For many months the JSE share market was stuck in a trading range and the list of factors that were being scrutinised for a sign of which way the breakout might go was getting longer. Frankly I think that we bears had the better and more compelling list. And so it has proved to be although it is quite uncertain what finally pushed matters past the tipping point. Personally I single out the US debt situation but right now it doesn’t matter. All those factors are still there and many of them will be exacerbated by the damage that the bear is doing to share markets around the world. It is not yet anywhere near the time to begin looking for bargains.
Undoubtedly all the usual “experts” like the central bankers, politicians and bureaucrats will soon be barging in and distributing other people’s money in yet another attempt to “fix” things. This fixing is really just about not letting capitalism and markets do their job of culling the weak and sick businesses and ideas and making space for fresh and novel ones. The problem is that in many economies the government and business are mutually dependant for survival and they both hang on long past their usefulness.
Here is SA this does not seem to be the case as there is a growing antagonism within the ruling political class towards the organisations and individuals who probably pay most of the tax. Lead by a so-called “youth league” the kleptocracy are raising their eyes from the tax to the income on which the tax is levied. The demand is for “economic freedom” which as far as I know they have not defined beyond the phrase “nationalisation without compensation”. The core principal, however, appears to be the acquisition of unearned income. Their point is indeed attractive and given just how hard it is to start and run a private enterprise where earnings exceed costs, their marches might attract support from everyone in the country not already dependant on the state for a living. Sustainability is obviously some else’s problem
The latest crop of company reports show a slight bias in favour of disappointing earnings often considerably lower than a year ago. Even MTN, the cell phone company, failed to reach double digit percentage growth. Some niches are doing better, however. The demise of Transnet as a reliable service has certainly helped the trucking industry, and the low profile unglamorous businesses that stock and supply the parts that keep the big machines running are OK for the moment too.
Finally here along side the Indian Ocean the Yellow Billed Kites have returned. For me they are the indicator of the start of summer and it has indeed warmed up considerably. If we have another cold winter like that down here next year I shall have to think about moving! Sutherland, I believe is a poor alternative. Thank goodness I never pursued my idea of a career in astronomy.
SAB are finding the Foster’s defence against their takeover bid as fierce as the Wallabies defence of their try line against the ‘bokke last week. Meanwhile the All Blacks are returning our favour of resting their stars for the test in PE tomorrow. Unfortunately not every ‘bok supporter will be clad in green and gold. In a huge triumph against crime and corruption the police have unearthed and impounded a large consignment of counterfeit ‘bok shirts. It’s hard to see why we should not be allowed to choose to buy them over the genuine article. After all many suggest that even the ‘bok coach is not the real thing. May I once again point out the unbeaten Lions at the top of the Currie Cup log?
James Greener
19th August 2011
