There are many, many things beyond your control as an investor. One of them, which can be really big depending where you live in the world, is politics. Where there are ulterior motives at work that upset the apple cart in a big way, there is nothing you can do, other than watch the apples tumble.
Perhaps there are not even ulterior motives, perhaps there are known knowns. Equally, there are unknown knowns. Credit goes to ex United States Secretary of Defence Donald Rumsfeld for this term; the full piece is almost as priceless as the day that it was uttered:
“Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns - the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.”
That could mean almost anything.
On Tuesday, Finance Minister Pravin Gordhan suggested that the charges against him were without merit.
They are designed to distract him and the timing is fishy, the medium term budget speech is just around the corner. If someone is using organs of state to remove the holders of the keys of national treasury, I am pretty sure that we will find out soon enough.
Read also: Torment of Gordhan rattles the rand again
We can all guess, we can all suggest that we know (known knowns). Who knows, perhaps the minister of finance is not squeaky clean; yet the vigour with which this is being moved along almost seems like a case of wanting to hang the boy that stole the apple.
The one that stole the pile of gold, well, that process is taking place at sloth speed (seemingly). At the end of the day, there is nothing you can do about politics. It isn't perfect anywhere in the world. Is the Nordic model the most perfect? Who knows, history judges in the end.
The upshot of it all is that the currency weakened significantly to the majors, and SA inc was not wanted, most especially financials. A downgrade threat looming means that banks possibly have to raise more money in that environment; collectively those stocks were down three and a half percent. Equally, local retailers were sold.
The top 40, which is more than a little littered with rand hedges, enjoyed a good day, up nearly two-thirds of a percent. The overall market rose a bit, up 0.43 percent by the close.
The top six losers were financials and banks: Nedbank down 4.4 percent, FirstRand down nearly 4, Standard Bank off 3.6 percent.
Read also: Sechaba ka’Nkosi: Pravin charges to hit us where it hurts
There were winners, in particular one that caught the eye: Richemont. That stock caught the weakening rand with both hands, there was, however, related company news that saw the Swiss luxury maker end the day just over six and two-thirds of a percent better.
It has been a tough year for all luxury goods manufacturers, watches have been a no-no. Non! That is French for no, ok? French luxury goods business LVMH, synonymous with fine bags, champagne and cognac, (as well as perfumes, shoes, accessories, watches and jewellery) beat expectations when it reported earlier in the session.
Asia improving “significantly” and demand for fragrances and leather goods drove the 6 percent top line growth.
Yet, Hong Kong continues to suck wind, while tourism to mainland Europe has been dampened since the terrorist attacks in Paris last November.
This may be a fleeting moment, it may equally be the start of a gradual and slow recovery in luxury goods.
The brands themselves, as I have always said, are timeless, and with each year that passes, they become more and more valuable. The oldest of the lot in the handbags (and other goods) front, Louis Vuitton (founded in 1854) itself, is iconic, and stands as tall as the old (the Eiffel Tower and Big Ben), as well as the new (the Burj Khalifa and the Shanghai Tower).
Bulgari on the jewellery front is equally an amazing brand, 122 years old this year. One of the oldest brands in the world, as far as my back of the matchbox research is concerned, is Stella Artois. The logo was apparently first used in 1366. Back during the dark ages, the plague and so on. LVMH, well, that is a little more classy.
So what to do? The burning question? You know, I know.
I think it depends on an individual by individual basis. Should you invest offshore? Yes, but do not do it for the wrong reasons, to escape the rand. Do it as wanting to diversify and to own the quality.
Sasha Naryshkine is an analyst at Vestact. His opinions do not necessarily reflect those of IOL.
@SashaNaryshkine
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