The JSE’s All Share Index is grimly hanging on above the 22 000 level. Weary readers will know that I think that it will fail to do so for very much longer. There is almost no evidence to suggest that the earnings of most companies and people – except for politicians and bureaucrats – are going to rise in the coming months. The government’s income stream has slowed up substantially as more people are laid off from work and everyone is spending less on just about everything. Our new minister of finance must be wondering at the amazing timing of his predecessor’s departure.
Recall however, that Minister Gordhan’s previous job was as chief taxman and it appears that he has already been on the line to his old office telling them to squeeze harder. While I was watching the test last week I received an SMS message from SARS reminding me basically that they knew where I lived. Chilling timing.
The alternative route for balancing the books would be to trim the expenditure side but the rate at which it is growing suggests that the genie is out of the bottle. It is alarming and the bond market knows all about it. Rates of long dated bonds are on the up. What better time to scrap some of the more pointless departments like Sport & Recreation, Arts & Culture and the strangely named Ministry for Women, Youth, Children & People with Disabilities. By the way I am puzzled that the name of this last money sink has not provoked howls of outrage at the potential implied similarities of the alleged beneficiaries of this particular area of state control and help.
Obviously the current upsurge in investigations of industries suspected of price collusion is also related to the hope that some hefty fines will help swell the state coffers. I have before wondered why, if after such a practice is discovered and proven then it is not the victimised consumers who get refunded the cash?
Have you seen the awe inspiring fines that can be levied if a cell phone company fails to write down where every one of its customers lives? This piece of onerous and costly administration is supposedly an important weapon in the war against crime. What, I wonder, will happen when it turns out that the intercepted call by the alleged crook was made from a cardboard box that was washed away by the last floods? Regulators are often so far behind the technology curve that their interventions are senseless.
A potentially serious event for the JSE has popped up.It concerns the classification of certain shares as so-called “Inward Listed”. Currently only a handful of counters are so identified but they include BAT, the largest share by market capitalisation. The classification prevents the shares from contributing to any index (easily solved, however) but more importantly places limits on local investors’s holdings. In the past several of our biggest hitters on the JSE moved their primary listings to London and a debate about whether or not they should have been or should now be declared Inward Listed is taking place. Frankly the sensible thing to do is to scrap the classification altogether as it is a nasty and needless aspect of exchange control. I have no doubt that our corner will be fighting this one very hard.
The rather unwelcome cold spell has departed the kingdom at last and that means that the horses will be wearing more than some of the race goers at the Durban July tomorrow. Despite this I shall remain at home with one eye on the TV and one on the sea. I have probably more chance of seeing the sardines appear than of watching memorable rugby.
James Greener
3rd July 2009.
