JSE all share hits new high amid global volatility
THE IMPACT of butterflies flapping their wings has reached gale force in recent years. The world is still reeling from the US subprime crisis, which emerged in 2007, spilled over into other regions and changed its form as it moved.
Now that the advanced economies are finally showing signs of recovery, emerging and commodity markets are the latest victims of a long string of economic and financial time bombs that explode at regular intervals.
On Tuesday the Sydney Morning Herald quoted a warning from Standard & Poor’s that Australian banks’ credit ratings could be cut by up to two notches and house prices would fall by as much as 25 percent if China’s economy were to slow sharply. South Africa is also exposed to China’s fortunes – the second-largest economy is South Africa’s biggest export market and a hungry consumer of iron ore and coal.
South Africa is even more vulnerable to credit rating downgrades than China because of its increasingly dysfunctional and often violent labour relations, which are a major threat to growth.
Fortunately a hard landing in China is a worst case scenario and last week brought positive data on last month’s industrial output and trade, as well as better-than-expected news on inflation.
Barclays Research economist Jian Chang cited a pick-up in US and euro zone activity as a reason for the 5.1 percent rebound in exports year on year, while China’s imports rose more than 11 percent.
The euro zone seems to be slowly emerging from recession with even the Greek economy improving – it shrank only 4.6 percent in the second quarter from a contraction of 5.6 percent in the first.
Improved sentiment helped send the JSE all share index to a record high of 42 497 points at the start of this week and a further record of 43 019.21 yesterday.
GEPF
Questions about the long-term viability of the Government Employees Pension Fund (GEPF) are beginning to be asked after board of trustees chairman Arthur Moloto’s revelation that its contingency reserves had slipped from about 19 percent to about 5.9 percent in 18 months.
The pension fund serves members of the armed forces, teachers and the 1.3 million strong public service – and about 360 000 active pensioners.
Freedom Front Plus MP Anton Alberts
Fortunately a hard landing in China is a worst case scenario and last week brought positive data on last month’s industrial output and trade.
has submitted a request to public protector Thuli Madonsela about a consortium with close ties to the ANC that acquired a share worth nearly R1 billion in Capitec Bank.
The party has also put in a question to the National Treasury asking why the GEPF was investing in the country’s mainstream media.
The Public Investment Corporation, acting for the GEPF, approved the investment in Independent News & Media in conjunction with the Sekunjalo Independent Media consortium. The GEPF also has an interest in the Times Media Group.
Former acting judge Johannes Slabbert, a GEPF member, said he was concerned that the precipitous drop in the contingency reserves was a consequence of poor investments “which are slowly but surely dissipating the fund’s finances”.
The GEPF, however, said the real test of the fund’s health was that assets exceeded liabilities by a significant margin.
Yet the questions still continued. Slabbert said that in the latest GEPF newsletter, Fundnews, elected GEPF trustee Franz le Roux had reported: “Stability was achieved through the fund’s judicious investments and the income they earned. The fund actively seeks investments that are not only secure, but earn attractive returns that benefit the pensioners.”
Slabbert said Le Roux’s claim of judicious investments was contradicted by the fall in the contingency reserves, which the GEPF had said was a consequence of poor bond yield performances.
British Airways
An apparently rather pointless stunt to draw attention to the fact that British Airways has acquired the first of a fleet of giant Airbus A380s and Johannesburg will be its third destination after Los Angeles and Hong Kong is having the surprise effect of raising thousands of rands to buy food for hungry people in South Africa.
This is because Springbok rugby star Bryan Habana is a patron of FoodBank South Africa, which is leading a campaign to provide nourishing food to poor families in this country after a recent investigation into health and nutrition revealed that one in four households in townships and informal settlements went to bed hungry.
Foodbank buys nutritious food and distributes it to depots around the country, from which its agents take it to households in need.
As part of a joint publicity campaign to attract bookings in the US, China and this country for the inaugural flights of the superjumbo aircraft, a video clip has been issued showing Habana racing against the world’s biggest passenger plane for 100m as it gathers speed down a runway in preparation for takeoff.
It has been shown on YouTube and, according to reports, is turning out to be one of the most successful campaigns on the medium.
As a result British Airways undertook to donate two business class tickets worth more than R60 000 to Foodbank to auction off when the clip attracted 2 million viewers and anther R60 000 worth of tickets if it reached 2.5 million.
Foodbank intends to auction the tickets later in the year and hopes they will attract bids higher than the normal fare because of the hype they have generated and in support of a good cause.
Sue Botes, British Airways’ commercial manager for southern Africa, said the company had been slightly surprised by the effect of the clip and had asked Habana if it could make a gesture to acknowledge “the huge hype” it had caused.