New market highs

[Nickolai Naydenov]

JSE reached new record high levels today, but what puzzles me is how does this happen in these tough economic times and a weak rand, despite that there's still lots of foreign investors investing here. Of course the issue here is behavioural investing but somehow there seems to be so much confidence. What are your thoughts on that?

[Dave A]

A weaker Rand is good for exporters. When you unravel all the incestuous relationships, its impact is deeper than it may seem at first blush.

The confidence is probably because it's not our economy that's tanking - it's the Eurozone jitters that has everyone a bit edgy.

[Justloadit]

A weak Rand for exporters only has value if a large portion of the exported product is sourced locally, so for mining this is good, however if you are a manufacturer, and you are reliant on imported raw material, the timing of the payment of imported raw material versus the payment of exporting finished goods, plays a huge role in the profit you make in Rands. Off course it does depend on how long it takes you to convert raw material into finished product. It all depends on which side of the curve of a weakening Rand against a strengthening of the Rand you happen to be. I have a feeling that we are in for a long ride of a weakening of the Rand. There is just too much uncertainty at the moment, and the wild cat strikes are doing no favours to the Rand value.

I have experienced both sides of the pendulum. It is extremely difficult to predict, and in most instances, you profit margins are compromised.

[wynn]

I remember when you got 2$US to the Rand, that would have been the time to import.

[Nickolai Naydenov]

As Justloadit said the exports need to increase drasticly in order formexporters to make money or for that to be good for the economy, but if demand doesn't change then exporters will make extra profit on the usual amount of items they sell. And yes a lot of manifacturing companies export raw materials to countries like China and then import it back in because it works out cheaper for them and of course weaker rand can't do good for that.
The eurozone is straggling big time so I'd imagine a lot of investors will invest in developing Africa. Either way it seems to me that something doesn't add up.