Don’t we all feel so much better and wealthier now that we find out that the recession has been well and truly banished? The nation has allegedly now enjoyed at least six months of substantial growth. It might be considered churlish to point out, however, that the recovery is a trifle spotty. Strangely the wholesale, retail, motor trade and accommodation sector recorded a contraction over the Christmas season, while the manufacturing, and of course, the government sectors were the two most successful contributors to the final 3.2%pa figure. Another case of statistics contradicting mere observation. Rather like the folk who are buried in meters of snow insisting that they can prove that the world is getting dangerously hotter.
The JSE like most other equity markets will show an unexciting month in terms of overall index performance. This lack of action has simply widened the gulf between those punting whether a bull storm or a bear tempest will follow the calm. As usual I am alarmed by developments in the USA which I tend to feel will be bearish for equities. Nevertheless, one should never be wholly out of the markets and with the dividend season pushing up liquidity levels there is always something offering a bit more value than usual.
In the world’s currency markets there has been a very noticeable flow into both the US dollar and the yen and so against those two the rand has weakened presumably to the satisfaction of many. Nevertheless, anyone planning a summer trip to Europe will be gratified to see both the pound and the euro getting cheaper almost every day. As ever, currency movements baffle me and I wonder what happens to the people who accept the invitations that appear on TV to open a foreign exchange trading account. Surely most of them get carted out in black bin-bags? With the developments in Greece right now, would you be long or short the euro? Now that’s gambling!
After reading the results of a number of construction companies that appeared this week I was struck by how hard they seem to work at making the money which they ultimately distribute to the shareholders. The path that begins with being awarded a contract and then proceeds through mobilising resources, doing the work, getting paid (often tricky!) and then hopefully sharing profits is a long one. South Africa is, however, pioneering a new breed of entrepreneur who has managed to shorten the process. It often begins by persuading the client – usually a relative working for the state – to put up most of the money sometimes even before official tenders have been announced. This is swiftly followed by the dividend distribution, not forgetting a little something for the relative. Only once these details have been completed is there any possibility that the job itself, now grievously under funded, might receive attention. Commonly at this point a nosy press comment triggers an outburst of astonishment and contrition and a promise that in the event of further money being forthcoming, the project will be completed to everyone’s satisfaction. All players then return to GO without going anywhere near gaol.
While not yet forsaking my belief that the Lions will one day be great, I have this season already twice ascended the heights of the Kings Park stadium to watch the Sharks. This has not been rewarding and already the news coming in from New Zealand this morning is that the team from the kingdom are still are uncertain what they are paid to do.. I am now going to the bush for the weekend and will thankfully be unable to watch the Lions also looking lost down on that sodden sheep-filled island
James Greener
26th February 2010
