Friday, 14 August 2015


Although the All Share index has been leaping about a great deal recently it has remained more or less within a 6% range on both the upside and down side this year. This means that we have definitely not yet seen the real bear market. While  a50% correction would not violate historical valuations it is highly unlikely. It remains very worrying, however, that the rand continues to sink and now even against the euro is at the year’s low. Simply no one can see a good reason for owning our currency it seems. Unsurprisingly company earning growth reports have been averaging 10%pa, a great deal less that enjoyed for many years. This too is a reason not to chase share prices higher. It is time for circumspection and caution.
Financial headlines this week have been dominated by the Yuan devaluation. Most of us will never learn either what this means or whether we should be happy or sad. Certainly it has triggered a rash of articles using the word “contagion” and grave talking heads on TV. A far bigger Chinese explosion this week involved actual bangs, loss of life and massive destruction of great quantities of manufacturing capacity and stockpiled goods. This may turn out to be the more important event, although the Chinese are often as reticent about these embarrassing events as our own energy minister is about her “secret” plans to order impossibly expensive nuclear power stations.
The government has obviously become worried that citizens are threatening to reach their own conclusions about the “state of the nation” and so we are being treated to frequent official updates on this subject. Unfortunately these events subject Number 1’s formal speaking skills to a severe test. Better known for a jovial impromptu singing and dancing communication style, these dreary lists of dubious achievements of his government put everyone, including himself, to sleep. It was interesting however, that someone seems to have got him to realize that the new draconian visa requirements are seriously impacting tourist numbers. He also seems to have noticed that not having reliable power supplies is pretty inconvenient as well. And summer is coming. It’s going to be great.
Over-excited Durban city fathers have been seen tearing about the place in blue flashing light cavalcades accompanied by the worthies who decide on the venue for the 2022 Commonwealth Games. Now there is little doubt that this city does already have a wide range of the facilities required for such an event. They are mostly all conveniently located along the Indian Ocean shorefront, and it would indeed be rather exciting to play host to the games like this. However the big issue is the price estimate of R6.4 bn; a number far more easily said than raised and definitely way lower that the final outcome. Glib hand-wafting explanations that the cost will be shared between government, the city and the SA Olympic committee are wildly optimistic. The government has yet to provide the expected and necessary guarantees.
Tonight's away Test against Argentina will be hard to watch for a number of reasons, not least of which is that kick-off is getting a bit past bedtime for some of us. Also it may prove to be even more embarrassing than last week’s calamity here at Kings Park. But never fear, the trade unions have now started to take an interest in rugby. Unfortunately, however, their involvement will probably just result in more pay for fewer players and longer half-time. There should however be a full 11 man Proteas squad on the pitch at Kingsmead this evening as the series against New Zealand begins. The stadium is looking rather splendid these days following a cleanup and a huge fancy multicoloured score board. Now all we need is for Eskom to keep the lights on.
James Greener
14th August 2015