Already confusion and dismay is trickling into the press and
websites about the change in the way that dividends will be taxed from April
Fool’s Day. The key fact to which I cling is that the change should be pretty
much neutral for the fiscus. That is they should collect about the same amount of
money with the new withholding tax as they did with the old STC. Therefore,
provided the companies play ball, shareholder’s net income ought to be
unaffected. This means of course that declared and payable dividend amounts
will need to be greater (excluding any growth of course) than they were, so
that after the10% tax deduction, the shareholder’s portion remains the same.
One definite victim of the changeover will be the calculation of dividend
yields and growth rates. It will be important not to compare apples with pears!
The market may take fright until it all settles down. In the meantime the bull
is back and raring to go.
South Africa now chairs the United Nations Security Council. Whichever suit from
Pretoria
actually gets to sit in the top spot, he or she is welcome to it, as the agenda
for that body is always packed with nearly insoluble squabbles between deeply
divided parties. Already our Prez has complained to the Council that the United
Nations does not treat the African Union with enough respect. But career
diplomats are never going to jeopardize their expense accounts by acknowledging
that the problem there lies in the total misuse of the words United and Union. Hopefully though, the chairman will introduce the
other members to the great South African tradition of leaping to one’s feet to
sway rhythmically while chanting an impromptu ditty that encapsulates the
moment. Frequent and lengthy refreshment breaks are also traditional.
The National Treasury was very excited to announce that they had this
week borrowed $1.5 bn in the overseas markets with little difficulty. It was
pretty cheap too; just 270 bps over US treasuries, way cheaper than nations
like Spain or Ireland can
manage. The trick here of course is that since both the interest and the principal
will have to be repaid in US dollars, misery and hardship looms if the rand
weakens. Only old bears like me remember the country’s notorious “debt
standstill” 30 years ago caused by rand weakness. The next day SAB Miller proved
the attraction of beer over government by borrowing more than four times as
much in the same markets. Unlike the nation, which has raised the money mainly
to pay off older debts, SAB are using their cash to buy another brewery. In Australia. Next time the Aussies beat the ‘bokke in
anything we can take comfort in the fact that they will have to celebrate with
an SA owned pint!
We still do not yet have even the simplest result from last year’s
census. This is because all the forms are still sealed in 135 000 steel boxes
while over 1000 people are being trained how to count the 64 billion characters
of data on the 235 million loose pages waiting inside those boxes. Sadly, while
impressive and even precise, these are
not the numbers we are expecting and we will have to wait until November to
find out how many of us there were last October. I trust the fish moths have
not found their way into the boxes and there will not be shouts of dismay when
they are unlocked and thrown open. This
has not been an efficient exercise.
The delightfully named Russian satellite Phobos-Grunt is falling to
Earth. Once again the owner of this piece of valuable scientific instrument
turned heavy junk is airily dismissive of the consequences that might arise if bits
of it fail to burn up on re-entry and land in someone’s back garden or worse.
You will hear quite a lot more than mere grunting if it does.
With yet another cricket spot-fixer
identified and other sports officials looking shifty I am worried that perhaps
even the women’s beach volley-ball might be rigged. Mind you, I never know who
is winning anyway.
James Greener
Friday the 13th January,
