Indholdsfortegnelse for 8/13/2020 i Finweek - English

sixty-four years ago, 20 000 women marched on the Union Buildings to protest apartheid pass laws for women. On 9 August we will again commemorate that historic day in 1956 as we celebrate National Women’s Day during National Women’s month. I will certainly celebrate the incredible fortitude of those women and I think commemorating this day is extremely important. But when it comes to Women’s Month, I am more inclined to feel that instead of dedicating a month to recognising women, we should be fostering a society daily, throughout the year, that does so. A society that challenges entrenched patriarchy, among other things, in order to effect true change, instead of placing women in the spotlight for a month, only to return to the status quo on 1 September, as…

“VOLUNTARILY STEP ASIDE.” —The ANC’s integrity committee wrote to party national executive committee (NEC) member and deputy finance minister David Masondo, asking him to “voluntarily step aside” from his responsibilities in government and the party. Masondo is alleged to have abused state resources to resolve a domestic dispute. The chairperson of the committee, George Mashamba, said Masondo allegedly showed poor judgment in involving the Directorate of Priority Crime Investigations (Hawks) in a domestic matter, which opened him up to accusations that he abused his power and access to state resources. He added that Masondo should have known that the mandate of the Hawks is to probe corruption and offences that fall under the Prevention of Organised Crime Act. “I’ve enjoyed the challenge of leading AngloGold Ashanti over these past two…

Mobile operator MTN expects its HEPS for its six months to end-June to rise by as much as 125%, thanks to favourable foreign currency gains. MTN Ghana also grew its after-tax profit by 52.3% to R2bn in its year to end-June, from strong growth in data demand and digital revenue. This is due to an increase in smartphone usage and new gaming offerings. Active digital subscribers in Ghana grew 44.5% to 2.2m – performance supported by the expansion of the company’s digital portfolio, including the renewal of their My MTN app and launch of the Ayoba messaging app, which allows non-smartphone users to communicate with smartphone users via the app. How to trade it: MTN has been steadily regaining its previous losses since testing an all-time low at 2 625c/share.…

for the past year or so there’s been a tweet that frequently pops up in my Twitter timeline, stating that in 1999 the JSE had 668 listed companies and now has 351. I haven’t verified the information, because it makes sense to me. It’s not a regulation or a red tape issue. It’s not even a South African issue. It’s a global phenomenon. In November 2017, research by the US-based Vanguard Asset Management – with $6.2tr under management at the end of January – found that in 1996 the US had over 7 000 listed companies, but by 2016 this number had fallen below 3 800. (You can access this research on this link: https://bit.ly/listingsPDF.) It may be different timelines, but it shows the same trend. A trend that has…

the pandemic is unequivocally unprecedented. In response, we’ve all voiced, in a chorus of lament, that “it is the worst of times”. After much observation and thought, I wonder whether there’s a case for seeing the existence of the best alongside the worst of times. As we search for lasting solutions to the pandemic, a daunting question arises: Will Covid-19 defer the UN’s Sustainable Development Goals (SDGs) and the National Development Plan (NDP) permanently, or will it offer an opportunity to accelerate their implementation? This is a difficult question. When both the SDGs and NDP were adopted, global inequality was already at unsustainable levels. The biggest concern was that, after acknowledging failure with the Millennium Development Goals, we cannot fail again. Several second-order, yet pivotal, questions also arise. Does Covid-19…

the conversation is shifting from environmental, social and governance (ESG) to impact investing. ESG is characterised as good risk management practices and defined by the UN as development that meets the needs of the present without compromising the ability of future generations. The Global Impact Investing Network (GIIN) defines impact investments as investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Impact investing considers both the financial return and the intentional positive social and environmental change, while ESG is viewed as sustainable investment. Although ESG and impact investing may overlap on the spectrum of investments, they each offer unique benefits. Whether one chooses good ESG practices or impact investing depends on the requirements of the investor and the types of investments. In…

the correlation between investment in capital infrastructure and GDP has been shown by IMF and World Bank data collected between 1960 and 2019. These studies demonstrate that 54% of all GDP performance can be explained by a country’s investment levels. At this juncture in South Africa’s economic history, given the contraction of the economy and the added impact of Covid-19, it is increasingly important to prioritise investment as a stimulant for GDP growth and economic development. Specifically, infrastructure investments have been empirically proven to have a significant impact on economic growth and to also reduce inequality, according to the International Journal of Critical Infrastructure Protection. Aschauer’s seminal paper, published in 1989 in Industry Week, triggered a voluminous amount of research into the sector by noting strong links between infrastructure investment…

globally, much work is underway to translate our understanding of impact reporting to the listed equity markets, where issues such as intentionality, type of impact, data, investment horizon and benchmarks require further interrogation. However, setting clear guidelines still requires more effort and acceptance of standards in reporting. To illustrate the challenge of reporting on “impact” fora local listed equity portfolio, two impact categories were selected: transformation and climate change. In respect of reporting on transformation impact, broad-based black economic empowerment (B-BBEE) contribution levels were used as the main measurement metric. The graph presents the 2019 B-BBEE data for a fund relative to the Capped SWIX Index. Sector contributions to each of the eight B-BBEE contribution levels are graphed along with non-disclosure and non-compliance. The data is presented by market capitalisation,…

sasol has announced the sale of 16 air-separation units located in Secunda to Air Liquide for R8.5bn. The market very much liked the deal, pushing the share up over 12% at one point on the day before closing over 8% higher. Sasol needs to reduce its debt by some R100bn through cost savings and asset sales (and ultimately maybe even a rights issue). This R8.5bn helps a fair bit with reducing that debt. But there is another side to the story that is less positive. The only customer of these air-separation units is Sasol, as it is an important part of its processes at the Secunda plant. But when Sasol owned these units, the plants either ran at cost, or, if they made any profit, that profit would flow to…

with two-thirds of the JSE’s 100 largest shares by market cap lying below their 200-day exponential moving averages (EMAs), the bear is no doubt continuing to dominate most of the JSE. That both the All-Share Index and theTop40 are lying above their 200-day EMAs is therefore certainly not an indication of the true state of the market. As is apparent from the table of the strongest shares, it is mining companies, with gold shares in the lead, that are towering above the rest. That a risky group such as Harmony is the strongest share confirms how active speculators have been with regard to gold shares. It is, therefore, also understandable why so many experienced market experts are warning that gold shares always require agile footwork to prevent investors from burning…

Rico Schacherl @ricoschacherl I swear, that maniac weaver bird in our back garden is a townhouse developer … he’s now building nest #6. I AM M M A P U L A @Mmaps_ThePro Corruption in Eastern Cape issa sport. Malehloenya Tsoaeli @iTsoaeli I bought Choice Assorted today because we don’t know if we’ll see Christmas 2020. Tito Mboweni @tito_mboweni A tender is an ethical contract. It is not a blank cheque to deceive and steal. And stealing from unwell people! During a Covid-19 pandemic! Please people. What kind of people are these criminals?! Pierre de Vos @pierredevos Colleagues. Dr Dirk Donkerbal @dirkdup69 Am I the only one who thinks the SIU (special investigate unit) is just one dude sitting at a desk in a basement somewhere? Kananelo @kaysexwale I asked…

we live in a world where information is available at the click of a button. Only three decades ago, a trip to the local library was the only way to know the population size of Portugal or Papua New Guinea. Acquiring information was expensive. Much of that has changed in the information era. Google processes about 3.5bn internet searches a day, providing a valuable service, but also generating valuable and timeous information. One new research paper shows how Google searches for the loss of smell in eight countries predicted a rise in Covid-19 deaths. Another one shows that Google searches for unemployment insurance in the US predicted the massive rise in job losses and unemployment claims. Big data allows for ‘nowcasting’ – the prediction of present trends, providing up-to-the-moment information…

south Africa’s largest listed poultry producer, Astral Foods, saw its share price decline by 36% since the beginning of the year. The company recently said that it bought a 6.4% stake in listed egg producer Quantum Foods in a bid to protect its long-term broiler supply agreement with the latter. Outlook: In May the company opted to hold on to its interim dividend as it braces for the economic fallout from the Covid-19 pandemic. Already the company faces an oversupply of fresh chicken in the market, which is expected to dampen demand for higher-margin products. Despite being an essential service as a food producer, the group faces the prospects of higher input costs as global supply chains were disrupted, and local load-shedding problems have also increased costs in its six…

for thousands of years the glamour of gold has attracted and captivated humans and even caused conflict. But during the 19th century, the role of gold changed dramatically by becoming the world’s official means of payment – not necessarily via direct trade, but in the form of “promises”. The gold standard basically meant that you could redeem this promise in the form of a note at any central bank for its weight in gold, which, at the time, was linked to a specific currency. The role of gold in developed economies changed with the outbreak of World War II. By the end of the war, the Bretton Woods monetary system was implemented, which came to an end in 1971 when the US decided to no longer convert dollars to gold.…

the single most powerful ideology of our time is the fixation on growth. Irrespective of whether it is growth at a macro or micro level, if entities can demonstrate some form of growth, they are perceived to be on the road to success. The time, however, may be fast approaching for modern society to rethink the growth ideology. Economics Nobel laureate Simon Kuznets developed and presented the modern concept of gross domestic product (GDP) in 1934 and a decade later, it formally became the tool for measuring a country’s economy. Interestingly, in his original report, Kuznets warned against the use of GDP as a measure of economic welfare. His concern centred on the simplicity of quantifying economic welfare in a single measure. He warned that oversimplification opens the potential for…

for years, the campaign to hold companies – and not just their shareholders, but the societies and economies in which they operate – more accountable, moved at a modest but resolute pace. This past year, though, theCovid-19 crisis laid bare the necessity of getting capitalism and financial systems working on behalf of society, the stakeholders, and planet we inhabit – and not just for pure self-interest. As such, we now have a virtual tsunami of initiatives from any number of international agencies determined to deliver that transformation at record speed. That leaves investors and asset owners in somewhat of a quandary. Which initiative or methodology should they align with? The starting point forgetting this transition right will be the companies themselves. And if they won’t report clearly on where they…

all investments have an impact – either positive or negative. A positive impact can be generated deliberately or unintentionally. Selecting the right metrics is an important tenet of the impact measurement and management process. But simply measuring impact does not necessarily lead to creating impact. Rather than focusing on what we want to measure, we need to shift our discussion to the purpose of implementing our impact investing strategy, and what changes we want to create and how. The newly published Impact Investing Handbook: An Implementation Guide for Practitioners by the Rockefeller Philanthropy Advisors, talks about the importance of articulating ‘why’ investors pursue impact investment. The ‘why’ – which is often said to be underappreciated – “establishes the values, goals, and parameters”. It leads to a “more thoughtful and consistent…

impact Investing South Africa is tasked with accelerating the adoption of investing for impact into SA’s investment community. It interacts with stakeholders across the financial sector, generating action points and sharing local findings with the Impact Investing Global Steering Group. Globally, international organisations have made significant strides to ensure a shared language and an array of global measurement standards. Locally, though, progress has been slower. The task force keeps an ongoing dialogue with more than 40 practitioners across the SA investment spectrum so we can identify any impediments to the process. Their feedback has been insightful. What seems to be holding South Africa back? To start with, this imperative is not being driven by senior leadership and has still not become a core consideration for the strategic processes of either…

SPUR CORPORATION Bite to the earnings Spur Corporation’s trading update for the year through 30 June, which was released at the end of July, gives details of the impact of the hard government-imposed lockdown. Spur’s system-wide sales were 5.8% higher for the period to the end of February but for the full 12 months through June this plummeted by 21.7% as sales during the lockdown months were almost 90% down before “improving” to a decline of 79% in June. July and the following months will see more improvements as lockdown regulations are being relaxed, but earnings will remain hard hit. STEINHOFF Calming the litigants Steinhoff is looking to settle the many legal claims (amounting to about R136bn) it is facing with a proposed R16.5bn deal. The deal, announced on 27…

the ruling ANC has an illustrious career in producing policy proposals that never see the light of day. Occasionally, some proposals are implemented half-heartedly, resulting in no meaningful impact being achieved by them. I was reminded of the ANC’s lacklustre track record in implementing its policies when the political party released a 51-page policy document on 10 July, which spelled out proposals aimed at kickstarting the Covid-19-battered South African economy. Interestingly, the document has a page dedicated to proposed measures that could be undertaken to boost production and investment in the ailing mining sector. However, the page does not mention anything about the African Exploration Mining and Finance Corporation (AEMFC), the state-owned mining company established in 2011 with the intention to develop strategic minerals with private investors in order to…

in early 2018, JSE-listed Kumba Iron Ore said it was considering a ‘step-out’ strategy, having in the previous year restructured its Sishen mine in the Northern Cape – a move that cut the operation’s life to 13 years from 17 years previously. The strategy was about exploring for new resources and included possible acquisitions that Themba Mkhwanazi, CEO of Kumba, said at the time would be opportunistic. That strategy is now bearing some fruit following the announcement in July of its R7bn Kapstevel project – an exploration project that will extend the life of Kolomela, another of Kumba’s mines. The company also disclosed it was drilling on two other projects – Ploegfontein and Heuningkrans in the Northern Cape. These are recent property acquisitions that, if developed, will help Kumba take…

The Shoprite* trading update for the year ending June was decent. Headline earnings per share (HEPS) from continuing operations are expected to range between 1.6% lower and 6.4% higher than a year ago. The update includes a R327.2m expenditure towards Covid-19 safety preparations and Covid-19 bonuses to staff. It also notes 66 days of no liquor sales and an ultimate 29.5% decline in this sector in the second half of the financial year. Liquor sales had been growing at over 20% prior to the government-imposed ban on alcohol trading and represents some 5.8% of the group’s South African sales. The share has been struggling lately but, taking HEPS at the mid-range results in a price-to-earnings (P/E) ratio of around 13.5 times. For Shoprite this is cheap, albeit that for a…

there is no easy answer when forced to choose between life and living; and it is this choice that has resulted in 3m jobs being lost in the last three months. The economic lockdown has created a plethora of emotions within all of us – despondency, frustration, mistrust, anger and rage. However, our emotions will not wash away the challenges that now face all of us. South Africa’s greatest task right now is to create a functioning economy again, which has sparked innumerable debates across government, business and citizens. At the beginning of this year, the Collective Insight team did not realise how apt the chosen topic, “How to better measure the value and impact of your investments”, would be right now. In the absence of the current crisis, this…

south Africa’s GDP looks set to contract by 8% in 2020. In an ideal scenario, we would see a sharp V-shaped recovery in 2021, resulting in an expansion of 8% or more. For this to occur, we need two things. Firstly, we need a return of confidence. Remember, SA entered the Covid-19 pandemic in recession. A decade of former president Jacob Zuma’s economic mismanagement means that private sector fixed investment has been contracting since 2014. To boost confidence, we need to see three or four tangible reforms (not just talk about reforms) in the next six months. The second requirement is for SA to protect as much productive capacity as possible. This will be partially met by the wage support measures and loan guarantees that have been implemented. However, even…

south Africa’s fiscal position, with its gross-debt-to-GDP expected to exceed 100% between 2021 and 2022, severely limits the government’s room to drive economic recovery, therefore the current emphasis on an investment-led recovery. To stimulate economic activity, there is a need to specifically focus on sectors that enable the country to address the challenges of joblessness and inequality. Investments that yield positive financial returns without any benefit to society could widen the inequalities that are already unsustainable. For the private sector to lead inclusive growth, one of the critical enablers will be access to finance – more so considering the eroded reserves of corporates currently. Without access to finance, the private sector’s plans to reactivate the economy would be hamstrung. Financing options for the private sector are traditionally dominated by equity…

why is impact measurement and reporting such a challenge for investors? After all, they have the necessary frameworks, tools, and metrics to support this process. Could this be a function of the fact that in some instances, the effect cannot easily be captured into a metric and that the human element involved requires subjectivity? There is also a wide divergence of opinions on what is meant by meaningful impact and where priorities should be focused. One investor might place a bigger preference on affordable housing to address the backlog in the country, whereas another might prefer to invest to address the infrastructure backlog, believing that this achieves a broader-scale impact. How does one rate the social value of one project over another? A good place to start is to see…

on 12 July, the Financial Times published this article: “Fund industry prepares to fight Trump curbs on socially responsible investing”. The curbs being proposed were to address the question of whether investing for societal impact would hamper returns for members, or worse, introduce political agendas. At a time where a Covid-stricken world desperately needs to find ways to close the funding gaps for delivering a basic quality of life, pension fund investments would provide a welcome supplement. But what about “value for members”? For decades we’ve accepted that long-term savings play a critical role in stimulating economic growth. But, as Deslin Naidoo said in our introduction, the bulk of pension fund assets are invested in listed companies. Investing in stocks simply moves money from buyer to seller – not to…

equity markets are usually efficient allocators of capital. But there may come a time when markets get distorted, usually due to changes in the macroeconomic environment. Now may be such a time. High-tech companies have grown strongly since the beginning of the year, partly justified by excellent earnings growth in the second quarter. But this has largely been achieved amid criticism that they ruthlessly undercut competitors and pay workers below-average wages. The rest of the market is losing out while the coronavirus pandemic is rapidly spreading through the US, with unemployment at the highest level in decades. The civil unrest in the US has many causes, but rising inequalities in the country are a real ancillary factor. When wealth is created, and people feel left out, history has shown it…

words like ‘force majeure’, ‘vis major’ and ‘casus fortuitous’ have special meaning in a time when a pandemic causes health and financial crises. The Covid-19 pandemic forced retailers to close their doors for weeks on end and are now only allowed to serve a limited number of customers at a time. More people than anyone thought possible are working from home. However, tenants are stuck with the excess office space, and their lease agreements. Cash flows have either dried up or slowed to a mere trickle. Law firm Werksmans’ head of property law and real estate, Fátima Rodrigues, says most retail and commercial lease agreements contain force majeure clauses. This is defined as an unforeseeable event or circumstance that prevents a party to fulfil his obligations under a contract. “However,…