Tidemarks has
already raised the problem of trying to make sense of the deluge of numbers
about the spread of this rather nasty virus responsible for the Covid-19
infection. The first confirmed South African case is a 38year old male right
here in KZN. He had been on holiday in Italy and must have arrived back home
right about the time the Department of Health issued a press release saying
everything was under control. But they are not the only ones to be blindsided
by this little gogga. The markets whipsawed in both directions far and fast,
ejecting investors and traders like water from a wet Labrador having a good
shake. To what extent this was also a reaction to the outcome from the current phase
of that never-ending circus the Americans use to find the most contentions and
unsuitable person to be their leader for the next 4 years, is uncertain.
The up-tic after the record-setting one day
fall in most indicators has all the classic hallmarks of the distastefully named
“dead cat bounce” (not to be confused with a band of the same name). The rand is
setting new all-time lows against most important currencies, setting the scene
for us to watch those politicians who said they would simply “pick it up” when
this happened. In fact, after a long period where worldwide the omniscient deciders
have coaxed interest rates ever lower, now, when there’s an event like this,
there is not all that further down to go. The seat belt sign is on folks. The
price of Krugerrands has outperformed the all share index by around 20% in the
last couple of months.
At last, someone
has pitched up with the real point in the simply terrible idea of arranging to
“invest” R250bn of Government Employee Pension Fund savings by lending it to Eskom.
Matthew Parks, the Parliamentary coordinator of Cosatu has noted that any
funding should respect issues of "financial integrity, fiduciary duty and
investment mandates. Isn’t that the truth?
The fact that Eskom needs the money to repay earlier lenders has
received scant mention.
There have
been signs that the deal was under pressure to be finalised quickly without
bothering too much about niceties like this. But now we also know the reason for the haste.
This week a Pagani Huayra Roadster BC was offloaded at Joburg airport and the
R50m invoice is being prepared for the lucky (?) buyer. Apparently, it’s a car
that’s capable of astonishing speeds in great comfort even with the top off. Only
40 of them will be made and naturally South Africa came to mind when the makers
were thinking of buyers. I doubt many readers (except those who have retained
their youth and wealth from those heady days trading bonds in the 90s) have
heard of it. But R50m is small change in the context of possible commissions
for those supervising the worst deal of the year.
Another
intriguing aspect of this unappealing deal is that in order for the lenders to
expect to be repaid interest and capital, many of their fellow citizens (and
probably indeed themselves) will need to change their attitude towards paying
for electricity.
The recent
release of the GDP data for the 4th quarter of 2019 has done nothing
to dispel our doubts about the reliability of this rather important data set.
It simply just looks and feels wildly variable and erratic. Illustrations and
examples of this have no place in this journal but based on the data as
published it is no surprise to learn that that the size of our economy has
declined by ten billion rand (on a base of around R3000bn) in the past 24
months. This is a terrible result for a nation whose population is growing so
much faster than this.
The sports
calendar is really hotting up. And that’s before I include the women’s matches
where the cuteness to colossal ratio is on the acceptable side. I usually
regard the Boat Race as the proper start of the northern hemisphere events but
the six nations has been interesting this season given that I now have family
living in both Edinburgh and Pembroke.
James Greener
6th March 2020
