The JSE has just wrapped up what seemed to be a high-flying month – although yesterday poor US economic data put a damper on global stock markets and the all share ended the day at 40 482.92 points, down from the previous close of 40 653.
The year started with a bang as the index went over 40 000 for the first time on the year’s first trading day. And the index went on to notch up another six record-breaking closes.
This came after 46 closing highs last year. But despite the series of closing records, the run-up last month was not very large – about 1 percent. And the gain was largely the product of a falling rand – from R8.45 to the dollar to more than R9. The index in dollar terms fell 4.6 percent in the month.
No sector produced a strong performance. And some of last year’s most popular shares fell out of favour in the month, mostly retail. The general retail index fell 13 percent. Among the big losers were Foschini, down 20 percent, Mr Price 16 percent and Woolworths 11 percent.
The country’s biggest food retailer by market value, Shoprite, was down 22 percent, after a sales report mid-month disappointed. This set the scene for other retailers as sentiment turned against the sector. Analysts have described retail shares as overpriced and it seems increasingly likely that heavily indebted households will have to cut back on spending.
After a preliminary report that the US economy shrank 0.1 percent in the fourth quarter, global investors have lost some of their enthusiasm for shares. And the domestic scene is even more discouraging as threats of labour unrest persist. So there is little to drive positive sentiment.
Many African airlines have increased their capacity to meet a huge increase in passenger demand forecast by the International Air Transport Association (IATA) as a result of increasing prosperity in the continent, which is attracting travel and investment from other parts of the world.
Like airlines all over the world, many in Africa including SAA and Comair, have invested in new generation aircraft using less fuel and causing less pollution. International passenger numbers in Africa did in fact go up last year, but not sufficiently to take up the entire increase of 7.1 percent in available seats particularly as new routes were started by SAA, Kenya Airlines and FastJet among others.
IATA’s analysis for the full year shows that average passenger loads measured across all flights by African airlines were only 67.1 percent – the lowest in the world.
Taking delivery of the new planes also meant an increase in freight capacity of 9.2 percent while demand for air freight – expected to soar in the long term – declined by 2.1 percent, resulting in a freight load factor for the region of only 24.7 percent – also the lowest in the world “by a considerable margin”, according to IATA.
But this situation is expected to be reversed as African middle classes grow and demand for both travel and consumer goods increases, while the lack of infrastructure makes surface travel difficult.
Looking at the global airline industry, IATA reports a year-on-year increase of 5.3 percent in passenger demand and a 1.5 percent fall in cargo. Passenger demand for international flights grew at a rate of 6 percent, while that in domestic markets grew by only 4 percent.
IATA economists say the strong growth in passenger numbers “despite the economic bad news that dominated much of the last 12 months demonstrates just how integral air travel is”.
Both the ANC and DA saluted multi-billionaire businessman Patrice Motsepe for being the first South African and third person internationally – after Bill Gates and Warren Buffet – to share the proceeds of his hard-earned business interests with poor South Africans through the Motsepe Foundation. ANC spokesman Jackson Mthembu said this act of goodwill gave expression to its view of “a patriotic bourgeoisie” whose outlook reflected an understanding of development challenges and limitations facing South Africa and its people.
“We believe that this gesture of philanthropy will assist many destitute South Africans to experience some relief that complements government initiative through the social safety net that has been a policy instrument to mitigate poverty and indigency.
“We hope that this gesture of generosity will send a clear message to our corporate citizenry of responsive consciousness in building cohesion and collaborative development.
“The ANC believes that business is an essential partner in development and in confronting socioeconomic challenges like poverty and unemployment.
“Patrice Motsepe should be lauded for exemplary leadership… that must confront business in their social commitment to eradicating deep-seated poverty that confronts under-developed countries.”
The DA finance spokesman Tim Harris said the Treasury “must make it easier for others to follow suit by boosting South Africa’s tax incentives for charitable giving”. Motsepe announced that he was joining “The Giving Pledge initiative” established by Gates and Buffet, Harris noted. “He has done so in a tax environment that is significantly less generous in the tax treatment of charitable contributions than that in the US.”
Harris said that this needed to change. Public benefit organisations “saddle a large and increasing burden of South Africa’s social and developmental needs”.
South Africa’s tax laws needed to reflect the reality of need across the country “by increasing the tax deductibility of charitable giving and making it easier to set up charitable foundations”.
Funny how neither of the main parties suggested that sponsorship of business breakfasts which host politicians is a good way for wealthy benefactors to invest cash.
Edited by Peter DeIonno. With contributions from Ethel Hazelhurst, Audrey D’Angelo and Donwald Pressly.