There seems to be an avalanche of news and developments that could affect market sentiment. It is quite hard to keep tabs on them all. Is the sudden outbreak of a nasty little war in South Ossetia significant? Is the European Central Bank’s decision to leave rates unchanged important? Just how does it affect one group of shareholders when a signed and sealed corporate deal is unpicked and repriced because another group does not like the fact that prices go down as well as up? How will the government implement the union’s demand that the prices of food and fuel be reduced? Will the JSE remove the No Smoking signs when the largest stock on the boards is a tobacco company? Is the commodity price boom really over now?
I have suggested before that currency exchange rates are perhaps among the more reliable of market gauges. They are certainly universal in that they reflect the aggregation of huge financial flows. Therefore I am very intrigued to see that the US dollar is definitely showing signs of recovery, although when I look at all the other data for that nation I can see absolutely no reason why, but there you are! Money is flowing into the greenback. The rand, on the other hand is displaying evidence that its recent strong spell may have ended. Suddenly there are rand sellers everywhere.
The All Share scared everyone by spending more than 24 hours below the 25 000 level before the fund managers began to waffle about buying opportunities and name-dropping their worst hit holdings.. Fortunately for them this prompted some buyers into chasing up the prices but they need to go a long way further yet to offset the dreadful performance that most managers will have to report for July.
So far the half-year results from the financial sector have mostly revealed positive growth in earnings albeit only in single digits. This is indeed laudable when compared with the losses measured in billions of dollars that we keep on hearing from the US banks. Nevertheless it is pretty patchy with some surprising companies having to tell the shareholders that things are getting grim.
Governor Mboweni, however, seems to have identified an unexploited source of economic growth. Despite attending a function presumably intended to highlight the precarious financial position of one of the country’s few remaining ballet companies he noted that the performing arts provided “significant employment opportunities for all gender categories - but mainly women and younger people.” This statement leaves many unanswered questions, but as he and I share much the same sort of shape, I suppose that we represent a gender category unlikely to find a job in dance.
It seems that I was correct in my previous complaint that the navy has little need for three (or indeed any) submarines. One of them has reportedly been sitting well clear of the water in dry-dock for several months. A spokesman claimed that this was standard operating procedure. Apparently there will be plenty of time to refloat the vessel when South Africa experiences its next maritime threat. In the meantime a very large contingent of government officials are in Beijing to lobby hard for the inclusion of “Catch the Kick-back” in the next Olympic games.
James Greener
8/8/8
