Among the many numbers that we analysts can use selectively to boost
our current view is one rather optimistically named “the leading indicator”. Allegedly
it behaves in a manner that is later is echoed by the dreaded grand poobah of
GDP itself. The latest published value for this statistic is down a tad so in
simple terms this means that 2012 could turn out to be a slow year. If so, that
would count against us enjoying decent market performance for the year as well.
In fact the All Share index has been stalled for almost six weeks and the
dispersion between the performances of the different sectors has disappeared.
This is not the time for large general portfolio investment.
This week the broking industry got its first taste of playing
tax-collector for the new dividend withholding tax. It works like this. The
full as-declared dividend amount is credited to each client’s income account,
whereupon a 15% deduction entry is immediately processed for every account not identified
as exempt (basically all individuals and trusts are not exempt). This
money is then sent to SARS together with a list of who it was collected from. In
cases like Anglo where some clients have chosen to receive shares in lieu of the
cash dividend, this after-tax dividend amount is sent back to the company and
in due course the extra shares will be added to their portfolio. Any suggestion
that SARS ought to pay us a fee for this work has been rejected with scorn and
derision. Things are creeping closer to the alleged joke tax return that asked
just one question of the taxpayer “How much money have you got?” Send it to us.
The furore about how to fund the company (SANRAL) that upgraded all
those roads around Joburg is raging strongly. Apparently it was made clear when
the project started that tolling the roads would be the solution but now the
arguments against tolls range from outright defiance to detailed nitpicking of
the fine print. An eleventh hour courtroom drama is taking place. Fanning the
flames is the recent realisation that the promised exemption from tolls for the
already belligerent mini-bus taxi industry is not certain. Here’s a suggestion
for those taxi drivers. Just pay the tolls chaps and then claim them back when
the exemption comes through. Surely you trust that SANRAL will swiftly refund
your money?
At first glance the INet-Bridge headline announcing a new government
agency to promote entrepreneurship seemed like a perfect example of oxymoron. Surely
by definition anybody who can create wealth would never work in government and
so the state could hardly be in a position to offer advice on such a matter.
But a moment’s thought reveals the wisdom of the idea. For generations the best
way to secure government contracts has been to know the right people in the
right departments. This new agency, which will be born out of the consolidation
of three existing but obviously ineffective agencies, should merely publish the
names and family trees of influential government officials. Entrepreneurs will then
pop out of the wood-work as it were. Unfortunately, closer reading reveals that
the new scheme will start life already crushed by its name – SA Finance Enterprise Agency (SAFEA). All too predictably it
is about allocating money—probably at the wrong price – to small businesses
operating in “the 17 infrastructure projects identified by the Presidential
Infrastructure Coordination Commission”. Well woo hoo. That doesn’t sound very
entrepreneurial. A government committee? Infrastructure projects? Oh dear me
no.
Another brace of short weeks has cropped up and all true South
Africans have filled up the 4x4 with fuel and beer at R12 per litre and left
for the berg or the beach. The markets will go into sleep mode until perhaps
next Wednesday. There’s a bit of rugby to watch. One supremely optimistic
journalist suggests that the Lions are favourites in their clash with the
Brumbies at Ellis Park. That’s nice. In the meantime one does need to
sympathise with the Sharks about some very odd decisions that keep going
against them (or so I’m told)
James Greener
26th April 2012
