Indholdsfortegnelse for 04/23/2021 i Finweek - English

local government is supposed to be the foundation of service delivery to individuals and businesses. This is the first point of contact for residents in the country with the other party to the social contract. However, it is normally very frustrating trying to do business with municipal officials – often staffed by cadres or family members of the ruling party. Consider, for example, the dysfunctional municipalities in the North West, Free State, Mpumalanga, Northern Cape, Eastern Cape and Limpopo provinces where the party, which is honouring its part of the social contract, by paying for services and taxes, has had quite enough. To make matters worse, the Auditor-General reports year after year on the maladministration of municipalities. Remember when former Auditor-General, Kimi Makwetu, could not sound more desparate as he…

“30 DAYS TO VOLUNTARILY STEP ASIDE OR BE SUSPENDED.” – President Cyril Ramaphosa announced that the ANC leaders and members charged with corruption and wrongdoing, including secretary-general Ace Magashule, have 30 days to voluntarily step aside or be suspended in terms of rule 25.7 of the ruling party’s constitution. Ramaphosa made the announcement after a late night session of the National Executive Committee. The implementation of the rule means Magashule, who is facing corruption charges, will have to step aside by the end of April. “We’re at a place where the economy’s about to start growing much more quickly.” —Federal reserve chairman Jerome Powell said the world’s largest economy (US) appears to be at an inflection point, with output and job growth poised to accelerate in the months ahead if…

A feature of the last metals and minerals “super-cycle” – in which prices for commodities rose to record levels between 2003 and 2008 – was that mining firms used plant and equipment quicker than the manufacturers could supply them. It was not uncommon for mining executives to voice their concerns that projects worth millions of dollars were at risk of standstill, whilst they waited for delivery of items, such as heavy-duty tyres. Those were the days, as they say. A report compiled by UK-listed drilling company, Capital Limited, says that a combination of US stimulus and the adoption of government policies globally that are sympathetic to decarbonisation, as well as robust demand from China, are creating conditions for a fresh super-cycle today. The mining industry, however, is finding it has…

clicks is a provider of health and beauty merchandise and is the largest retail pharmacy chain in South Africa. In August 2018, the group celebrated 50 years of trading, since launching in Cape Town in 1968, and its market capitalisation on the JSE subsequently surpassed the R50bn mark. It has since expanded to more than 704 stores and over 545 in-store pharmacies across SA, Namibia, Botswana, Swaziland and Lesotho. Share price history Click’s share price gradually appreciated from a low at 1 115c/share after acquiring 60% in Direct Medicines for a cash payment of R13.2m in 2008. The group then assumed control of all Medicross pharmacies on 1 December 2016 and 45 retail front shops of the Netcare hospital division on 1 February 2017 – its share price surged further…

THUNGELA Worth a look Anglo American has announced it is going to be listing its remaining local coal assets in Johannesburg and London under the name Thungela Resources (also see story on p.11). Anglo still needs shareholder approval, but that is likely to happen, and shareholders will get one Thungela share for every ten Anglo American shares they hold. Coal is not exciting, but as Exxaro shows, it certainly can be profitable. In addition, the Thungela assets are of good quality and it exports everything it mines with an allocation at the Richards Bay Coal Terminal. I’ll wait for more details, but for somebody seeking dividends, this may well be worth a look. PICK N PAY Ban on sales takes its toll Pick n Pay updated the market on 8…

the video game and e-sports industry is, at least in my view, one of the most exciting industries in the world today. Not many people realise that annual global video game revenue is over $180bn, making it bigger than the global movie and North American sport industries combined. There is little doubt that the Covid-19 pandemic will have helped this industry grow even bigger over the last year. Most people could not leave home, there were no sports to watch, TV viewership is down around 9% – so how did people spend their time? Twitch, the market leader in the streaming space, saw the hours streamed double in the second and third quarter of last year. Activision Blizzard reported that hours played were up 70% compared with the same period…

Critics of daylight-saving time say the practice is outdated. Many scientists say it is also dangerous – at least around the time when clocks are set forward and people lose an hour of precious sleep. The American Heart Association refers to a Finnish study that showed the risk of a stroke increased by 8% during the first two days after the start of daylight-saving time. In Sweden, researchers found an average of 6.7% greater risk of heart attacks in the three days after the spring time change. A group of US researchers conducted their own study and determined that heart attack risks increased by 24% the Monday after the switch to daylight-saving time. That risk then tapered off during the remainder of the week. By contrast, risks for a heart…

in 2018, Hank Bessembinder, professor of business at Arizona State University, published a paper in the Journal of Financial Economics with the rather nonsensical question: Do stocks outperform Treasury bills? It seems nonsensical because, from 1926 to 2016, the approximately 25 300 companies listed on US stock exchanges, created $35tr in net wealth for its shareholders, in other words, $35tr more than what investors would have earned on US Treasury bills. But here’s the catch: All that net wealth was created by the top 1 092 companies, or 4% of the total, which means the remaining 96% of listed companies “collectively generated lifetime dollar gains that matched gains on one-month Treasury bills”. One might easily conclude from this research that it is vitally important to pick the right stocks. But…

Balwin Properties issued a trading update on 30 March for the year ended February, which included information about construction delays and sales challenges during the 2020 hard lockdown. The company expects headline earnings per share (HEPS) to be between 18% and 23% lower, since they sold a few less apartments and at slightly lower prices as they build smaller and cheaper units. I like their business model; it is flexible to demand. We should see continued interest in the below-R1.5m residential property space, driven largely by first-time buyers taking benefit of the low interest rates. I expect the current prime rate of 7% to hold for the rest of the year and while the economy remains shaky, 2021 will most definitely be better than 2020. Balwin has been increasing its…

the first quarter of 2021 through 31 March has ended with strong returns across the board with the FTSE/JSE Top 40 Index adding almost 12%. (Note that all dividend payments are excluded in this article). This was a great start to the year for investors. Local stock market returns were driven, in most part, by the FTSE/JSE Resi 10 Index (gauging the ten largest resource stocks), as it added almost 16%. The FTSE/JSE Indi 25 Index (tracking the 25 largest industrial shares) gained 11.7%, helped in large part by Naspers*, which added almost 17%. Of note is that Prosus (housing the Tencent stake) added only just over 2%, while Hong Kong-listed Tencent rose 6.5%. Here we see two interesting trends. Firstly, Naspers closed some of the valuation gap between Prosus…

it was a positive first quarter for equity markets in 2021, but can it last, since it seems like it was money made easily? The surge in Big Tech has abated, while the market has turned measurably toward value from growth stocks, mainly due to the stimulus drive in the US, which could be inflationary. President Joe Biden has announced several fiscal support policies, including infrastructure spending, amid some success with the country’s vaccination drive. But the US Federal Reserve (the Fed) remains committed to low interest rates. The Fed’s aim is to prevent any deflationary tendencies developing, which have become prevalent in the European Union (EU) and Japan, by raising its inflationary target and expectation levels. The benchmark US ten-year bond yield has risen to 1.77%, the highest level…

The MVIS GDP Africa Index has about $55m of assets tracking this gauge. It includes 71 companies. The index is “designed to reflect the size of a country’s economy instead of the size of its equity market,” according to the index fact sheet. It also includes non-local companies that generate “at least 50% of their revenues in Africa”. This means the exposure to SA stocks are 35.86%, while the rest of the continent constitutes 64.14% of the index. To be included in the index, companies must have a full market capitalisation of at least $150m, at least 250 000 shares traded per month over the last six months and a three-month average daily trading volume of at least $1m. This will understandably exclude the vast majority of the 1 057…

sleep-deprived people can cause relationship troubles at work, because of bad moods, emotional outbursts and negativity, impacting the entire organisation. It gets worse. People who wear working at all hours of the day or night as a “badge of honour” run an increased risk of a fatal heart attack and the onset of Alzheimer or dementia. Adults need a minimum of seven hours of consecutive sleep and a maximum of nine hours per night. Many in leadership positions boast about only “needing” six hours per night. Joni Peddie, CEO of Resilient People, quotes Matthew Walker, professor of neuroscience and psychology at the University of Berkeley, California, who says these people increase their risk of having a fatal heart attack by 200% (see sidebar). Peddie says one of the effects of…

Let’s agree This issue’s isiZulu is asivumelane. It means “let’s agree”. Vuma (agree) is the root word. So, when we say a car has vooma, we mean it “agrees to go”. Yes, vooma comes from vuma. Asivumelane, that blew you mind. Yes, it did. But here’s what we should agree on: Soccer is not our thing. Asivumelane that it hasn’t been for a while. We suck. Bafana Bafana must retire and try something lik Crypto mining. They’re already a scam – a bloody pyramid scheme. Ponzi. Asivumelane that if the SABC airs one more Bafana match, we stop paying TV licenses. Wait, you’re already not paying. Okay, fine, let’s tell them if they stop airing Bafana matches, we’ll pay. Asivumelane that if DStv airs another Bafana match, we send Steve…

i am not a fortune teller, but I can smell from miles away the different approaches that black business lobby groups are taking in the matter of racism allegations against Eskom’s CEO André de Ruyter, who is under pressure to step down barely two years into his tenure to turn around the ailing electricity producer. The Black Management Forum (BMF) has been leading calls for De Ruyter to be suspended after it said it had received several complaints of racism and abuse of power from employees of the state-owned power generator and its suppliers. Curiously, the other two powerful lobby groups, the Black Business Council (BBC) and the National African Federated Chamber of Commerce and Industry (NAFCOC), have been silent on the matter, preferring to shy away from public involvement…

One means by which the diamond industry has coped with restrictions on international travel is to route sales of unpolished goods through online auctions, partly assisted by the mechanised way in which diamonds are now able to be valued. However, that is not an option for emeralds and rubies, the coloured gemstones that are mined and marketed by JSE-listed Gemfields, a company that barely escaped the last 12 months with its corporate shirt attached. The company reported a net loss of R1.4bn for the 12 months ended December. Compared with the previous year’s R566m profit, that’s a reversal in fortune year-on-year of roughly R2bn. The performance support the remark by CEO Sean Gilbertson in an earlier trading statement that the company had endured a “grisly” year in 2020. Gilbertson says…

The SA assets produced 16.5m tonnes in Anglo’s 2020 financial year but ran at a $15m loss before interest, tax, depression and amortisation, owing to an average coal price of $57/t. The current spot price for its grade of coal is about $90/t, but Anglo will nonetheless inject $170m into the business, leaving it with net cash at commencement. Anglo will also support the company for three years should the coal price fall beneath a certain level. According to analysts, these mines can’t make cash at less than $80/t currently. Thungela Resources will be led by CEO July Ndlovu, currently the CEO of Anglo Coal. He’s a respected operator and has set out an investor strategy aimed at yield. Thus, Thungela will pay out 30% of free cash after sustaining…

Prosus houses the international internet assets of Naspers*, and listed on Euronext Amsterdam on 11 September2019 with a secondary, inward listing on the JSE in SA. Naspers spun off most of its internet assets to Prosus to stop being seen as a mere proxy for investing in the WeChat-creator, Tencent. Prosus has been trading in a bull channel since May 2020 and even tested a high at 197 000c/share. However, after attempting to retest that all-time high and failing to breach it in February, sellers dragged the share price to the lower slope of the bull channel. Though the lower slope has curbed further selling once again, upside momentum seems less vigorous than before, meaning buyers are few. Prosus had plans to cut its stake in Tencent to 28.9% from…

i often wish that the world of shares could be as flat as the Karoo, so that we could look into the future – not just a day or two ahead, but years into the future, to see the levels at which shares would be trading by then. Wouldn’t that make investment management so much easier? Unfortunately, we don’t know what share prices will be tomorrow or next year, so we have to rely on other tools. Not unlike with investment opinions, investors often also disagree about the best strategy to follow when buying and selling shares. Some investors prefer to look at the market through a telescope so they can see well into the future, and they don’t mind buying shares and waiting patiently for good returns. Their reasons…

business confidence is at an all-time low, and this is dissuading investors. The business confidence index of the South African Chamber of Commerce and Industry averaged 86.5 in 2020, which is the lowest annual average since the index was launched in 1985, when apartheid was in its death throes, SA was economically isolated and the country was on the precipice of civil war. There is a multitude of reasons for the current low confidence, not least of which is the country’s fiscal position. A debt crisis is on the cards unless this can be managed. It would also be fair to say that the current low confidence is in large part due to businesses’ concern around government’s track record and capacity to address the issues facing the country that have…

2021 marks seven years that Paul Dunne has been at the helm of Northam Platinum. Prior to joining Northam, Dunne, an electrical engineer, was an executive director at Impala Platinum, responsible for all mining, concentrating and smelting operations at its Rustenburg and Marula mines. Dunne, who has been in the mining industry since1987 when he moved to South Africa at age 24 from England, says he has always been on mining sites, and happily so, as he prefers it to the city. “I am more of an operating person and not a Joburg person,” he tells finweek. When Dunne assumed the role of CEO at Northam in 2014, he boldly expressed the intention to double the company’s platinum production by 2020. The mature Zondereinde mine produced approximately 300 000 ounces…