Friday, 18 March 2016


The result reporting season for January year-end companies is drawing to a close and the average earnings decline for members of the All Share index is 7%. Nevertheless, the index itself has soared by about 15% since the January low, with the simple mathematical consequence of pushing the pe ratio (for historical earnings) of the 100 biggest cap shares to around 35. This level suggests that buyers ought not to be allowed out unsupervised. Shares purchased with these valuations are unlikely to deliver satisfactory returns over the next few years. But as always there must be situations worth looking at now that the commodity prices may have bottomed out. But do wait until the ratings “shock” is over.
Reserve Bank Governor Kganyago is clearly much taken with that big lever in the corner of his fancy office. Yesterday he gave it another tug, raising the repo rate to 7%. So the commercial banks now expect their prime rate borrowers to pay them 10.25% and this will cascade down and make life even harder for the majority of our citizens who are alarmingly in debt and assuredly paying even higher rates.
Beleaguered presidents, politicians and premiers world-wide are surely watching with envy and astonishment the way in which our Number 1 is dealing with the waves of unfavourable criticism about his friends, family and regime. His perfectly timed giggle and dismissive denouncement of all accusations as nonsense is masterful. He knows nothing about these ludicrous claims and questioners are told to seek answers elsewhere. Students of the political landscape deem it impossible for our young democracy to bear these insults anymore and assure us that Zuma will soon either be replaced or brought to heel by disgruntled party elders. Let’s see. Unfortunately, though, an indisputable and respected replacement candidate is not in sight.
It won’t have taken long for the ratings people, who are in town for an assessment, to reach a conclusion. One astonished peek at the Gupta Guest Book was all they would have needed before snapping closed their laptops and heading off to the beach bar for a ridiculously cheap beer.
There is really something rather quaint about the hopelessly insolvent national airline forecasting that it will make a profit soon. This prediction does, however, come with the warning that this miraculous outcome is dependent on SAA “obtaining more financial support from government”. Well there’s a great plan for any struggling business. Just get the taxpayers to send round a truck load of the folding stuff and voila! Profits. Well, executive bonuses at least.
An engineering research team have proposed fitting minibus taxis with an ear-splitting alarm triggered when the vehicle exceeds the speed limit. This, they claim, would help reduce road accidents. Did their field work not notice that taxis are already filled with a deafening cacophony to which the addition of a klaxon would only further alarm the other drivers on the road? In fact, when the great “taxi recapitalisation” project was launched about a decade ago, the design specifications for the new vehicles included seatbelts for all passengers and a speed limiting governor. Neither modification seems to have caught on. Ruthless and indiscriminate enforcement of existing traffic laws is what is needed to bring our terrible road carnage under control. Not more noise.
The National Nuclear Regulator is not quite the expected efficient and ruthless overseer of things that could harm us. This week they received applications from Eskom for licences to build and operate two nuclear power stations. NNR are expected to take around two years to give an answer! And only then might building begin. Which shows that the scurrilous rumours about our president (and his friends) arranging construction and operating contracts for personal gain can’t be true.
My phone’s calendar is overflowing with sports events to supervise this weekend starting this evening. There have already been some unexpected (suspicious?) results at the World T20 tournament in India. I wonder if $10m is still the going rate to take care of a sporting result?
James Greener
Friday 18th March 2016