Although the All Share index has been
leaping about a great deal recently it has remained more or less within a 6%
range on both the upside and down side this year. This means that we have
definitely not yet seen the real bear market. While a50% correction would not violate historical
valuations it is highly unlikely. It remains very worrying, however, that the
rand continues to sink and now even against the euro is at the year’s low.
Simply no one can see a good reason for owning our currency it seems. Unsurprisingly
company earning growth reports have been averaging 10%pa, a great deal less
that enjoyed for many years. This too is a reason not to chase share prices
higher. It is time for circumspection and caution.
Financial headlines this week have been
dominated by the Yuan devaluation. Most of us will never learn either what this
means or whether we should be happy or sad. Certainly it has triggered a rash
of articles using the word “contagion” and grave talking heads on TV. A far
bigger Chinese explosion this week involved actual bangs, loss of life and
massive destruction of great quantities of manufacturing capacity and
stockpiled goods. This may turn out to be the more important event, although
the Chinese are often as reticent about these embarrassing events as our own
energy minister is about her “secret” plans to order impossibly expensive
nuclear power stations.
The government has obviously become
worried that citizens are threatening to reach their own conclusions about the
“state of the nation” and so we are being treated to frequent official updates
on this subject. Unfortunately these events subject Number 1’s formal speaking
skills to a severe test. Better known for a jovial impromptu singing and
dancing communication style, these dreary lists of dubious achievements of his
government put everyone, including himself, to sleep. It was interesting
however, that someone seems to have got him to realize that the new draconian
visa requirements are seriously impacting tourist numbers. He also seems to
have noticed that not having reliable power supplies is pretty inconvenient as
well. And summer is coming. It’s going to be great.
Over-excited Durban city fathers have been seen tearing
about the place in blue flashing light cavalcades accompanied by the worthies
who decide on the venue for the 2022 Commonwealth Games. Now there is little
doubt that this city does already have a wide range of the facilities required
for such an event. They are mostly all conveniently located along the Indian Ocean shorefront, and it would indeed be rather
exciting to play host to the games like this. However the big issue is the
price estimate of R6.4 bn; a number far more easily said than raised and
definitely way lower that the final outcome. Glib hand-wafting explanations
that the cost will be shared between government, the city and the SA Olympic
committee are wildly optimistic. The government has yet to provide the expected
and necessary guarantees.
Tonight's away Test against Argentina will
be hard to watch for a number of reasons, not least of which is that kick-off
is getting a bit past bedtime for some of us. Also it may prove to be even more
embarrassing than last week’s calamity here at Kings Park.
But never fear, the trade unions have now started to take an interest in rugby.
Unfortunately, however, their involvement will probably just result in more pay
for fewer players and longer half-time. There should however be a full 11 man
Proteas squad on the pitch at Kingsmead this evening as the series against New Zealand
begins. The stadium is looking rather splendid these days following a cleanup
and a huge fancy multicoloured score board. Now all we need is for Eskom to
keep the lights on.
James Greener
14th August 2015
