This bear market is getting fiercer. Some indices are now back to levels last seen about 4 years ago and one is quite tempted to do a little buying here and there. But don’t expect immediate gratification. It may well take a year or two before you will be able to congratulate yourself on your clever buying. The conundrum is that most companies who announced results or issued trading statements this week were modestly and occasionally very positive. Retailers enjoyed a pretty good Christmas season and not even the banks have yet unveiled any really frightening stuff. Bears will of course point out that our recession is starting to hit only now and so we need to wait six months or so before the skeletons tumble out of the cupboards.
This morning, however, the news that Anglo American will miss its dividend is a big shocker. I wonder to what extent this result is a consequence of that organisation losing many experienced people and also trying to comply with unrealistic government diktats. The company is now in only 4th place in the JSE market capitalisation rankings. Is it melodramatic or premature to wonder if we are seeing the end of an era?
We may get an indication of how badly everyone is hurting when the results of the Soccer World Cup local ticket sales begin to filter through. The cheapest ticket at the earlier matches will be priced at R70, but there are also many which will be dished out for free. The black market prices of those will be a very good indicator of both local interest in the event and the state of economic hardship in the country. I was intrigued to see that unless one has both an internet connection and a credit card, the only other way to lodge an application for tickets was to slap down a pile of the folding stuff at the branch of a local bank that very kindly will open a credit card account for you with the money. Have they found a way around all this time-consuming FICA and Credit Act stuff? In that vein I was amazed to be told by Telkom to hand a certified copy of my ID to the technician when he came to the house to fix a fault. No one was able to explain why this was necessary or useful. But to go back to that ticket thing. FIFA are reportedly using an exchange rate of 7 rand to the dollar for their sums. They may be in for a disappointment when the games are over and they pop in at the bureau de change at the airport on their way home.
Just weeks after they raced off home to Detroit clutching cash from Washington, General Motors are bleating that they will soon need some more. They will probably be in luck. President Obama, who appears to have spent much of the early days of his reign signing things, does not send an upturned hand away empty. He has not yet heard a hard luck story he does not believe and he glides off to the polished table to sign a clutch of cheques in front of an adoring team. Why do they applaud when he finishes? Perhaps it is the thrill of seeing a president who can write. But the result of having to print all this money to cover the bills is eroding the value of the greenback. One of them will now buy only 1/1000th of an ounce of a shiny metal called gold.
It is unsurprising that the UK have decided to impose visitors’ visas on South Africans. No doubt their attitude has been influenced by the national airline’s drug transporting business which no one allegedly in control seems to have any desire to investigate or stop. Despite all these lucrative schemes how come the top party officials always seem to have money problems? And why on earth do we accept them setting out economic policies for us?
The Lions are in Durban this weekend. I may have to keep my celebrations rather low key and private. But I do now have an ND registration plate on the Sani.
James Greener
20th February 2009.
