It seems as if there is nowhere left that is not overwhelmed with corruption Almost every day another alleged paragon of virtue is exposed to be just as grubby and self-serving as the rest. Is there no institution, enterprise or individual that consistently and reliable displays and practices integrity, honesty and probity? It would sadly seem to be unlikely, and if not, then should we even be able to trust whoever decided that someone did deserve such an accolade? The financial world has long demonstrated that AAA ratings are more easily bought than earned and in any case neither version means very much at all. One should not be surprised by anyone finding it easier to renege on an obligation than to fulfil it. Watch this space.
Mankind undoubtedly has an inherent propensity to trade first for his own account before tending to his customer’s needs and it is probably just wishful thinking to believe that in the good old days everything was so much better. The growing numbers of computers able to talk to each other and swap their stores of secrets is making it far harder to hide and easier to uncover the skeletons in the closet which in the past may have remained unopened. Which goes to show that being a computer illiterate who never sends emails might be a good career move for anyone aspiring to run anything; especially a country. Surely one of those guys who will be building Eskom’s boilers was able to tap ‘Chancellor House” into Google? Or can none of them read?
Equally, anyone claiming to be an investment specialist should take care what he or she commits on record, as always half of it will be completely wrong. The usual question of where the market is going to is nearing an interesting stage as the market approaches the all-time highs set in 2008. Most shares are currently priced on historical valuations which are at the top end of recent ranges. Indications are that hosting the World Cup will deliver only meagre contributions to earnings yet to come. Most of the associated infrastructure spend has already been banked, although the state has promised that much more is in the Budget. And then there have been some exciting forecasts of what GDP growth might be this year. Globally the “double-dip” supporters are facing extinction and only very fierce bears would use the valuation risk to exit the market at this stage. Bulls should be nervous but may continue to tune the portfolio with well managed dividend paying liquid counters, and new money should commit no more than half their cash to similarly selected shares on the basis that there is a fair chance that better buying opportunities will turn up later.
I suppose that most of us are starting to accept that South Africa is inexorably slipping down the ranking tables in most areas except for rugby, cricket and corruption. However something called the Fraser Institute has pushed South Africa down to 61st position from its previous 49th place in the world mining league. This dreadful news should not surprise anyone following the JSE mining sector. Only a small minority of the pure mining companies consistently declare a profit and some are amongst the Exchange’s largest loss-makers. They also have to devote copious resources to keeping abreast of the never ending stream of advice, instruction and obstruction emanating from clueless bureaucrats. Minerals Resources Minister Shabangu, who through no fault of her own, has no education or experience in this activity, has kindly pointed out that mining companies ought to be using modern exploration technology to enable them to discover “world-class” deposits. Does she perhaps imagine that mining houses still deploy grizzled old prospectors on mules to swirl grit around a pan?
A month ago Bafana Bafana beat Botafogo (I have no idea either) but since then have either lost or drew the next three warm-up games. What an opportunity to recapture some of that 1995 goodwill is going to be lost. Imagine the excitement in the land if there was a sniff of a chance that our side might win a match or two. The optimist who has just sent me an email offering vuvuzelas at R20.90 apiece provided I buy 10 000 of them might just have got an order.
James Greener
23rd April 2010
