listed companies feel compelled to go along with government’s terrible and wealth-destroying program of resource allocation by race, the bourse ought to be at the forefront of insisting that shareholders are equal.
The huge penalty slapped on Pioneer Foods for allegedly colluding to set the price of bread is very alarming. They must have really annoyed someone’s relative. For starters, doesn’t it take at least two to collude so why not treat all parties equally? Next, the fine extends far beyond a simple cash payment to the state. The company must pay a sum into an “Agro-processing Competitiveness Fund” which will quickly be plundered if only because no one has any idea what that means. The authorities have also told the company how to run its business in the next few years so that the punishment will be long lasting. They are delighted to show off with terms and concepts like “capital expenditure” and “margins” – clearly in the belief that the bread and milling markets can be controlled by edict. The company’s eagerness to settle and get the matter behind them is understandable and the share price seems certain that the company intends quickly to move on.
The Sharks may have won their last Currie Cup at Kings Park. Now the boss of SA rugby has turned engineer and declared the stadium to be deteriorating. This is merely code for “the owners of the unused soccer stadium next door have a problem.”
James Greener
Guy Fawkes Day 2010
