Friday, 22 December 2017


If this writer were a proper analyst he would be mining the price charts and company reports for insights and hints about which sectors and shares to pick in 2018. There are many reasons including apathy and cynicism why this is not happening. A significant development in the past few years is the “hollowing-out” of the JSE as the number of listed companies which might be considered “blue-chip” dwindles. That blue-chip label is dangerously misused since currently few large local companies seem to be able to find and develop a sustainable and winning business model in the face of government regulation and international competition.  While the newly opened local exchanges are not yet posing a worrying threat to the JSE, its own boards are shrinking with at least half a dozen sectors having just a single member. Steinhof, as the sole constituent of the Household Goods index, which is down more than 90% this month, is currently the most notorious example. Hopefully the numerous smaller unlisted players in this sector are doing far better.

Another anomaly is that despite the ridiculously long list of new car models on offer in this country and the ceaseless flow of huge and apparently fully laden car carriers in and out of Durban harbour, the JSE’s Automobiles sector contains just Metair, a small R4bn market cap parts supplier. One can’t even get exposure to the profitable fuel supply business. And given the crying need for a new refinery capable of producing fuels that modern engines prefer, it’s odd that no one is thinking of a listing to raise that sort of cash.  Our bourse is not a good proxy of the economic landscape and so investors are mostly just looking for special situations.

Which is exactly the position in which the new leader of the ruling ANC party finds himself. Whilst no actual chairs were launched at the interminable conference, Mr Cyril Ramaphosa’s victory obviously surprised many who thought that Number One’s ex-wife was a dead certainty for the job. However, the old guard seem to have managed to surround the new chap with a coterie of “minders” but Jacob Zuma still faces the unexpected and uncomfortable position of being president of the nation without a trusted ally as the head of the party. How long that will work, is already cause for fervent speculation.

Cyril, in turn has been lobbed some early hot potatoes. The parting shot in JZ’s valedictory address was a promise of free university education while the congress delegates instructed him to legalize fixed property theft. Oh, and the comrades would very much also like to own the SA Reserve Bank. Presumably they think it’s full of cash. Or that it will be handy to take charge of the pesky bank supervision department?   None of these ideas will help to sustain the 10% strengthening of the rand against the US dollar that happened when news of Cyril’s victory was first leaked.

But it’s year’s end. The solstice was last night, and Christmas holidays are confirmed by the migration count of over 3000 cars an hour pouring down the N3 and into Durban. Parking at the shops is already inducing seasonal outrage.

So please have a very merry happy and safe Christmas.

James Greener
Friday 22nd December 2017.