One of the great utilities of a stock market is that it reveals what investors honestly think. The “honestly think” part of that sentence is the crucial bit. I’ve written about this before, but it’s enduringly important because it illustrates the difference between what people say they think and what they actually think.

For example, you might imagine if you wanted to know who the next president of the US would be, you could just ask people how they intend to vote. What could be more simple? But asking people what they think turns out to be a pretty bad way of predicting future action for a host of reasons, some obvious, some not.

The obvious reason is that there is a huge difference between presentation and reality. Many people don’t want to be thought of as racist or sexist in public, but actually are in private. People want to be seen in a positive light and therefore tend to provide answers they think the public might like, as pollsters discover regularly when they are horribly wrong. But there are other reasons, too, that have to do with a range of conscious and unconscious biases.

But when it comes to the stock market, rewards are provided only for being correct rather than appearing correct. And it’s binary; there is no opportunity to occupy the muddled middle ground.  Well, not when choosing a single stock at least.

SA Inc sell-off gathers pace

The reason for this long introduction is that if you look in detail at the stock market, it’s obvious that the sell-off in SA Inc stocks is gathering pace. This was illustrated very graphically in an article in Moneyweb on Friday, which pointed out that more than a dozen SA Inc stocks have hit 52-week lows. These stocks include Vodacom, MTN, Capitec, Pick n Pay, TFG, Cashbuild, Brait Pepkor, Zeda and MultiChoice.

Moneyweb points out that this is not a panic-selling situation, just a steady decline that began in 2019. Even SA’s elevated bond yields are no longer attractive enough to foreign buyers, who became net sellers this year. Stocks with strong foreign sales and commodity companies are, by contrast, doing pretty well, notably Prosus and Richemont.

Last Thursday, the day the rand really blew out, was in some ways a good example. Two companies in totally different businesses but both a part of what you might call SA Inc — Pick n Pay and Standard Bank — were big losers.

Some of the move to investing outside SA is and has been very explicit. For example, independent financial adviser Magnus Heystek, the director of Brenthurst Wealth, has very publicly delivered a consistent message for years now: move your money outside of South Africa. It is extraordinary for a money manager to be so explicit in his critique of his own country. But clearly, the message is spreading.

The number of delistings on the JSE tells the same story differently.

And then on Friday, AngloGold Ashanti announced it was moving its listing offshore. And as if to confirm my point about the difference between appearance and reality, CEO Alberto Calderon said the move has “nothing to do with South Africa”. Really?

Calderon said: “Our growth is in North America; the liquidity of gold is in North America.” And that of course raises the question: Why is this the case? Ironically, AngloGold’s share price went down following the announcement, but it is up 40% over the year. The especially weird thing is that SA’s former finance director-general, Maria Ramos, is currently the chair of AngloGold, which means that a former head of the Treasury is overseeing one of SA’s foundational companies emigrating to the US.

If that doesn’t tell a story, nothing will. DM/BM