Indholdsfortegnelse for 3/4/2021 i Finweek - English

in turbulent economic times, small- and medium-sized businesses usually have to move heaven and earth to get their books to balance. It sometimes requires difficult decisions, such as prioritising certain products, cutting staff benefits or, in the worst case, retrenchments. In a company that cares for its people – its customers and its staff – the latter option is usually the last resort for the owner. But sometimes it is unavoidable to lay off people, even those who have been loyal to your business and to you as a business owner for many years. It has enormous consequences for the emotions and reputations of both parties. In addition to these devastating circumstances, the business owner must also improve the value for money of the services or products offered to retain…

− US President Joe Biden underscored concerns about Beijing’s economic practices, as well as its continuing crackdown in Hong Kong, human rights abuses in Xinjiang, and increasingly assertive actions in the region, including towards Taiwan, in his first call with Chinese President Xi Jinping, according to the White House. The Chinese state broadcaster reported that Xi spoke in conciliatory tones about the importance of a healthy bilateral relationship but pointedly warned Biden to “act prudently” with regard to the problems raised. Both sides signalled they would not yield on the thorny issues, a sign that these matters could generate major tensions in the post-Trump era.…

after becoming aware of fellow University of Cape Town students’ struggles to move their goods, Tiang Moabelo launched LoadALot in February 2016 – and since then his company has grown to offer a package of moving solutions, which even include non-students, in Cape Town and Johannesburg. Moabelo started the company with absolutely nothing but sheer determination and a hunger to be a successful entrepreneur. “I found a willing partner by hailing down random bakkies on Main Road, Rondebosch. We negotiated a price, after which I added 30% commission when fixing prices with students, who either responded to my adverts on Facebook or word-of-mouth referrals,” Moabelo says. But then one day early on in the venture, the driver failed to arrive for a 9am appointment. “He did not inform me of…

there is a perception that emissions start with the exhaust and that has put the world on the fast track to zero-emission mobility. But take the entire lifecycle of the so-called “green” zero-emission battery-electric vehicle into account, and it is a very different story. “You cannot look at emissions from a tank-to-wheel perspective. You need to look at emissions from a lifecycle analysis, where you take the carbon footprint of everything that contributes to the automobile,” said Stellantis CEO Carlos Tavares, speaking at the announcement of the formation of Stellantis after the merger of PSA Groupe (Peugeot and Citroën) and FCA (Fiat and Chrysler). “You also need to take into consideration the carbon footprint to extract and transport the raw materials, to manufacture and recycle the batteries, and to set…

I sold my MTN shares when the first Nigerian fine emerged back in 2015 as I lost all faith in the company’s management. Since then, we have a new management. Still, the price remains more than 50% below the level which I sold at. MTN’s biggest market remains Nigeria and an improving oil price will help this country’s economy. Working from home has also changed how people use data. We are using more data in general while paying less per gigabyte. We are also using a lot less voice services. These trends will continue. Regulatory risk remains in some of MTN’s markets and we still need to see how the 5G spectrum auction will be managed in South Africa. But for me more importantly is the valuation of MTN’s shares.…

with no fewer than 87 of the 100 biggest shares on the JSE, measured by market cap, sitting above their 200-day exponential moving averages (EMAs), there is little doubt that the bull is dominating the stock exchange. It’s the highest percentage in years, and this strong buying pressure is also reflected in the record levels of the large indices. However, market experts are concerned that these strong JSE figures are being reached in an economy that is in the middle of depression-like conditions. The state of the share market bears no relationship to what is actually happening in the economy. The one sector where the fundamental factors and sentiment are in harmony, which is necessary for a “normal” bull market, is commodities, where record profits are being made due to…

most of us probably know somebody who has bought Bitcoin and burnt their fingers in the process. Just think of the local MTI scam that was recently crowned as the biggest crypto swindle in the world. Cryptocurrencies are digital or virtual currencies that are secured through cryptographics, which makes it almost impossible to counterfeit. These currencies are based on blockchain technology running on decentralised computer networks. Elon Musk’s Tesla recently announced that the company has invested $1.5bn in Bitcoin and that it would now accept the cryptocurrency as legal tender. Visa also recently indicated that cryptocurrencies would be playing a bigger role in its business dealings. Buying gold in times of uncertainty has always been the traditional way of hedging a portfolio. After all, it serves as protection against inflation.…

global focus on zero-emission vehicles is reshaping mobility. It is also changing the way carmakers operate and invest. And the trend towards electric vehicles in developed countries will reshape the economies of developing markets like ours. The issue for South Africa, which only manufactures cars with internal combustion engines, is that the markets for fuel-burning vehicles are shrinking rapidly. The green movement, accelerated by Covid-19, is speeding up. In the UK and EU, regulation is moving rapidly towards the adoption of the electric vehicle. After 2030 the sale of cars as we know them will be banned in the UK. Furthermore, the sale of hybrids (a combination of a petrol or diesel engine with an electric motor) will be banned by 2035. Thereafter the UK will become a market for…

as the first exchange-traded fund (ETF) celebrated its 21st anniversary on the JSE, the surge in supply of ETFs comes as evidence that this sector has come into its own. Judging by the returns on these passive investments, ETFs are now part and parcel of investors’ portfolios and even forming a core holding in most. Adèle Hattingh, manager for business development and exchange-traded products at the JSE, points to the increased acceptance of exchange-traded products (ETPs) in the market. The value of ETFs traded in 2020 was almost three times more than what was traded in 2019, reflecting almost R124bn traded during 2020, according to Hattingh. “In addition, the number of ETF trades had doubled in 2020 and the year-on-year volume increase was 60%.” Interestingly, the composition of the ETP…

in contract theory and economics, information asymmetry deals with the study of decisions in transactions where one party holds more or better information than the other. The lack of a full picture precludes the other party from making accurate decisions. It is common practice in the rental market for prospective tenants to furnish copies of their bank or income statements that are vetted for affordability when applying for a rental. However, three months’ bank or income statements do not quite provide that full picture, which is where the TPN credit bureau enters. When one of her tenants was not paying their rent on time in the nineties, Michelle Dickens, CEO of TPN, thought “how do we as an industry share negative experiences about our delinquent tenants with each other?” The…

The South African Banking Risk Information Centre (Sabric) provides the following tips: Be careful if a scheme promises huge returns; is described as a once-in-a-lifetime opportunity; insists that you invest at once and cannot explain exactly how the money will be generated. Remember, high returns with little or no financial risk cannot be guaranteed. If it looks too good to be true, it usually is. Do your homework before you invest and ask an independent consultant before committing yourself. This is what a Ponzi scheme looks like High returns are promised in a short period of time (which cannot be achieved by the conventional investment opportunities). In some cases, the promoter of the scheme uses fake qualifications to entice investors. High returns are paid initially to lure investors to invest…

in early February 2021, the findings of a new vaccine trial were announced. While the news was only picked up by a few South African news outlets, the implications could be more profound for SA’s future than any Covid-19-related news. This is because the trial 1 results of the vaccine candidate showed a breakthrough in producing rare immune cells necessary to prevent the deadliest of pandemics in southern Africa, one that has ravaged the subcontinent for almost three decades: HIV/Aids. Statistics SA estimates that about a quarter of all annual deaths in SA – around 125 000 people – is attributed to Aids. Those numbers suggest that an HIV vaccine would improve the lives of millions of South Africans, raising life expectancy, reducing morbidity and the consequent (private and public)…

− Niël Pretorius, CEO of DRDGOLD told Mining Weekly that the company had never witnessed better financial results than those for the six months ended 31 December. Group revenue increased by 41% to R2.9bn due mainly to a 42% increase in the average rand gold price received to R988 998/kg. Operating profit increased by 100% to R1.4bn from R719.6m. DRDGOLD reported a 129% higher headline earnings a share, despite reduced production at operations. Pretorius said he viewed the outlook for gold as being really good, although he was concerned about the rise in debt levels around the world. The group upped its interim dividend by 60%.…

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the R100bn surplus in South Africa’s taxtake this year is thought to be largely due to improved royalty payments and corporate taxes from the country’s mining sector – the first of the segments to recover from SA’s hard six-week lockdown last year in response to Covid-19 and a beneficiary of increased commodity prices. While that’s great news for SA, the concern is that the government isn’t doing nearly enough to ensure numbers like that improve. According to Roger Baxter, CEO of the Minerals Council South Africa, R20bn worth of new projects are waiting in the wings. These include a string of platinum group metal (PGM) and gold-sector investments flagged by Sibanye-Stillwater at its year-end results presentation in February, at which it also announced R6.8bn of projects it could undertake, creating…

Founded by two siblings in 2001, Blue Label Telecoms (BLU) is a mobile technology company that specialises in selling prepaid airtime, electricity, and ticketing. It also distributes virtual electronic merchandise in South Africa and abroad. In September last year I recommended a buy on Blue Label above 335c/share because not only did its share price abandon its long-term bear trend, but it also broke out of an inverted head and shoulders pattern (a bullish reversal formation). Blue Label was drowning in debt worth R8.9bn, before it embarked on a turnaround strategy focused firstly on recapitalising its troubled investment in Cell C, in which it acquired a 45% stake for R5.5bn in 2016. Blue Label recently announced that it expects to report a rise of up to 45% for the six…

TRUWORTHS Caution in retail space Results are starting to land on the JSE after the trading updates of January and early February, and one thing we’re clearly seeing is that the updates boosted the share price, which the follow-up results did not. Truworths was up almost 50% after its 15 January trading update, but weakened ahead of the actual results and closed lower the day after the results were released. This very much suggests that the initial updates surprised to the upside, but that the numbers and stark reality of the local economic conditions are bringing new concerns to investors. I have written about investor fears that retailers were boosted by increased grant payments, retrenchment packages and people raiding their retirement funds last year. The market seems to be slowly…

despite reaching new highs, traditional equity markets have been forced to take notice of new developments, centred in the US, that threaten to fundamentally change the ways markets have been operating up to now. Suddenly, new players, such as retail brokers – essentially day traders – and market makers, acting as social media trading strategists, have come to the fore, making banks and asset managers nervous as to their sudden impact. Trading on an app through Robinhood has favoured small upstart retail players who have upset established hedge-fund players, leading to losses of over $5bn for Wall Street hedge funds at one point. Retail brokers and market makers have become the new middlemen in the US, earning billions in fees amid greater market liquidity. The onslaught of these upstarts on…

there is a saying that when a New York taxi driver asks you what share they should buy, you should sell all your stocks immediately on getting out of the taxi: a bubble is developing. The adage is that when Wall Street meets the High Street, alarm bells should ring. It is, unfortunately, not that easy to go out and “sell all your stocks”. Trying to time the market – even when it is overheating – is a fool’s game, and leaves the participants poorer in the long term. And that is the key phrase: long term. Rather than dumping your (hopefully carefully researched) assets, revisit your valuation metrics and decide if your portfolio – whether it consists of stocks, bonds, commodities or cash – will withstand a crisis. Such…

finance Minister Tito Mboweni has unexpectedly scrapped plans to raise R40bn in taxes over the next three years in his 2021 budget speech, making an unprecedented bid to boost South Africa’s economic recovery by easing the financial pressure on embattled businesses and households. A surprisingly strong pickup in activity, when lockdown restrictions were eased last year, had alleviated the magnitude of the anticipated blow to tax revenues after the Covid-19 pandemic struck, making the step possible, he told parliament on 24 February. Last year’s recession remains the worst since World War II, but the bounce in output in the final quarter also means that the economy is likely to have contracted by 7.2% in 2020, less than earlier forecasts of 7.8%. The shortfall in tax revenues for the financial year…

Simon Brown Founder of Just One Lap LOCAL CHOICE: Satrix Top 40 ETF (STX40) I bought my first EFT about a month after it was listed in 2000, the Satrix Top 40* ETF. I knew a little about the product as a concept and liked the idea of owning the entire market as opposed to trying to pick the winners. I continued with a monthly debit order for about a decade before switching that into an offshore ETF. I was not concerned about the local nature of the ETF, rather I was worried about SA concentration risk when taking my regulation 28 retirement product into account as that has restrictions on offshore investment. I still hold this ETF and have watched it go from resource dominated in the early 2000s…

Vuthas your people The isiZulu word vutha means ablaze or on fire. A fire vuthas – and so forth. It’s also synonymous with anger, sexiness, amazing skills or anything else English speakers use “blazing hot” for. My favourite use of vutha is to “fetch your people to back you up”. Maybe it’s just Jozi speak, but when you are in a tight spot, you vuthas your people. As a kid, my favourite person to vutha was my grandmother. Whenever the older kids would start trouble, I’d run home, screaming “GOGO!” uGogo would come out, with imvubu (sjambok) and all hell would break loose. I would never vutha my mother though, because I would just get a hiding and told to do the dishes or my laundry. The kids with older…

a company dynamic worth watching in the second half of this year will be how Gary Nagle takes Glencore towards its new-age makeover, replete with a 2050 carbon neutrality pledge and amid a US Department of Justice (DoJ) investigation into its historic trading affairs. Glencore is one of the JSE’s biggest counters, but it is also one of the resource sector’s underperformers over the last three years. This is partly owing to its ownership of thermal coal – it produced a whopping 106 million tonnes of the stuff last year – and questions about the probity of its trading. The DoJ investigation, as well as similar investigations launched by Swiss and UK antigraft authorities, will only conclude after Glencore’s incumbent CEO, Ivan Glasenberg, steps down in June. When they are…

grindrod is a holding company with more than 100 years of experience in the South African logistics industry. Through subsidiaries and joint ventures, the company operates in three divisions: freight services, shipping, and financial services in the trading, handling and transportation of bulk commodities – which include agricultural products – by road, rail, sea and air. The group’s global business is represented in more than 24 countries and is uniquely positioned to service trade flows among African nations. Share price history Grindrod’s share price has peaked twice at 2 085c/share – in 2008 and again in 2014. After pulling back in 2008, the share price regained upside when it sold a 50% interest in Cockett Marine Oil to Vitol. Grindrod had acquired 100% in Cockett in April 2008, which is…

we recently listened to President Cyril Ramaphosa’s fifth state of the nation address (SONA), which in general came across as cautiously optimistic. In my experience, however, the average South African is all but optimistic and in most cases, they just do not have enough conviction to invest their hard-earned capital in South Afria. When I ask them about it, the standard response is: “Look around you, Schalk, we keep moving backwards every day”. This is usually followed by “SA is going nowhere”. I also hear a lot about how the rand is going nowhere and that the JSE remains one of the worst investment destinations in the world. Well, those who know me, know that I live by the saying that if you can measure it, you can manage it.…

as I write this in mid-February, the FTSE/JSE Top 40 Index is up 13.5% for the year so far and since the lows of March last year, the index has gained 85% (I took a double take and triple checked both stats because they’re wild). Now, sure the recovery from the bounce doesn’t really tell the story as the collapse saw the index down over a third from the January 2020 highs. The S&P 500 Index, the clear winner over the last year and last decade, has risen by a much more modest 4.7% so far in 2021. Not shabby, but well behind the Top 40. My point is twofold. First off, there is the old trope that you read on all investment disclaimers: Past returns are no guarantee of…

The correct strategic approach to deal with market uncertainty is investing with a solid long-term framework in place, says Pieter Koekemoer, head of personal investments at Coronation Fund Managers. “Owning a diversified portfolio of assets with a level of market exposure consistent to your risk budget is, over time, a much more dependable route to wealth creation than an attempt to time markets by calling peaks and troughs,” he says. Stephán Engelbrecht, fund manager at Anchor Capital, has a similar view. “We believe that trying to time the market is often a fool’s errand,” he says. “We are therefore maintaining our principles of investing in high-quality companies that continue to offer value.” Raphael Nkomo, head of strategy and research at Ngwedi Investment Managers, puts it straightforwardly: “Diversify, diversify, and diversify.”…

In the immediate aftermath of his budget speech on 24 February 2021, Mboweni got a nod from financial markets as the rand rallied by more than 1% against the US dollar at one point. This was in reaction to the government sticking by its guns in reining in spending on employees, and focusing on getting the economy growing stronger again. “After a very difficult year, the National Treasury has produced an excellent budget,” said Nazmeera Moola, head of SA investments, and Peter Kent, co-head of fixed income, at Ninety One. “There was always a concern that given the growing evidence of higher than forecast revenues, expenditure would slip a lot in the coming years from the October medium-term budget policy statement forecasts.” Mboweni’s strong impetus on the state’s debt trajectory…

The number of actively managed ETPs is growing steadily, albeit that the process has been slow, says etfSA’s Brown. ETPs have traditionally tracked indices with a range of periodically adjusted underlying assets. “Asset managers in SA have been slow to recognise the opportunities provided to them to list actively managed portfolios on the JSE as a substitute for traditional unit trusts and fund of funds,” says Brown. In 2018, UBS listed eight ETNs with a maturity of five years which track certain underlying funds. These included local equity and offshore funds. It also includes local fund managers. In 2019, the bank listed another two ETNs and last a year a further two which tracks various underlying funds.…

krion, Kubus, Sharemax, Barry Tannenbaum’s scheme and, more recently, Mirror Trading International − South Africans know all about money-making schemes that turn out to be scams. Yet these “businesses” keep popping up, and people keep losing millions. Most investment scandals take the form of a Ponzi or a pyramid scheme, and there is usually one common denominator: big promises of huge returns. In a pyramid scheme, investors have to attract new investors before their returns are paid, while a Ponzi scheme uses new investors’ money to pay “old” investors. Unfortunately, the Covid-19 pandemic has proved to be a breeding ground for scams, which snare those who have lost their jobs and received packages or withdrawn pension money. The investigation into the alleged pyramid scheme Up Money continues after the company’s…