Or, maybe the market is waiting for next week's election in SA?!?
FYI:
Markets ponder policy risk from election
By ALISTER BULL
Johannesburg (Reuters) - South African markets are
prone to political risk and could suffer as speculators
mull the composition of president-in-waiting Thabo
Mbeki's new cabinet and wait for policy signals after
next week's election.
Analysts say fears of a bloody election campaign have
proved false. But they are concerned that some foreign
investors reckon the ANC may harbour a secret
agenda to let the rand slide. That could nag at
confidence until the party proves otherwise. Some polls
signal the ANC is near the two-thirds majority that
would give it the power to change the constitution - a
prospect that alarms people who fear SA is headed
towards the de facto one-party state of neighbouring
Zimbabwe.
Largely to the ANC's credit, the election campaign has
been relatively peaceful, with violent incidents rare, in
contrast to the historic 1994 election when thousands
died.
Mbeki has taken great care with his relationship to
business - backing the migration of some top companies
to London, including Anglo American - in the teeth of
protest from the ANC's alliance partners in labour.
He has used every opportunity to deny he would veer
from the government's current sober economic policies.
He also has sworn to respect the central bank's
independence and not to neglect for one moment the
interests of foreign investors whose capital he needs to
build a better nation.
But speculators - who were conclusive victors during
last year's rand crisis - continue to nurse suspicions that
the ANC will jettison conservative spending controls
and embark on state-sponsored expansion to lift growth
and create jobs.
"The post-election policy landscape is uncertain and
even if you believe that they will change nothing, the
ANC has to prove its innocence," said Roddy Graham
at Morgan Stanley in London.
One US hedge fund manager, who declined to be
identified, said that the view from New York was that
the country faced enormous pressure to deliver to
millions of poor blacks and would adopt an inflationary
policy to pump-prime the economy.
"I reckon they'll cut interest rates, let the rand sink and
go for growth. And if they do, the stock market is going
to become a screaming buy," he said.
South African markets have been on a one-way path
since the end of April, shaking seven percent from the
value of the stock market, four percent from the rand
and adding 100 basis points in yield to the government's
benchmark R150 bond, due in 2005.
Much blame can be laid on external factors. The gold
price has slumped to fresh 20-year lows, the US has
hiked rates and emerging markets are generally back on
the watchlist after Russian debt took another tumble
and Latin America sagged.
But doubts about the future of Finance Minster Trevor
Manuel and the prospect of former ANC heavyweight
Tito Mboweni taking over at the central bank on
August 7 prompt caution about assets.
Mbeki will be inaugurated as president on June 16 and
cannot formally announce his new cabinet lineup until
that date.
Analysts have a hard time believing he would risk
upsetting sentiment by removing Manuel, who has
worked hard to win the market's confidence and whose
role is seen as a crucial guardian of ANC commitments
to deficit reduction and spending controls.
"I cannot imagine why he would want to shift Manuel
because he has done a good job and it took him a long
time to settle. Why risk going through that disruption
again?" said Nedcor chief economist Dennis Dykes.
Manuel's 1996 appointment coincided with a run on the
rand as speculators took advantage of his perceived
inexperience to inflict a painful baptism of fire.
On the other hand, Manuel has an international profile
that some say Mbeki might resent and, as a mixed-race
coloured man, he may be vulnerable to the criticism that
SA ought to promote black Africans to key government
jobs.
Mbeki has stressed that rumours of changes to his
cabinet, including the finance minister, were by definition
speculation because he had not made up his mind - one
possible indication that no one's job is guaranteed.
___________________
SA has reason to thank Mandela
By DARREN SCHUETTLER
Johannesburg (Reuters) - South Africans may grumble
about soaring crime, a lack of jobs and a crumbling
currency, but when they reflect on their violent past they
have good reason to thank Nelson Mandela, who
retires on June 16.
"The Mandela legacy is about a larger than life man who
turned SA into something special in the world," said
Chris Landsberg, an analyst with the Centre for Policy
Studies.
"But beyond his towering image, Mandela leaves a
commitment to reconciliation that will never be
equalled."
On the eve of Wednesday's election, it speaks volumes
about how far SA has come when political rivals who
killed each other five years ago now argue over
campaign posters.
Most attribute the country's political peace to
Mandela's skill in giving expression to black anger while
soothing white fears. But Mandela shrugs off
comparisons to other great leaders like Mahatma
Ghandi.
"It is a mistake to think it is the work of one man,"
Mandela said recently. "It is not an individual that is
responsible for the last five years. It is the movement."
"I step down with a clear conscience because I have
contributed in a small way, a very humble way, to what
is happening in this country."
Mandela's long life before taking office is already
legend.
Mandela rose from rural obscurity to take on the
apartheid empire, a struggle that gave the 20th century
one of its most compelling figures.
He was among the first to advocate armed resistance to
apartheid in 1960, but was quick to preach
reconciliation and forgiveness when the country's white
minority began easing its grip on power 30 years later.
"I have cherished the ideal of a democratic and free
society in which all persons live together in harmony and
with equal opportunities," Mandela said in one of his
most famous speeches, delivered to the court that found
him guilty in 1964 of trying to overthrow the apartheid
government.
"It is an ideal I hope to live for and to achieve. But if
needs be, it is an ideal for which I am prepared to die."
Though prosecutors had sought the death penalty, he
was sentenced to life in jail and was taken to Robben
Island penal colony off Cape Town where he spent 18
years before being moved to mainland prisons ahead of
his release in 1990.
Three years later, Mandela prevented a racial explosion
after the murder of popular Communist Party leader
Chris Hani by Polish immigrant Janus Walusz. That
night, as the nation braced for violence, he appealed for
calm on countrywide television.
"He brought to SA, in its most precarious moment, the
prospect of a society beyond division and beyond
retribution," wrote Lester Venter in When Mandela
goes.
After his inauguration, Mandela made reconciliation the
theme of his presidency.
He took tea with his former jailers and won over many
whites when he donned the Springbok rugby jersey
team before the 1995 World Cup.
When the killing of a black baby by a white farmer last
year threatened to fan simmering race conflict, Mandela
visited the grieving family and urged blacks not to take
revenge.
The hallmark of Mandela's crusade was the Truth and
Reconciliation Commission which probed apartheid
crimes on both sides of the struggle and began healing
the country's wounds.
Stanley Mogoba, leader of the Pan Africanist Congress,
believes Mandela spent too much time trying to
reconcile blacks and whites and failed to bring about
black unity. Nevertheless, he says: "Mandela is one of
the great people we have produced in this country . . .
not only in this country, but in the world."
Mandela's decision to stand down voluntarily after just
one term as president is seen as a shining and sadly rare
example for other leaders on the continent.
Often criticised for a woolly grasp of economic issues,
Mandela hands over to a new generation of leaders
better equipped to manage a modern economy. Despite
many achievements over the past five years,
unemployment is stubbornly high, hospitals are
crumbling, and crime and corruption are out of control,
threatening foreign investment.
In foreign policy, Mandela's controversial friendship
with Libya's Muammar Gaddafi paved the way for a
breakthrough in the Lockerbie bombing case last
month.
But his efforts to bring peace to war-torn central Africa
flopped, while SA's close ties to Syria, Iran and Cuba
have irked Washington. Human rights groups have
questioned his embrace of China with no mention of its
rights record.
Some say SA's special status in the world will be
carried off by its greatest salesman when he retires on
June 16.
During his presidency, Mandela was feted by kings,
prime ministers, and presidents, although it's difficult to
say how much that translated into foreign investment.
However, Landsberg rejects the notion that SA will
become an ordinary country when the Mandela era
ends. "I think it's precisely because this country
produced a man like Nelson Mandela that it will not
fade away that easily."
_______________
DE BEERS/AVMIN
PHANTOM STALKER STAKES A
CLAIM
Nothing focuses the military mind like being caught in an ambush and De
Beers must have captured Anglovaal Mining MD Rick Menell's full
attention through its unexpected purchase of a 21,3% stake.
Avmin is putting the best spin it can on the development, viewing it as an
expression of confidence by De Beers in the prospects for the restructured
and focused mining group.
Despite this, and comments by De Beers chairman Nicky Oppenheimer
that he has no intention "currently" of increasing the holding, Menell has to
be wondering what is really going on.
The fact is he is vulnerable to a hostile takeover bid come June 30 2001
when he and his brother Brian lose control of Avmin because the
high-voting stock they hold has to convert into ordinary equity.
This temporary control mechanism was put in place as part of last year's
restructuring that separated Anglovaal's mining and industrial interests,
placing control of Avmin with the Menells and the industrial arm with the
Hersovs.
Avmin public relations manager Julian Gwillim says De Beers will not get a
seat on the board and will have no involvement in day-to-day management
issues. He says Avmin welcomes De Beers as a long-term shareholder and
feels the group's action supports Avmin's bullish outlook on its Zambian
copper ventures.
De Beers communications officer Tracey Peterson does not see it quite
that way. She says De Beers bought in purely to get more exposure to the
Venetia diamond mine, SA's most important producer.
Might De Beers eventually raise its stake or go for control? "We would
consider a suitable opportunity to increase our stake if it presented itself."
The standard reply from Menell and former Avmin chairman Basil Hersov
to questions about their insistence on absolute control was that they "slept
better at night" because of it. Not any more. Reflections on what Anglo
American did to Lonrho through its substantial minority stake has to be the
stuff of corporate nightmares.
By: Brendan Ryan
_______________
Regards. Goalie. |
