The Markets Jacques Magliolo
Suddenly, mysteriously, the markets have gone strangely=20 quiet. After two weeks of intense activity, the=20 Johannesburg Stock Exchange trading floor this week was=20 more like a museum than South Africa’s financial centre.
To make matters worse, nobody seems able to provide a=20 reason for the total lack of investor interest across all=20
Dealers are puzzled. Some say that its mostly sentiment,=20 and we’ll have to wait for that to change. But, EW=20 Balderson dealer Barry Miller says: “When we don’t know=20 what to make of a market, we attribute it to sentiment,=20 which means we don’t know what is going on.”
Maybe investors are waiting for more financial=20 information, possibly statistics or maybe the Gauteng=20 Budget — released on Wednesday?=20
Dealers say they can’t foresee anything bad coming out of=20 the Gauteng Budget (in fact, most dealers didn’t know=20 that regional budgets would be announced). Neither are=20 they “really waiting for any pertinent statistics.”
As a desperate last resource — to divert attention away=20 from traders — some dealers pointed out that=20 it is not their task to “read the market, they simply=20 carry out trades. If you want opinion, ask the brokers.”
Good idea, but no joy there either. Martin Irish, of=20 stockbrokers Irish & Menell Rosenberg, says: “World=20 markets are doing well, so I can’t understand this lack=20 of interest.”=20
He indicates that Wall Street had reached new highs on=20
Grappling at straws, another stockbroker suggests that=20 the total disinterest in the Johannesburg stock market=20 could lie in institutional desire to trade off-shore.=20
Logical thought is that, since the financial rand was=20 scrapped and the unitary currency is doing so well, there=20 is a possibility that other exchange controls could also=20 be lifted.
If restrictions which prohibit institutions from trading=20 overseas are lifted then it makes sense that trading=20 would be slow. Institutional portfolio managers and=20 dealers would be waiting for their chance to buy shares=20 offshore,particularly those listed on Wall Street.Irish=20 says: “Lifting of restrictions is the only thing I can=20 think of, but I don’t believe that it will happen this=20 year.” There are too many procedures which have to be=20 drawn up and too many rules and regulations which have to=20 be set in motion for the lifting of remaining foreign=20 exchange controls to take place this year.
Could it simply be lethargy after a new pubic holiday?=20 Dealers don’t believe that this is the case either. They=20 say that even jobbers — dealers who trade for their own=20 account — have not shown any interest in the market.
There does not seem to be any explanation, except to note=20 that a similar feeling flooded the trading floor in 1987=20 — two weeks prior to Black Monday.