I have been battling for a topic for my next blog.
There is always a raft of bad news available and so it is easy to be negative. Once Peter Dirk-Uys, of Evita Bezuidenhout fame, was asked where he gets his material. His answer: “I read the papers.”
But, this morning it struck me, things could be worse. So here are some things for which we can be grateful:
Europe – Things seem pretty settled economically in Europe. Growth is positive and, apart from terrorist red-alerts, politics and economics seem stable. As our largest trading partners, that is very important for us.
Brexit – There are no fireworks that are being reported. Fair enough, whatever talks are being had are still at the technical stage. Deal-breakers, like Immigration and Passports and EU Fees, would be noted and placed on back-burners at this stage to be settled later in smoky lounges. The UK Pound is weakened and will stay that way for the foreseeable future as uncertainty prevails but its current exchange may become the new normal depending on the final Brexit agreement.
USA – Trump trumps. It feels as though everything we read about this nation is either ascribed to Trump or Buffet. The latter certainly called the stock market and its rise of about 18% [Nasdaq, for sure] has meant billions of dollars for the Investors. But Trump seems to be more focused on his image than his international relations. My sense is foreboding, you can’t be that sensitive to criticism and that dictatorial to decisions and still manage all the constituencies onshore and offshore. He has headwinds but his country is still prospering. That’s good for us and the rest of the world. If I was North Korea, I would just be cooling it for a while. Seriously though, we hope sanity prevails in that region.
Stock Markets – Wow, they’re high! Certainly no waiting, or watch-and-see there. Just up-and-up and off very little data that underscores the call. My sense is that interest rates are staying low longer, inflation remains controlled despite US$trillion balance sheets after Quantitative Easing and world trade seems stable. Added to that, Emerging markets seem to be less risky than compared with the Developed world so capital is seeking positive interest returns. Put another way, we seem a lot more concerned than the foreign Bond investor world does about the state of our country. Whatever, that’s another raft of good news for us as long as we are not fully downgraded.
Darkest Africa, it is no more. Pockets of democracy still prevail such as recently displayed in the Angolan polls. Growth is positive and fixed investment is occurring. We need Africa somewhat stable as we have big investments in her, and we desperately rely on governments to provide for their people so as not to migrate here and cripple us economically by adding to the poverty that abounds.
Unfortunately, I must be a tad political as we understand our economy and our politics are side-saddling at the moment.
Interest Rates – There’s talk of another decrease. Inflation was pretty close to 4% so well within the SARB target range and the Rand has been range-bound though volitile. Sitting in a Risk committee last week, the sense was that the Rand was volatile but hasn’t weakened, or maybe, “downgraded” should be the word, as expected. This environment is somewhat conducive to declining interest rates. My view on the last one was that it was a “tester” to see if the Rand would weaken notably. It didn’t, so expect some more decline in interest.
Free Press – I would rather be saying, “Why are we not prosecuting?” than not be aware of the Amabhugane revelations. Thank goodness we have a free Press and that, whilst it faces difficult challenges at times which I would not dare trivialise, it largely does it work unhindered. We are kept informed and are able to make powerful decisions at key times; if this was not the case the ANC would be far less tenuous. I recommend you read to understand, and then look beyond the “noise” to reflect positively.
Gupta Exit – Could they come back? Yes, of course – like Chevrolet and Peugeot did after 1994. My question is more along the lines of, are their companies properly valued for sale, will they pay the appropriate tax and will the funds exit the country legally? If not, alleged Grand Theft should continually be investigated. But, their exit signals a tightening of the screws to doing business in SA. Companies have stepped back from their business to the point that they cannot transact any longer. It will be very interesting to see if the new owners get the fundamental support they need to trade and, if not, why not. If alleged [in our country, we still apply this rule of law] corruption is being retarded, that’s good news.
ANC – Cyril Ramaphosa spoke of the division again this weekend. Despite continual denials, there is an undeniable rift. Sadly, its roots are very deep and it would take years of courageous preparedness to litigate and a cessation of cadre deployment to reverse endemic corruption. I don’t know who has the stomach to make that happen satisfactorily. But again, that we can read about it, that leaders are speaking about it and the ANC is worried about it, is good news. In this regard, the SACP bi-partisan meeting today with the ANC will be telling. Derek Hanekom will be top of the agenda. What a nuisance when your NEC-elected head of the Disciplinary Committee is not prepared to tow the Party line. The court case concerning the KZN ANC election could also be telling when it comes to the KZN vote in December. This week could prove very interesting in SA politics. I would go so far as to say that these machinations are holding Moodys back from declaring us full Junk status. The hope that is engendered as good men of high standing refuse to have their characters and reputations trashed, is palpable for the rest of us. It is these actions, which seem to be light in the gloom of SA politics, that are helping our property industry at the moment.
Property – We are doing well. Of course, it could be better. However, we will not see that unless sanity returns to government. We have not had to endure any shocks recently and since the reshuffle, and the economy is hopefully going to come out of recession soon. But, admittedly, we are on a knife edge and nobody but our politicians are going to change that in the medium-term. Somehow, our property prices are holding their own even though I acknowledge that the rate of growth is declining. Perhaps what I’m trying to say is that I know it’s tough but if you’re still in the industry, you are winning against the odds.
JSE – What is going on here!? Record highs and a little drop only to return to…you guessed it, another record high. Huh? Yes, Naspers is at the heart of the growth but even Steinhoff could not pull the market back. And as we indicated above, this trend is not unique to us. Why is this something for which to be grateful? Well, we measure our wealth predominantly through shares and property. These asset classes are the crux of most pensions and the rest is cash or near-cash. If property is in the doldrums and stocks follow, we get miserable and for good reason. I’m not sure about the JSE breakaway but if you’d offered it to me I would have taken it with both hands. Good news!
The Rand – As stated, volatile but range-bound for the common man, the value is much better than gut-feel expected. Nothing more to say than it is good news for now. Another interesting point was made last week, that a normal deterioration of our currency based on inflation since the late 90’s would have yielded pretty close to R13/US$. Thinking about all the other stress and starin to which we have submitted our economy, our current rate is not that bad.
Let me sum up. I may be an old fool living in denial, but things could be much worse than what they are. You have to see the positives to get you through the day. You need support – family, friends, and the likes – from time to time, but unless you can convince You of some of these things, you can slump and become ineffective. There are positives and, at least, there are things to be grateful for. Many things we have feared have not come to pass and we have cause for hope in much of what we are reading and hearing, and, may I say it, experiencing. Stay in negativity if you wish, no one will blame you. But, if you can see some stuff that is positive, if not in the megatrends I have tabled but just in your daily life, then inspire others. I coached a man the other day who said this, “We are inspired by what we see, so be inspired.” Maybe that colleague next to you deserves some inspiration?
Homeloan Junction is inspired. Not because it’s easy but because it’s worthwhile. Continue to meet us at the Junction.
Yours in Property.