The much anticipated 2010 Soccer World Cup is days away, following several years of careful planning and hard work behind the scenes. Hosting an event of this magnitude is a “first” for Africa – and it is by no means an easy task to follow on from Germany, who hosted the event in 2006.
A little World Cup Soccer trivia, for those of us who haven’t yet had enough of all the hype:
- The event has been hosted every four years since 1930, with the exception of 1942 and 1946, due to WW11.
- Brazil are currently the record holders after winning the tournament 5 times and are the only country to have been represented at each of the 18 tournaments, followed by Italy [current champions – won 4 times] and Germany [hosts in 2006 – won 3 times]
- It is reported that some 715.1 million people watched the final match which took place in Germany in 2006 [Italy vs France].
- The total prize money for the tournament this year is reported to be $420 million [an increase of 60% from 2006], with the winning team expected to receive $30 million and the runners up, $24 million.
- Zakumi is the official mascot for the 2010 World Cup. According to Wikipedia, “his name comes from “ZA”, the international abbreviation for South Africa, and “kumi” a word that means “ten” in various African languages.” His official birthday is 16th June 1994 – “Youth Day” as we know it in South Africa.
Trivia aside, this is a golden opportunity for South Africa to shine, both on and off the field, and to showcase to the world what it has to offer. From tourism to trade, from foreign investment to finance – this really is an opportunity of a lifetime.
The Greek debt fiscal crisis has dominated the markets’ attention during the quarter, with the concern that, should the relevant authorities not put together an appropriate rescue plan, similarly vulnerable countries like Portugal, Ireland, Italy and Spain [the remainder of the “PIIGS” countries] could follow in Greece’s footsteps. The European Union and the International Monetary Fund announced a “bail-out” package on the 2nd May which will provide Greece with 110
billion Euro’s over the next three years, “on condition that Greece slashes public spending and boosts tax revenue.” While the rescue package for Greece lifted markets initially following its announcement [because the root cause of the problem is finally being addressed], the impact of the crisis on the region as a whole can clearly be seen in the performance of the Euro Stoxx 50 Index in the above graph. Following a lifeline being extended to Greece, similar austerity measures were also announced for Italy, Spain and Portugal. The market is well aware of the fact that these austerity measures [which require significant fiscal change] could well dampen growth in the region for the foreseeable future. In the short term, there is also the concern that sluggish growth will reduce tax revenues, which could serve to exaggerate the current problem in coming months. The recent rescue of the Spanish bank, Cajasur, by the Bank of Spain added to the ongoing pessimism in the region.
Other factors that have unsettled the markets over the quarter include the economic impact of the volcanoes in Iceland, the BP oil slick in the Gulf of Mexico and the mounting tensions simmering between North and South Korea. Under these circumstances, it is not surprising that gold is once again being viewed as a safe haven. Having said that, though, one could argue that the price of gold hasn’t risen as one would expect based on its safe haven status – but we need to bear in mind that the price also hasn’t declined in line with most other commodities in recent weeks.
While our domestic market hasn’t been immune to the jitters affecting global markets, it is encouraging to note that according to Stats SA, “real gross domestic product (GDP) at market prices on a quarter-on-quarter seasonally adjusted annualised (saa) basis rose by 4.6% in the first quarter of 2010 from 3.2% in the fourth quarter of 2009.” This is evidence that the domestic recovery is gaining further momentum. The graph on
the right reflects the movement of each of the domestic sectors, as well as the JSE Allshare index year to date.
Currencies have remained in unpredictable territory, although the Rand has exhibited pockets of weakness recently. This is to be expected, with the current levels of uncertainty prevalent in the markets. The graph reflects the performance of the Rand against the three main cross currencies for the quarter ending 31 May. As alluded to by John in his article last quarter, we do expect to see periods of Rand weakness during the second half of this year.
With this being my final report for Finlaw [as my husband and I are relocating to the UK] I would like to wish you all everything of the best for the future.
Sandy D’Arcy – 31 May 2010.
