From Ajay to Zondo
here is no doubt that 2018 never lived up to initial expectations. Just look at how the JSE moved from Ramaphoria in the first quarter to negative returns of 11.4% by the end of December.
Still, I expect business confidence to improve once there is progress in the counterattack against state capture, especially if it includes jail sentences. And it’s clear that the ratings agencies have warmed to us since the appointment of Tito Mboweni as finance minister and Reserve Bank governor
Lesetja Kganyago showed the courage to hike interest rates last month.
The question of expropriation without compensation is still the elephant in the room. A property-owning democracy could be created if people got title deeds for their properties in urban areas and if what used to be called “tribal trust land” was handed to those who live on it. Then we could set up a commission along the lines of those in Eastern Europe which processes claims from people who lost their properties to previous regimes, like the Communists and the Nazis.
True, we have the Land Claims Commission, but it is sitting with thousands
Tof claims it hasn’t even started processing. Perhaps we need a tribunal more independent of government, that can move faster to get the job done. Still, it is encouraging to see a number of fund managers repatriating funds to take advantage of opportunities in SA. For one thing, property shares have never been cheaper. This has nothing to do with expropriation without compensation — though technically, after the constitutional amendment, the government will be able to seize the Rosebank Mall or Canal Walk in Cape Town. I hear that a good local shopping-centre share such as Hyprop is a better buy than its UK analogue Intu, which has much higher gearing and a CEO who won’t get the hint that it is time to go.
Granted, US Treasury bills are starting to show a fair yield — but at 2.7% it is still half what you get from the dividend flow out of Standard Bank and those Treasury bills also don’t offer the opportunity of capital gains.
Few people would disagree that Standard Bank is competently run: I have seen at first hand that its human capital is impressive. I would buy its shares before the likes of the indifferently managed Barclays or the Royal Bank of Scotland.
Today, of course, SA’S resources shares make up a smaller part of the
JSE than ever. BHP has even dropped the “Billiton” part of its name, and as it has no significant assets left in SA, perhaps it will consider leaving our bourse. At one stage, I had hoped it might go the other way: had Rio Tinto decided to join the JSE, all the largest mining houses would have traded in Johannesburg — the greatest mining town ever built.
Gold rush redux
As far as industrial minerals go, clear signs of a cooling of the Us-china tariff war would be good news for them. But perversely, holders of gold shares must hope for uncertainty or even chaos, as gold still has safe-haven status. And yet, Anglogold and Gold Fields are both making orderly withdrawals from SA.
Ultimately, however, the main mover of the JSE shareholder weighted index remains Naspers. It looks cheap, considering it trades at a discount to its holding in Tencent — but this is no different to, say, Reinet’s discount to
British American Tobacco, so it could persist indefinitely. The best way for Naspers to unlock value for shareholders would be to unbundle Tencent and focus on its less glamorous and lossmaking basket of so-called managed operations.
Few people would disagree that Standard Bank is competently run. Its human capital is impressive