A notable feature of stock exchanges at the moment is that there are some pretty substantial volumes of shares being traded. Sceptical bears believe that this might be evidence of the so-called redistribution trade where institutions are the sellers and individuals are the buyers. The theory is that the wise and well researched have noted that the future looks bleak while the keen and ignorant think that there has never been a better time to buy shares. This neat categorisation of investors is nonsense. Institutions can and do buy stuff that they later wish they hadn’t. Thanks to the internet, information is ubiquitous and simultaneously available to everyone. The differences lie in the interpretation and inference and also in remembering that the investment industry’s income is largely based on someone buying something. The latest rebound in confidence is allegedly due to reports that the Chinese have professed admiration for the euro. Well, they sort of have to don’t they? There are not too many choices for them when they decide to diversify out of the several trillion US dollars that are knocking about their vaults.
It was hoped that the ruling party had muzzled Youth League Chairman Malema at least until the World Cup was over. Regrettably, he popped up this week to insist that he was solely responsible for announcing the government’s policy on mine nationalisation. Straight from the horse’s mouth as it were it was very muddled but interestingly appears to be intended for new projects only. Presumably that means that all the mines currently operated by the 16 listed mining companies that appear among the JSE’s largest 100 list would be unaffected by this proposed legislation. In one respect at least the local proposal might be better than the Aussie plans to dissuade investment. The horses’ mouth, however, is not known for doing sums properly and probably will be disappointed by how long it will be before the deserving poor will be able to order Breitling watches like his. Mining in South Africa is not a bowl of cherries. The aggregate price to earnings ratio of those 16 companies is around 25, and this climbs to over 80 if you omit Anglo and Billiton, who derive a lot of their income from offshore. In the last 150 years miners have naturally plucked the low hanging fruit in terms of the richest and shallowest ore deposits. The proposed state mining company is not only going to be faced with technically difficult projects but will also battle to find private money willing to share the risks in return for the very meagre rewards that Malema is prepared to allow them. Tax payers can look forward to even more outstretched hands.
Bits of the Gautrain will be working in time for the big event. The schedules of fares and running times have been released and show that management have conducted a careful needs analysis. Unfortunately it appears to have focused on the need of the staff to go home to bed, as the service will close down every night at 8:30pm which is the exact moment that the final match of the day kicks off. Fans needing to get back out to the airport after that match can forget the metro! And there could be lots of them as it was announced that 140 000 extra tickets have been found down the back of a sofa and have now gone on sale .Hopefully the demand will come from overseas fans who have realised that their press warnings to beware the venomous vipers in South Africa omitted to point out that these would mostly be confined to VIP boxes and blue light motorcades travelling the protocol routes.
There are certainly no tickets left for the Super 14 final at the Orlando Stadium tomorrow. People seem surprised that rugby fans had such a good time at the same venue last week. Did they forget that the place is situated in the nation’s largest per capita beer consumption neighbourhood so what was not to like. Go Bulls.
James Greener
28th May 2010.
