Indholdsfortegnelse for 7/16/2020 i Finweek - English

it never ceases to amaze me that despite countless times of it being made abundantly clear that social media is not a forum for nuanced discussion, another Twitter war erupts because someone decided to make a sweeping (often incendiary) statement in 280 characters, or less. Social media can create a space where ignorance obliterates critical thinking. If wielded as such, it can become an enormously powerful and divisive weapon. Just ask Donald Trump. Or Helen Zille. It’s one of the reasons I’ve never been a particularly active social media user. The cynic in me enjoys those who can construct scathing, witty commentary, but I just as easily dismiss and roll my eyes at the more bizarre rants that I scroll past. Choosing not to engage. Clicking the unfollow button, and…

“Not much to go around, yet not the right hands at the till.” – Kimi Makwetu, Auditor-General of SA, titled his office’s latest general report on the local government audit outcomes this way. He said this is “to reflect the state of financial management in local government. Billions of funds allocated to municipalities are managed in ways that are contrary to the prescripts and generally recognised accounting disciplines.” The report states that 8% of municipalities received a clean audit, and on average took 180 days to pay creditors. Irregular expenditure exceeded R32bn – up from R24bn in the previous year. “WE’RE COMMITTED TO HELP FIND A SOLUTION IN THE FIGHT AGAINST THIS UNPRECEDENTED GLOBAL PANDEMIC.” – CEO of Cipla South Africa, Paul Miller. The drug manufacturer is set to bring…

So Anglo American is bidding adieu to its Main Street offices in Johannesburg’s inner city for a more ‘burby’ vibe among the jacarandas and street cafés of Rosebank, a mere eight kilometres away but somehow much, much further in ‘feel’. Having already moved De Beers out of its hallowed Charterhouse Street offices in London in 2016, after a century of occupation, it seems inevitable the Johannesburg chapter would follow. The matter of the Joburg move was first raised in 2016 after jobs – then put at 66 000 – were shed (not necessarily lost) from the group following heavy restructuring by Mark Cutifani, Anglo CEO, shortly after his appointment in 2013. Following that restructuring, the innards of 44 Main Street resembled more of a hotel with its deep carpet weft…

capitec, one of the five largest commercial banks in SA, warned shareholders early in July that the provisions for bad debts for the three months ending May increased by R3.3bn since the end of February as the economic fallout from the lockdown filtered through to customers. Capitec said its earnings for the first half of the year to end-August could drop as much as 70% due to higher bad-debt expenses and lower transaction volumes. Outlook: After forming falling tops from an all-time high at 149 760c/share, Capitec eventually gave in at key support at 132 500c/share. In my March analysis, I had recommended a sell below that level, and anticipated downside to the lower slope of its long-term bull channel. The share plummeted through the lower slope of its channel…

STOR-AGE Packing a punch Self-storage property fund Stor-Age* has again showed how resilient its business model is, despite economic conditions. It does well in good and bad times as clients’ needs shift – this sees some clients exit, but then a new group of clients gets added. Full-year financial results to end-March were solid and saw an increased dividend (with a scrip option). Much of the business model revolves around building scale as they generate leads online. But, more importantly, is that when they build a new storage facility in an area, they essentially lock out any competitors as the Stor-Age brand is extremely hard to compete with. The company’s UK business is doing very well. Stor-Age has a loan-to-value ratio in the low 30s, which means debt is hardly…

recent global market movements have shown that the most dangerous moment is not when shares hit rock bottom. It is when shares recover, and the momentum cannot be sustained. Global markets started to climb at the end of May following the rout earlier in the year and continued their remarkable recovery into June. At the end of the month markets started to reflect daily record losses again as the fears of a second wave of the pandemic later in the year overrode optimistic views of a V-shaped economic recovery. However, markets soon stabilised at negative single-digit levels for the year so far, still a remarkable recovery compared with the March rout. Surprise was expressed at the initial swift recovery, given the generally dire economic data, with the job numbers in…

for more than a decade, Naspers* has formed the bedrock of the retirement funds of most South Africans. Through sovereign rating downgrades, currency weakness and corporate scandals that have decimated the domestic economy and destroyed wealth, Naspers has dragged the JSE away from disastrous territory by sheer dint of its enormity in the FTSE/JSE Top 40 Index and Tencent’s ongoing growth. As investors digest the latest set of annual results from Naspers, it is worth taking stock of how the company is positioned as the world continues to grapple with the economic fallout of an unexpected and unprecedented health pandemic. In February of 2019, Naspers listed its satellite entertainment division, MultiChoice, and in September spun off a new entity called Prosus onto the Amsterdam Stock Exchange, designed to house all…

covid-19 has not only impaired lives, but business continuity too. Around the world, businesses – from small to the largest of conglomerates – have had to grapple with how to keep operations running while maintaining social distancing and adhering to national lockdown restrictions, to limit the spread of the coronavirus. A crisis of this nature and magnitude placed enormous pressure on organisations to quickly adapt or cease to operate, either briefly or indefinitely. How quickly a business harnessed the technology it was already employing within the organisation, or digitally transformed its operations, was what kept most enterprises from losing huge chunks of their productivity and output. Processing mobile payments Yoco was primarily built on easing the use of cash in the economy by taking cash transactions digital and at low…

few sectors have been left unscathed by the Covid-19 pandemic, and although it may affect the appetite for new business transactions, it will provide significant opportunities for ‘fast-moving’ buyers who have done their homework and are looking to acquire a distressed business or assets. “We are already seeing buyers with strong market positions or balance sheets who want to capitalise on the opportunities available in the most challenged sectors, as well as in those who have performed well,” says Marc Yudaken, partner at law firm Baker McKenzie in Johannesburg. But buying a distressed business or asset in times like this carries huge risks, as owners may want to sell before the buyer realises they are, in fact, boarding a sinking ship. There are, however, those owners with good businesses who…

Seth @Dudewithsign Some good news: We’re halfway done with 2020. Sammy Phatlane @_SammySA But is 2020 done with us? Chester Missing @chestermissing Non-contact sports allowed. GREAT news for Bafana Bafana. The Dad @thedad This is the best time to build a new deck, according to my wife and other family members who won’t be building the deck. Tressie McMillan Cottom @tressiemcphd So, who else is still smiling at people, dogs and babies from behind a mask like a fool? BrooklynDad_Defiant! @mmpadellan Just when you think we’ve hit peak stupidity in 2020, Texas bar owners are staging a “Bar Lives Matter” protest while their state is spiking. I am shaken, not stirred. Dr. Emily Porter, M.D. @dremilyportermd Wear a mask. That is, unless you want to be intubated by a gynecology…

When a crisis hits, economic historians are in demand. The 2008 financial crisis made students of the Great Depression popular commentators and policy consultants. The swift and correct reaction by the US Federal Reserve was undeniably aided by the fact that its chair at the time, Ben Bernanke, had written his PhD on the 1930s depression and the weak monetary response that exacerbated the crisis. The current global pandemic is no different. Now the historical analogy, of course, is the 1918 Spanish flu, an influenza pandemic that killed an estimated 6% of (or 300 000) South Africans and as many as 50m people globally. Although far less studied by economic historians than the Great Depression, Covid-19 and its global impact have ensured that the research gap is closing quickly. Several…

During this pandemic I have held off buying shares and rather focused on purchasing diverse exchange-traded funds (ETFs). But I have been keeping an eye out for opportunities and Purple Group*, owners of no-frills discount brokerage EasyEquities, caught my eye. But it must be said this is speculative. EasyEquities has seen a massive surge in new account openings, as have most brokers the world over. This will help them improve from their break-even point recorded in Purple’s February financial results. More recently they announced a deal with Capitec* that will see the bank’s clients have access to buy shares using the back-end platform of EasyEquities. This should add another surge of clients and transactions. The risks with small stocks are always real and are heightened now, but a small position…

one of the most fascinating animals I have come across in my life is the northern short-tailed shrew. It must be one of the cutest little animals to walk the planet. It’s not its looks that make it so fascinating, but rather its “saving habits”, or more specifically, its “emergency fund”. Its primary food source is insect larvae, but what I didn’t know, is that its saliva contains a type of venom that paralyses its prey. This venom makes the prey comatose, after which it drags it to its nest to feed on later. Because the shrew doesn’t know if its current circumstances will continue to guarantee the availability of food in the near future, it can keep the sedated prey alive for days, and even weeks, if required. If…

While the US and the EU are pumping money into their economies on a large scale as part of an attempt to get growth going again, something quite different is playing out in China, which is good news for commodity countries such as South Africa. There are indications that China is making extensive investments in infrastructure projects to stimulate growth and create jobs. One of the most important indicators being watched by outsiders is the product levels of China’s enormous steel industry. Last year the industry produced just over half of the total world output. At the moment, Chinese factories are producing at full capacity, which always means that the demand is strong for infrastructural projects, varying from railway lines and ships to new cities being built. One of the…

“In my opinion you can’t afford not to hold these companies. Their long-term prospects are so much better than most other options available to investors by virtue of having exposure to the digital economy,” says Nadim Mohamed, investment analyst at First Avenue Investment Management. “For the next few years, the market will be basing its valuations on what Tencent does, but I don’t think Tencent will rush from HK$450 to HK$550. Tencent’s price is very much at the high end of my valuation. However, if it wasn’t clear last year, it will be clear this year – the next companies driving global growth are the tech giants and especially as a rand hedge, exposure to the digital economy in any portfolio is a must. It should be the core shareholding…

There is often a variety of tax debts outstanding in a company that is financially distressed, says Joon Chong, committee member of the South African Institute of Tax Professionals. This could include income tax and provisional tax payments due, as well as VAT and employees’ tax (Pay-As-You-Earn). The Tax Administration Act (TAA) provides that a senior official of Sars may temporarily write off tax debts for the duration of business rescue proceedings. Chong says the decision may be withdrawn if the official is satisfied that the total cost of recovery of the tax debt is more than the anticipated amount to be recovered. In making this determination, the official must consider the amount of the tax debt, how long it has been outstanding, steps taken to recover and costs so…

talk of large formal retailers being allowed by government to spread their tentacles into the spaza shop market is splitting the black business community down the middle. Two diametrically opposed views on the thorny subject are beginning to emerge, with one camp supporting a tentative push by white-owned retailers into the spaza shop market and another camp arguing for retailers to be stopped in their tracks before they gobble up the lucrative market straddling South Africa’s townships and rural towns. The issue came under discussion recently at a second instalment of a live Facebook panel discussion, known as Lockdown Convo, which I participated in. The theme of the discussion, moderated by MisoTini, posed this question: What does it mean for black business if Pick n Pay and Shoprite can enter…

On 24 June, finance minister Tito Mboweni presented the supplementary budget, which outlines the government’s economic and fiscal response to the Covid-19 pandemic. As National Treasury director-general Dondo Mogajane explains in his foreword to the Supplementary Budget Review, the special adjustments budget “fast-tracks normal processes to provide resources to frontline services, provincial and local government, and firms and households, with a focus on the most vulnerable South Africans. It also underlines our commitment to stabilise the public finances and enact reforms that will promote trade, investment and job creation.” South Africa’s public finances were already severely stretched prior to the onset of the pandemic, and the country is steering towards a sovereign debt crisis if public debt is not stabilised. The supplementary budget review notes the following about South Africa’s…

Earlier this year Woolworths refuted suggestions that it will consider divesting its troubled Australian department store chain, David Jones. Woolworths bought the company for A$2.1bn in 2014 with dreams of creating a luxury retailer with more sales and higher profits. In July last year Woolworths wrote down the value of David Jones by A$437m, taking the total write-down figure since 2014 to A$1.1bn. In a recent announcement in June, the retailer cited its decision to fund its floundering David Jones, to which it received harsh criticism from analysts, who believe David Jones is a bottomless pit. Woolworths will be spending close to R1bn to further fund the Australian business. How to trade it: Woolworths has been trading in a bear channel since breaking out of its primary bull trend in…

capital raising by listed companies on the JSE is breaking records. As I write this (in the last week of June), we’ve had some R5bn of book builds from Harmony, Pepkor and Transaction Capital and more than R10bn of proposed rights issues (some mooted, but not yet confirmed). There are many reasons for this activity. In the case of City Lodge, for example, it is being done to bail out its BEE deal. Curro, on the other hand, is suggesting potential acquisitions, but the education provider also has debt – as does Sun International and TFG. Mr Price doesn’t really need cash but is considering a R3.6bn rights issue to bolster its balance sheet, and Sasol has cautioned about a possible $2bn issue if required – but there hasn’t been…

satrix is launching a new exchange-traded fund (ETF) this month that will track Chinese stocks. This is a first for the JSE; there was an exchange-traded note (ETN) from Deutsche Bank which was delisted in January. This new ETF will be eligible to be included in your tax-free investment portfolio and, of course, in a discretionary investment portfolio. This new ETF is a feeder fund, which means Satrix will be buying the iShares MSCI China UCITS ETF issued by BlackRock. This does help the process and reduce costs, but the total expense ratio will still be 0.63%. This is higher than we’re used to with most general-market ETFs in South Africa. But emerging market ETFs are generally more expensive due to smaller fund sizes and the challenges that come with…

Estienne de Klerk has acquired several qualifications, but deep down considers himself a salesman, paying his way through university by selling overalls. “Sales skills is the ability to communicate; it’s the ability to demonstrate the value you can provide to an organisation or industry. That’s something all our youngsters in this country should be working on and be proud of having.” He places value on the power of the collective, used to full effect by the Property Industry Group. “The collective sharing, advice and help from all the other CEOs is what has helped us as an industry navigate the worst environment we’ve ever seen in our careers.” He advocates focusing on that which can be controlled and keeping focus. “Persistence and tenacity are really underrated. People are often close…