Suddenly it is all looking very messy. In a couple of days the All Share is down almost 10% and is back to where it was a year ago. The news wires and pundits are crackling with excitement and urging people to buy at these wonderful levels. But I am not so keen and think that the bear has a lot more work to do before he gets most investors to the point where they never want to buy another share ever again. Traditionally that’s the signal that rouses the bull. Except for this big fall in equity markets, nothing fundamental has happened elsewhere in the economic landscapes. In the US, where of course they raised their debt ceiling at the eleventh hour to even sillier heights, there is talk of the feds coming in once again with “stimulus money”. The Eurozone is springing leaks everywhere. People are waving and drowning!
One good news story locally comes from the so-called small and medium supermarkets sector which operates mostly in the rural regions. They are reporting sales up 73% compared with 2009. From our desks in the city it is hard to imagine how this can be, but perhaps it is government outflows both formal and illegal that are reaching purses and wallets out there in the sticks.
If these poor souls try to flee to the cities, probably the only job they might get will be to clean stuff like streets and floors. Fortunately for them the Services Seta is right onto their plight, convening Cleaning Services Industry Information Sharing Sessions. The five item agenda for these sessions is astonishing to those of us who have no idea what goes on in this industry. The item about new qualifications and unit standards is particularly fascinating. Who knew that, provided the standards were met, one could become qualified to push a broom or wield a mop?
The Pan South African Language Board spent R5.4 m in legal fees to dismiss its CEO. That seems like a lot of money to say “You’re fired!” but presumably the process had to be conducted in all 11 official languages (and Braille).
And so here it comes. Legislation to regulate the ratings agencies is on the way. They will have to become “registered” – that delight of all bureaucrats. Because there is scant difference between a ratings report on an entity and a research report published by an analyst, registration of pretty well everyone in this industry must be imminent. Mining analysts are already in the net. Presumably the objective of the regulators is that aggrieved investors who follow advice that turns out to be wrong must be able to place the blame and loss elsewhere. Sadly it is true that even professionals, who should know better, fail to understand that the responsibility of an investment decision rests with them alone. Justification for this statement lies in the fact that, especially in the case of company analysis, it is common that respected analysts will have opposing views, thus demonstrating the subjectivity of the exercise.
The government has announced that it is to create two new commissions whose tasks will include fighting red tape. There is something oh so wrong about this idea!
“Winning will be high on our list of priorities” was the headline that accompanied the report of the Springbok coach’s response to the nation’s disgust at what happened in Sydney and Wellington. What exactly is at the top of this list then? Ensuring that the sponsor’s cheque arrives on time? Providing properly prepared orange slices for the lads at half time? Or maybe it is to have a training and selection policy that confuses and disappoints as many people as possible while delighting the opposition. Yes, that must be it.
James Greener
5th August 2011
