Indholdsfortegnelse for 7/30/2020 i Finweek - English

in mid-July I needed to take a Covid-19 test as part of pre-admission screening fora routine outpatient procedure. While the test itself was about as bizarre and uncomfortable as I had read it would be, seeing the workings of the testing station and the frontline workers – both medical and administrative – was a stark reality check. Here I must give the caveat that I am a huge fan of apocalyptic and post-apocalyptic fiction. So, my testing station experience was certainly coloured by this. Sitting in a demarcated area of a parking lot, on a chair perfectly distanced from the next person in line as we waited to be allowed into the container one by one (throwing fleeting, uncertain glances at one another) is a scene that can send a…

“MORE THAN 95% SURE.” – UK security minister James Brokenshire on Britain’s certainty that Russian state-sponsored hackers targeted UK, US and Canadian organisations involved in developing a coronavirus vaccine. On 16 July, the UK’s National Cyber Security Centre (NCSC) issued a joint advisory with intelligence agencies from the US and Canada warning that a Russian hacker group was behind a spate of cyber attacks on medical research centres tasked with finding a vaccine forCovid-19. Brokenshire told BBC Radio 4 that the NCSC and its counterparts were confident that Russian intelligence agencies were responsible for the attacks on the drug companies and research groups. Russia’s ambassador to the UK, Andrei Kelin, rejected the allegations on BBC, saying that “there is no sense” in the story. “Leadership is everything, so it is…

south Africa recorded its first current account surplus in 17 years in the first quarter of 2020 because of a trade surplus of around R208bn. Essentially, a trade surplus shows the difference between imports and exports. A surplus indicates that a country is exporting more than it is importing, or earning more than it is spending. Economic theory posits that a weakening currency can eventually lead to a higher level of exports, given that these exports are relatively cheap for foreigners with stronger currencies, and lower levels of imports. In theory this is positive as it supports economic activity and growth in a country which in turn has a positive impact on employment, wealth creation, and will even support the country’s currency over time. A country where this occurred in…

south Africa is heading towards “autarky”, a much greater self-sufficiency that includes trade protectionism, in its economic policies. The government began bringing the economy “closer to home” before the Covid-19 crisis but seems to be accelerating the move since then. That’s the view at least of some of the country’s trading partners. They worry about a push to contract manufacturing value chains down to the region or to Africa; to localise much more manufacturing and to give the state greater control of the economy. This would run counter to globalisation and free trade and thereby deny foreign manufacturers and suppliers beyond Africa a chunk of their share in the SA economy. Western diplomats discern signs of these tendencies in recent policy pronouncements by the ANC and by the government, particularly…

South32, which was spun out of BHP in 2015, said in a recent quarterly report that it expects to impair its manganese assets by $109m (R1.8bn) for the fiscal year ending December 2020. This is in response to the Covid-19 pandemic sweeping through the global economy. Manganese is used as a strengthening ingredient in steelmaking. The miner also expects to report one-off, pre-tax restructuring costs at its Metalloys alloy smelter in Vereeniging of about $7m. The share price remained unchanged as it continues to trade on the upper slope of its long-term bear channel. With a market capitalisation of R124bn, South32 is a globally-diversified metals and mining company with operations in Australia, Southern Africa and South America. It has proven to be a consistently cash-generative business, with the strongest balance…

RICHEMONT Bleak outlook for bling Richemont’s trading update for the quarter ending June covered the full hard lockdown seen all over the world and, as expected, it was bleak. We also saw diamond sales from De Beers essentially collapsing in the first half of 2020, as announced by Anglo American. Richemont points out that a lot of its sales are to tourists and so the lockdown and current travel bans mean no tourists and thus a collapse in sales. When we start to see countries and borders opening again, we can expect luxury goods sales picking up. It will, however, be slow as economies and consumers continue to struggle financially, and the latter will be low on confidence. The bigger question is the long-term impact on luxury goods. They certainly…

our long-term stock pick is a company in California that has just come out of bankruptcy. The reason the company entered bankruptcy was that it was held responsible for causing wildfires in California due to badly-maintained power lines which killed 85 people. In the end, the court ordered the utility company to pay $25bn. The company that we are talking about is PG&E (ticker code PCG) and it has recently had its plans approved to exit bankruptcy. PG&E works in a regulated environment where most of its revenue is controlled by the California Public Utility Commission (CPUC). The commission sets the rate at which PG&E can charge customers. The current rate the company can earn on its equity is 10.25%, and this agreement expires in 2022. In other words, the…

what makes a person want to be a CEO? “One reason is that there is a huge opportunity to have an impact,” says Natascha Viljoen, CEO of Anglo American Platinum (Amplats) since April. There’s also a tacit “trust in your own ability”, she adds. It’s a question worth asking because most people might have been hemming and hawing given the introduction Viljoen has had. She hadn’t even taken her seat when a full-blown crisis ballooned. That was in February when the firm’s processing facilities in Rustenburg, finely-tuned technology that turns concentrate into refined metal, exploded. The back-up unit also failed. The outcome was a one-fifth cut to 2020 platinum group metals (PGM) production – about 900 000 ounces. Amplats’ financial year was barely eight weeks old, and yet full-year earnings…

Khaya Dlanga @khayadlanga First-borns deserve tax breaks and a grant. David Scott @TheKiffness Was really hoping that Eskom took this 3-month holiday to reflect and become a better person. Sarah Cooper @sarahcpr My advice to the younger generation: Make your mistakes now. Because by the time you’re 40, you’ll barely even remember them! And then you get to make the same mistakes all over again, it’s really fun. Monica Lewinsky @MonicaLewinsky uhhhmmmmmm. Delphine Govender @Delphine_DG FOVID-20: In year 2020, the suffering of Fatigue Of VIDeo calls of all manner; webinars; virtual conferences; and more webinars; did I mention webinars…. Dean @Herne_TheHunter • I’m 39-years-old. • I have two degrees. • I’m a doctor. • I’m a member of a Royal College. • I have had, unbeknownst to me, a sock…

a few weeks ago, a small group of social scientists, most of whom enjoy, like I do, the comforts of academic life, wrote an open letter to finance minister Tito Mboweni, telling him to spend more. They are concerned about the prudent supplementary budget and would like him to increase spending to support the millions of South Africans who are now jobless and destitute thanks to a global pandemic and the subsequent lockdown that sounded the death knell for an already faltering economy. But despite the signatories’ good intentions to aid poor South Africans and revive our economy, the letter exposes poor economic thinking. Let me explain. Firstly, while the signatories encourage more spending, they fail to answer the obvious: what would the limit be? Their letter, widely reported on…

clicks Group has seen its share price more than double over the past five years, remaining almost unchanged compared with a year ago. The company said in April that it will suspend its dividend, even as profits rose, in a bid to preserve cash amid the uncertainty of the coronavirus pandemic. Outlook: Though Clicks’ share price pulled back to support at 20 250c/share, it’s still trading in its primary bull trend and continues to outperform the FTSE/JSE All Share Index. Clicks has a robust balance sheet and generates strong cash flows and because it has an impressive business model and sound expansion plans for its pharmacy footprint, it’s a good defensive stock. However, it’s not immune to challenges in the operating environment. On the charts: Clicks’ share price has fallen…

they say that you shouldn’t sweat the small things in life, and although there might be a lot of truth to this saying, I think there lies greater truth in the fact that you can be successful if you do the small things right. Best-selling author James Kerrtried to determine how the New Zealand rugby team (the All Blacks) manages to remain so successful year after year in his book Legacy. One of the things in his findings that made quite an impression on me, was the fact that every player in the All Black team cleaned up the locker room after every game. It doesn’t matter who you are, every team member does his part by sweeping and ensuring that the locker room is left in a better condition…

“The VIX” is a term that is often thrown around in the investment world, although also one that is often not fully understood. That’s why we are going to explore what the VIX is. Admittedly, we are not going into too much detail as it gets rather complex. Once we understand the basics of what the VIX is, we can start to look at how it can be used to assist in both protecting your portfolio or trading it outright as an instrument to profit from. The VIX is part of a complex formula used in valuing an option. The formula, known by the name of its creators, is the Black-Scholes formula. There are several components to the Black-Scholes formula, but the one we are interested in is the volatility…

on 18 July, health minister Zwele Mkhize appealed to South Africans to stick to the behaviour changes needed to curb the spread of Covid-19, warning that South Africans were letting down their guard just as infections in the country were surging. His remarks were extracted from an identical appeal made three weeks earlier, and unsurprisingly did not make headlines. Few South Africans were aware that the country’s death toll had just passed the 5 000 mark, or that hundreds of people were fighting for their lives in hospitals that had begun to be overwhelmed by a sudden influx of serious Covid-19 cases. The fact that SA had just clocked up one of the biggest daily spikes of recorded infections in the world and was now fifth overall in its tally…

a trust is set up when one transfers the ownership of their property, or ‘puts it in a trust’, which becomes an instrument with a separate legal personality. The transferred property is administered and managed for the benefit of specified beneficiaries such as children, in accordance with the Trust Property Control Act no 57 of 1988 — the law that governs trusts in South Africa. The act states that trustees should be appointed, whose primary responsibility is to administer and manage the trust’s assets, for the benefit of the beneficiaries, which in this case would be the founder’s children. The trust comes to life after it is registered with the Master of the High Court, which must subsequently issue a letter of authority to the appointed trustees, giving them powers…

we need less government intervention in this country. Especially if we want to kickstart the crumbling economy. Two recent events have prompted a consideration of whether citizens, businesses and the government are taking a feasible route in their discourse around how to get economic growth back on track – and at a much faster pace at that. First off was a recent discussion on whether to allow white-owned businesses to enter the township retail market through spaza shops. The second was the ANC’s Economic Transformation Committee’s 31-page discussion document on reconstructing, growing and transforming South Africa’s economy. Both of these examples have something in common: calls for greater government intervention. The ruling party went as far as proposing state-owned hatcheries in a bid to boost investment in aquaculture. I’d suggest…

after a ten-year stint as chief technology officer of a gaming business in London, Brett Meyerowitz made his way back to South Africa and started working for a banking company. With more time on his hands, he decided to volunteer as an ambulance assistant, which exposed him to the deep inefficiencies of the emergency response systems used in SA. “The systems were dated, expensive to maintain, unfriendly and extremely inefficient, resulting, among others, in emergency response teams being reliant on map books when they were in unfamiliar territory. This in situations where timing often meant the difference between life and death,” Meyerowitz says. In response he started developing a mobile platform to help him and fellow volunteers overcome this challenge. Features were expanded as more companies became aware of the…

The diamond market is in a serious hole from which it could take the best part of two years to emerge, according to Goldman Sachs analyst Jack O’Brien. Previously, the narrative was for China to start stimulating demand with engagement and wedding jewellery sales beginning in tier-one cities before moving to tier-two and three cities. This would be supported by sustained existing demand in the US, which comprises about 49% of the market, and falling supply. New diamond mines are thin on the horizon while the large Rio Tinto mine, Argyle, will close imminently. According to O’Brien, however, the mid-stream market of cutters and polishers has collapsed in India owing to lack of credit, leaving behind significant stockpiles. Alrosa, the large Russian diamond producer, expects to end this year with…

On p.23 of this issue, I write about gold miners in general and Pan African Resources (see p.20) specifically. Pan African is comfortably the lowest-cost producer of the precious metal and its new high-grade find at Barberton will further help drive down overall costs for the group. This is due to the higher yield of the metal, which means more gold output for largely the same amount of work and thus costs. With gold finally having its day in the sun, the price seems set to move higher. But, even at the current price of around $1 800 an ounce, Pan African is very profitable with all-in sustaining costs (AISC) of under $1 000/oz. In addition, the mid-year operating results guidance was for AISC to remain below this level. The…

back in the early 1980s, gold was all the rage. The US had abandoned the gold standard and it was on the move from under $100/oz in the early 1970s to hitting $682 in September1980. Our local exchange was having a great time with literally dozens of listed gold mines that were suddenly printing money. This fever lasted for at least a couple of years, even as the gold price started to slip, with gold closing the 1980s at around $400/oz. Even at that price mines still made great profits, thanks in part to their fixed cost base. Back then most listed gold mines were single shaft affairs, not the large conglomerates we see today. The plan was to mine the shaft at a profit, pay chunky dividends and then…

much has been written about the disconnect between Wall Street (the markets) and Main Street (the consumer) as unemployment remains above 10% in the US while markets soar higher, with the Nasdaq hitting new all-time highs recently. As I have previously written, there are two drivers of this disconnect. The first is that markets look forward 12 to 18 months into the future and, as such, are investing for the second half of 2021. Of course, one can make a solid argument that the economy will then still be under pressure, but likely less than it is now. This then brings me to the second reason: The US Federal Reserve (Fed). It’s been pumping hundreds of billions of dollars into the system and that money has found a home in…

Keillen Ndlovu, head of listed property funds at Stanlib, shares some pointers that potential investors in the listed property sector should consider: 1. Distributable income (or profits) is likely to fall over the next year or two given the challenging environment. 2. Focus on total returns as opposed to just income. Reits are retaining some profits to help strengthen their balance sheets. 3. Reits offer 50% exposure to SA and 50% offshore (mainly Europe, the UK and Australia). 4. Physical property values are likely to fall by 10% to 20%. This is mostly priced in as Reits are trading at 50% below net asset value. 5. Volatility may continue in the short term and this can create long-term buying opportunities.…

The guardianship of children is governed in terms of section 18 of the Children’s Act, whereas the role of trustees is governed by the common law and the Trust Property Control Act, explains Elmarie Neilson of Neilsons Attorneys. The powers of trustees are set out in the trust deed, with reference to the Trust Property Control Act. “It usually involves purchasing, selling or mortgaging immovable property, investing cash, paying school fees and maintenance for the children,” she says. While a guardian can be appointed to the child either in a will or by the High Court on application, Claire Thomson of Witz Inc. further explains that a trustee can be a legal guardian, but the two (trustee and legal guardian) are not synonymous.…