Patient South African equity investors are finally being rewarded, after three years of close to zero returns, with a 17% jump in the value of the All Share index over the past 12 months.
But before you pop the Kaapse Vonkel, here is a brutal reality check. Despite its welcome surge, in dollar terms you are poorer today than you were in 2007, courtesy of the rand halving in value over that period. Back then, the rand traded around 7/$; today, it's around 14/$.
Currency devaluation translates to an extraordinary destruction of wealth.
Had you invested instead in the S&P500 over the same period, despite the turmoil of the global financial crisis you would be more than three times better off, in dollars. A million rands converted to dollars in 2007 would have bought you about $143000. Invested in a low-cost S&P index fund, it would be worth about $420000 today. Converted to rands: R5.9-million. Left in rands in the JSE All Share index, your R1-million is now worth about R2-million. Let that sink in for a moment.
While the value of the All Share index has doubled in rands since 2007 from around 30000 to current levels of 60000, the level of the S&P500 has increased from around 900 to current levels of 2700.
It's hardly surprising, therefore, that the Government Employees Pension Fund wants to be able to up the amount it can invest offshore on behalf of civil servants. It is restricted to 15%, whereas workers in the private sector can put 25% outside the country.
As the National Treasury mulls the weird and wonderful ways it can extract more from us in the February budget to try to plug its R50-billion revenue shortfall, it needs to be cognisant of the fact that, in real terms, wealthier South Africans are feeling poorer and the statistics show them to be increasingly reluctant to keep funding the country's economic mismanagement.
Treasury officials need look no further than this week's Famous Brands results for evidence of upper-middle-class financial fatigue. The group is seeing lower sales in its more upmarket offerings, a sure sign the wealthy have less disposable income.
This week, Finance Minister Malusi Gigaba said he would not countenance a tax revolt, but, unlike protesters taking to the streets, financial chicanery is altogether more subtle and harder to crush. An undeclared cash payment here, a barter arrangement there, and suddenly less income is registered, less VAT is paid, less company tax is paid and, rather than draw a salary and pay PAYE, owners of small businesses increasingly help themselves from the till, reporting losses as shrinkage in a high-crime environment.
While the South African Revenue Service this week angrily pushed back at public perceptions that it was to blame for the country's revenue shortfall, the government has to acknowledge that while it can enforce compliance and may win many battles, it will, like the Nats, eventually lose the compliance war.
The window of opportunity is closing as the global net tightens on the greedy cabal at the centre of state capture. It took the better part of a decade for Pravin Gordhan to restore the moral authority of SARS. Destroying it is quicker. Especially when the core of your tax base look at what they might be worth elsewhere.
• Whitfield is an award-winning financial journalist and broadcaster
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.