Geopolitics
Politics is always tough to read and more often than not geopolitical "intelligence" is a big "what-if" game.
However there appear to be a few storm clouds brewing:
- The US over the last few weeks has found itself in a constant state of alert for terrorist threats both at home, in far-flung places like Yemen and of course in the Middle East. Whether there is a serious threat or not to the US the emotional drain on the American psyche has to be there
- Just tonight a Texas nuclear assembly plant was shutdown for securit reasons.
- A top Iranian nuclear academic was recently assasinated. Neither Israel nor the US are claiming responsibility but Iran is making some unhappy noises and this looks like it is rapidly coming to head considering the US deadlines which don't appear to have been enforced.
- More fuel is being thrown on this fire (excuse the bad pun) after Swiss commodity firm Glencore reportedly stopped selling gasoline to Iran. Something has to crack here and it looks like the US is on a colission course with Iran.
- Debt issues continue to plague Iceland, Ireland, Argentina and Greece as well as a number of other emerging markets which look shaky.
- US Centre for Disease Control reckons as many as 81 million people have been infected with H1N1 swine flu, 16000 deaths and 360000 hospitalisations.
- Lots of posturing between China and Google which I'm surprised hasn't really been picked up by South African media.
- Initial stimulus packages appear to have had only a short-term impact on the economy
- Job cuts both locally and abroad continue to mount. The pace may be slowing but each month there are a few more people joining the unemployed lines
Locally I have had reports from one of the big media houses and two of the big financial services firms that there is another round of job cuts coming.
Small business confidence ticking up?
Having said that there are a lot of negatives in the economy, there seems to be some anecdotal evidence that some of the smaller businesses who were operating on a low cost base are bouncing back quite nicely.
Those who survived the carnage of last year appear to be consolidating.
So where does that leave us?
Disposable income is tight and markets don't look like they are going anywhere fast. Maybe there are some opportunities for some under-rated small-caps to shine through?
Things that look like they bear some consideration:
- CIC Holdings - quality branded goods licenses
- Advtech - Education
- Paladin - Education and financial services
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3 comments:
Advetch very low on liquidity but paying decent dividents, you reckon education is a good bet when times are bad? What about retailers? People still have to buy food and clothes?
I like education - you're a parent aren't you?
The one thing you are going to bend over backwards to make sure of is that your children enjoy a good education. Its probably one of the real investments you can make.
Quality education providers are price makers not price takers.
Retailers - I know they are boring but if I had to pick one I'd still go with the tried and test Pick 'n Pay. In the short-term they'll probably not outperform but I think they are one of those things you can fire and forget.
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