The folks over at Virgin Galactic have certainly got the measure of
how things work in SA. They have opened a booking office here to sell tickets
for their space trips. A spokesman said “he believed that there were enough millionaires
or people with access to funds in SA for a space flight.” The second part of
that statement is the killer. Boy, do we ever have plenty people with “access
to funds”! Note there was no suggestion that it should be their own funds. I
can already hear the arguments that using a rocket is the best way to improve
service delivery.
The market is trying quite hard to break out upwards from a long
period of indecision. The difficulty for anyone looking to climb aboard the
bull is that there are very few shares that are priced to offer value.
Now we can see exactly how the dividend tax works. And there’s little
evidence that companies are passing on to shareholders their 10% STC rebate. It
is therefore puzzling that the market is not drooping to account for the lower
actual dividend yields being collected by individuals. Perhaps that is the
reason though. The very large majority of shares are held by institutions that
are exempt from the dividend tax and so they have no need to cause a market
correction. Presumably, on the other hand, most of the variable dividend rate
preference shares are held by individuals and that is why the market prices of
these instruments are still battling to find a level.
Sadly there might just be a reason for not running a private
portfolio in one’s own name emerging here. Tellingly, investing in a dividend
paying exchange traded fund is not identical in tax terms to buying a unit
trust. Beware politicians seeking money. They can ruin anything.
It is very hard for us outsiders to know if we should be worried or
not. The story about unsecured lending is growing in frequency and stridency. Reportedly
too much cash has been lent to too many people by lenders who are being
cavalier and lax in vetting their clients for ability and intention to repay.
The bears claim that this will all blow up in a fully fledged credit crisis and
that therefore the banks are soon going to get into even more difficulties. The
market does not buy this and the bank sector index has massively outperformed the
overall market in the past 6 months or so. Investors clearly don’t think there
is a problem looming with these lenders. The individual banks are likely to be pretty
much on top of any potential problems After all this is their so-called core
business – lending money – and they are repeatedly issuing reassuring
statements to this effect. Nevertheless sharp-eyed data ferrets are able to
produce scary statistics like there being many more debtors than employed
people and it is certain that many borrowers are getting into severe
difficulties with servicing their debt. A social problem is certainly unfolding
even if it may not yet be a meaningful financial one. What will it take before
the government and its trade union allies stop setting impossible standards and
conditions for paying someone to perform a task?
The cabinet has formed “a high-level e-tolling committee”, Watch for
official-looking suits perched on those gantries. And the word is spreading fast
that those gantries are also laden with lashings of the very best copper
cabling. This is turning out to be a very entertaining spectacle.
Even if I do now have an official Lions cap the team is making it
ever harder to display unquestioning support. Perhaps the problem will be
solved next year if some one with sense realises that SA currently can support
just four teams in the Super competition. It is getting pitiful. Mind you the
Cheetahs are also catching the disease.
James Greener
4th May 2012
