Indholdsfortegnelse for 9/24/2020 i Finweek - English

the passing of George Bizos gave much pause for reflection. Not only on his legacy and activism, but about the giants he stood with. Those who gave their lives and fought fearlessly to allow us to live in a free and fair society. While we boast one of the most progressive constitutions – crafted by those very giants – in our democracy it seems that the concept of public service has been all but lost. Politics has become self-serving and as a young South African, I am hard-pressed to find any political party or politician that I believe is worthy of the legacy of those that came before them. I am not just referring to the current ruling party. The DA has done anything but paint itself in glory and…

Jean-Sébastian Jacques, Rio Tinto CEO, paid the ultimate career price mid-September when he agreed to leave the Anglo-Australian group. This was after the company ignored an impact study that should have overturned the earlier approval for blasting an iron ore site in Western Australia containing 46 000-year-old Aboriginal settlements. The point of Jacques’ departure for SA’s mining sector is that a new precedent has been set for how company boards sanction abuses of environmental, social and governance (ESG) standards. It’s no secret ESG has been a growing influence in the investment world. Analysts say SA’s mining sector, with its labour-intensive, technically-risky, and sometimes unsafe mines has suffered from the growing popularity of ESG-led investing. “ESG for mining companies is always tricky, specifically for the South Africans, because the most common…

Solid results from drug manufacturer Aspen Pharmacare saw headline earnings per share (HEPS) come in at 1 268c, up 9%. The company’s debt ratio is now 2.89 times HEPS and below the 3.5 times covenant level it had been in breach of as debt spiked to almost R55bn. After the year-end, Aspen also sold off its commercial rights and intellectual property for the thrombosis business in Europe for R12.6bn, and this will further reduce its debt. The market was, however, spooked by comments from CEO Stephen Saad about looking for new acquisitions and the stock was sold off. My view is that while debt did spike to levels that were not sustainable, overall the group has undertaken particularly good deals and, importantly, has never issued shares to fund a deal.…

a great tweet from Stuart Theobald of Intellidex reads: “Imagine you had a machine that told you the news a year’s time from now. Imagine you had that a year ago. You would have shorted the market, right?” The implication is obvious; if we’d known about the pandemic before it arrived, we’d surely have shorted the market – fully confident that it would be lower for longer – yet, the sell-off was short, and markets recovered quickly. Humans tend to fall into the trap of believing that if one thing happens, then the other linked event will most certainly follow. But this is not true. One would expect a pandemic to see markets very much lower for a lengthy period, at least until we had a vaccine. Yet, central bank…

when the markets collapsed back in March, and then started to stage their recovery, all the talk was centred around what shape that recovery would take. Would it be V-shaped (a crazy idea at the time, but one which has pretty much held true for overall indices)? Many said it would be W-shaped and we would see a second sell-off – this never happened. Another option was an L-shaped recovery, but that was never on the cards as markets rallied fast off their lows. A last offering was a proposed U-shaped recovery. The shape of the recovery, if we dig deeper into the market’s performance, is a K-shaped one. We have an upper leg that is booming. In the US, it’s the large tech stocks and locally, it’s miners. The…

Michée @rico_barsz The “e” in “South Africa” stands for electricity. Errol @errolbsk Nomvula Mokonyane volunteered to pick up the rand but is having extreme difficulty picking up the truth. Andrew Ross @maddog_sa Pandas are living proof that you can be fat by just eating salad. Myles Udland @MylesUdland Stocks crashed as high schoolers return to class and step back from Robinhood trading. Samantha Marika @samanthamarika1 My professor is talking about how terrible capitalism is…. I kid you not…the professor is drinking Starbucks… David Shapiro @davidshapiro61 Is the pooh about to hit the fan at Spur? Recent resignations of 2 senior directors and 2 non-execs point to trouble. Shares down 10% at multi-year low. Market cap R1.2bn. Wayne McCurrie says company just not the same since they removed garlic snails from…

the world of investment is changing rapidly. A combination of Covid-19, lockdowns, fiscal stimulus packages, higher savings, and more leisure time has caused a surge in retail investing. Online investment platforms like eToro, Robinhood and Easy Equities now not only make it easier for ordinary people to invest in global stocks, but also allow amateur traders to build up an international reputation and following. Dave Portnoy, better known as Davey Day Trader, is at the vanguard of a movement to upset the ways of institutional investors – the ‘suits’. This democratisation of investment arguably threatens the livelihoods of investment companies and their asset managers. Asset managers are fighting back with better technology. In almost all sectors of the economy, better technology means greater efficiency; yet many new technologies in the…

in 2017, FoodForward SA (FFSA), a non-profit surplus food redistribution company, significantly increased operational efficiencies after launching a digital solution called FoodShare. The digital platform allows food donors – primarily wholesalers, manufacturers and retailers – to donate their edible surplus food to nearby beneficiary organisations in the FFSA network. The beneficiaries then use the food to cook meals for hungry people within their networks. Andy du Plessis, managing director of FFSA, explains that food donors upload notifications of food surpluses onto the platform, notifying member organisations of ad hoc or regular collection slots. A notification is sent automatically to three nearby beneficiary organisations, with the first to react to the notification receiving the slot. Distribution data is also updated in real time when the beneficiaries collect the food. Du Plessis…

zimbabwe is deeply dependent on South Africa, perhaps more so than is commonly realised. About 41% of Zimbabwe’s imports come from SA, 60% of its exports are to SA and 80% of its exports go through SA, as Bulawayo business executive Busisa Moyo, who also chairs the Zimbabwe Investment and Development Agency (Zida), told a Chatham House webinar on 8 September. And he said SA had also recently overtaken the UK as the largest investor in Zimbabwe. So, there was a lot SA could do to help fix the Zimbabwean economy, Moyo thought. The high trade and investment interdependence – coupled with the large amounts of remittances from the many Zimbabweans in SA – meant that the Zimbabwean economy was already deeply integrated into SA’s. It would thus make sense…

Tiger Brands is South Africa’s biggest food producer and despite being classified as an essential services provider during the lockdown period, the company had to write off assets worth a hefty R557m in May. Write-downs have become familiar territory for Tiger Brands, who previously wrote down R106m in its Nigerian investment, UAC Foods. However, Tiger Brands’ share price remained quite composed when the worldwide Covid-19 sell-off occurred. Firm support was retained at 14 380c/share. In fact, Tiger Brands has been forming rising bottoms above that level, which is an indication that investors were incrementally buying the share. So much so that Tiger Brands’ share price is now edging closer to a key resistance level that, once breached, will trigger a good buy signal. How to trade it: Tiger Brands has…

MAIZE HARVEST Prices ignore bumper crop South Africa is on course for a great 2020 maize crop, yet the maize price is back at levels last seen during the drought. A possible reason is locust plagues in East Africa that have seen crop yields there well down on previous years, pushing demand – hence prices – higher. Locally these high prices are bad news for those with maize as an input cost, most notably Astral Foods, whose sweet spot for the yellow maize price is around R2 000 to R2 300 a tonne; the current price is over R3 000. For those looking for a trade or investment here, wait for the maize price to start coming back down before jumping in. SHOPRITE A good year Shoprite’s* financial results for…

in 2011 a massive tsunami hit Japan, killed thousands of people and wreaked havoc on the world’s third-largest economy. The tsunami caused the first nuclear catastrophe since Chernobyl, with certain security features failing at the Fukushima nuclear reactor, leaking radiation to a nearby town. Not only was this an environmental catastrophe for Japan, but the suppliers of uranium found that suddenly, the promised recovery in uranium was dead. The world rushed to close its nuclear reactors, Japan acted immediately and over the next few years shut down all its nuclear reactors. A few other countries announced their intentions to close reactors, or stopped any plans for new reactors. Japan has since restarted some of its nuclear reactors and, as a country with no natural energy sources, nuclear power is the…

On a practical, operational front, local investment managers and collective investment schemes instantly lost face-to-face contact with clients, financial advisers, service providers and management teams of companies in which they invest on their clients’ behalf. As with most industries, the solution has been accelerating the rate of digital transformation within their organisations; not all began from an equal footing. Jean Pierre Verster, CEO of Protea Capital Management, says his team worked remotely even before lockdown, which meant minimal disruption to daily operations. “As a whole the industry needed to adapt, and one visible benefit has been the adoption of videoconferencing via services like Zoom and Microsoft Teams, to make staying in touch seamless. I think going forward we’ll see a lot more of this with significantly less business travel required.…

“WE WERE ON A ONE-WAY TICKET TO TOTAL DYSFUNCTION.” − President Cyril Ramaphosa told journalists in a media briefing that his administration is “not playing games” when it comes to eradicating corruption in the country. Ramaphosa acknowledged the depth of public frustration with the lack of progress government has made in tackling corruption and implementing growth-enhancing economic reforms since he took office in 2017. He explained that state structures had been “broken, piece by piece” during the previous administration and gave assurance that although it had taken time to put things right, “we have now reached a stage where the changes we all want to see will start to unfold”. (Also see story on p. 36). “THERE COMES A TIME IN THE LIFE OF EVERY PERSON WHEN YOU EITHER SUCCUMB…

richemont has maintained its long-term bull channel, although it has been volatile for the past three years. The company announced a 47% slump in revenue for the three months through 30 June as the coronavirus pandemic ravaged sales of its luxury products in its large Asian markets. It shored up cash in advance of the economic fallout. The share price has gained 8.7% in 2020 due to a weaker rand. Outlook: The share price has been confined between 3 500c/share and 8 865c/share since November 2017 – in a triangle formed within its long-term bull channel. Notwithstanding the share price drop in January, which was quickly recovered, the long-term bull channel remains intact. On the charts: Richemont is currently testing the upper slope of its symmetrical triangle. It has failed…

spring has finally arrived, and we’re getting closer to the time of the year when most people’s minds start leaning towards sun, sea and sand. The less pleasant side of a seaside vacation, however, is rip currents. Anyone who has had the unfortunate experience of crossing paths with one of these monsters will know that it must be one of the most terrifying and frustrating experiences to go through. Your every instinct will prompt you to swim back to shore, only to find yourself being drawn further back into the ocean. The key to your survival when caught in these currents, strangely enough, lies in either conserving energy and floating on your back along with the current; or swimming sideways – parallel with the shoreline – until you can feel…

oscillators, such as the relative strength index (RSI) and stochastics, are often used as signals for overbought and oversold zones. Let’s use the RSI as an example. Generally, an RSI set on 14 days is considered over-bought above the 70 level, but there are many examples where this fails to stop an advance. Many novices have shorted a stock when it reaches the 70 RSI level, only to notice many days later that the share is still climbing. Let’s use an example (see graph 2): the Nasdaq was overbought according to normal metrics from late December through late January. Anyone who shorted during this period, or sold their assets, would have been severely disappointed. Oscillator divergence helps to achieve better timing. Oscillator divergence is when the oscillator no longer makes…

the inflation or deflation debate has been heated since the Global Financial Crisis (GFC) and it’s reared its head again in 2020. During both periods central banks implemented extraordinary monetary loosening measures and analysts feared that this would produce inflation. Low CPI inflation across the world after 2009 led many to conclude that inflation fears were unfounded. Applying that 2009 to 2016 experience to 2020, one could forecast that inflation will remain contained over the coming years. This conclusion is overly simplistic and constructing portfolios on the back of it is dangerous. Monetary inflation and the deterioration in the value of cash are big themes for client portfolios in 2020. The missing ingredient to the inflation or deflation debate is a holistic appreciation of inflation. University economics focuses on the…

alarm bells are ringing as evidence mounts that it may take years before South Africa bounces back from its deepest economic contraction on record, with a recovery lagging well behind other countries hit both by lockdowns to curb the spread of Covid-19, and the toll which those measures have taken on global trade and growth. The real culprit is not the pandemic itself but the policy paralysis which, for more than a decade, has blocked the private sector investment that could free the country from a debilitating low growth and rising debt trap, aptly described by finance minister Tito Mboweni in June as the “jaws of the hippopotamus”. Lack of consensus among the groups which help formulate official policy – government, business and labour – together with a long list…

spring has sprung and so has a virus that has not only permeated people’s health but personal finances too. An online survey of 1 000 adults from different regions in South Africa, conducted between 31 July to 3 August 2020 by TransUnion, indicates that the financial impact of the Covid-19 crisis on local consumers remains high. The number of consumers saying their household income has been negatively impacted dropped to its lowest level (77%) since the first round of surveys in April, and much lower than the 84% peak observed in June. The respondents reported that job losses continue to increase, with 21% of financially-impacted consumers reporting that they have lost their jobs because of the pandemic, up from 10% in April. The pandemic has affected and will most likely…