Friday, 4 May 2018


Fans of the Savoy operas will immediately have noted the similarity between Ko-Ko, the Lord High Executioner and Donald, President of the USA. Both have “little lists of those who won’t be missed”. The more recent of these two list-makers has identified the nations which most often vote in opposition to the USA at the United Nations and which in consequence face the probability of America chopping off aid and benefits. Alarmingly South Africa is on this list and the punishment could be far worse and longer lasting than anything Ko-Ko had in mind. It’s provng foolish to poke the bear and not believe that he will carry out his threats.
Whether it’s this policy that is finding support is of course impossible to tell, but solid demand for US dollars is the big market story at present with our own runt about 8% weaker against the greenback in just two months. However, those inflows to the dollar don’t seem to be directed towards buying US shares or bonds since neither of those prices are moving much. Conversely though, with many JSE listed companies sensitive to a weaker currency, the local indices are quite perky with resources leading the pack.
However, those who like to do old fashioned value analysis still feel that there are very thin pickings on the JSE. Earnings remain very low compared to prices and therefore this is probably not a good time to buy. But the difficulty in using this metric and indeed most other techniques, is that increasingly it appears na├»ve to rely too much on published and even audited financial statements to obtain such presumably useful parameters. This epidemic of unreliability is almost certainly related to the rise in regulatory and compliance activity. This will seem counter intuitive to outsiders but now that every call is recorded, every meeting reported, and busybodies are frantically trying to ensure that the playing field is level -- made harder because they have no idea what game is being played on that field -- the market’s early warning systems have been stifled. The incentives and opportunities to dig and ferret and chat and probe and pass on a rumour have been removed and largely prohibited and so it is only when a mess gets very large and smelly do the authorised mechanisms get activated. It’s ironic that despite the massive growth in compliance activities, clients and customers still get hurt. And what’s worse is that they are of course indirectly paying for this unwanted monitoring of their “safety”. A couple of scrupulous and honest front office personnel with long-standing client relationships are worth a thousand over-qualified yet inexperienced and clueless gumshoes listening to recordings, sifting through records and composing ever longer disclaimers.
If there are still any believers in hard tangible assets out there they probably already know that at around sixteen and a half thousand rand each, Krugerrands are at their cheapest in several years. The gap between this price and the JSE price of New Gold, the exchange-traded fund that tracks the rand price of gold is also at a low point. Time to switch from the ETF to the coin?
While there is the usual feast of Super Rugby matches to help us each reach the national average daily TV watching time of 7 hours and 2 minutes (yes really!)  the one that probably deserves our attention is the Cheetah’s play-off against the Llanelli Scarlets at 7:35 pm on Saturday (right after the Sharks match) in their Pro 14 campaign. The press commentary is mostly rather gloomy about their chances, but this is a side which often does surprise. And there’s an excuse to pop down to the bottle store and get in a few Guinness since they are the tournament sponsor and also deserve support.
James Greener
International Star Wars Day -- May the Fourth be with You