Today in business: Rand takes a hit after Trump shocker – Business Insider South Africa

Today in business: Rand takes a hit after Trump shocker – Business Insider South Africa
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7 October

Rand takes a hit after Trump shocker

The rand has weakened to R16.63/$ as investors dumped risky assets following a shock over the US economic stimulus plans. Markets faltered overnight after US president Donald Trump unexpectedly stopped negotiations over the plan.

The Dow plummeted as much as 1.5% immediately after the announcement.

The abrupt pause leaves the US economy to recover without fiscal support many have deemed essential for fueling a timely bounce-back.

“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” the president said in a tweet.

This means Americans will not receive any additional economic relief — neither stimulus checks nor expanded unemployment benefits — until at least after the November election.

Insisting that Democrats only want to “bailout poorly run, high crime, Democrat states,” Trump said on Twitter that he would no longer negotiate with them over another stimulus package. Indeed, he insisted that the economy is “doing very well,” despite there being 10.7 million fewer jobs today than there were six months ago, and said he would pivot instead to confirming his nominee Amy Coney Barrett to the Supreme Court.

On 1 October, the Democrat-led House of Representatives passed a $2.2 trillion coronavirus relief package that included a second round of $1,200 stimulus checks for every American, with parents eligible to receive another $1,200 for each dependent child. The bill also proposed an additional $600 in federal unemployment benefits and $436 billion in aid for state and local governments to help cover the cost of providing assistance to out-of-work Americans.

But Senate Republicans negotiators balked at the price tag, and the two sides were unable to reach a deal.

Cosatu strike contines

Cosatu’s national stayaway strike is going ahead today. tomorrow in protest against corruption, retrenchments and unemployment, gender-based violence and attacks on collective bargaining. Motorcades are planned for Tshwane, Polokwane, Mbombela, Rustenburg, Mthatha, Bloemfontein and more.

6 October

Luxury cars seized

More than 25 luxury vehicles owned by businessman Edwin Sodi – who finds himself at the centre of a R255m asbestos audit tender scandal – and his firm Blackhead Consulting,  were seized yesterday. The NPA reported that assets and cash totalling R300 million had been frozen. Sodi, along with ousted Mangaung mayor Sarah Mlamleli, the head of the Free State human settlements department Nthimotse Mokhesi and others face more than 60 charges tied to a tainted multimillion-rand asbestos audit contract, which envisioned an audit of 36 000 low cost homes in the province.

Meanwhile, the Hawks have dismissed rumours of an imminent arrest of ANC secretary-general Ace Magashule. Magashule has been on the radar of law enforcement over his links to corrupt deals in the Free State.

Oil surges after Trump leaves hospital

Stock markets rallied overnight after US President Donald Trump was released from hospital, and amid signs that US politicians are moving closer to a new stimulus package. Oil prices surged 6% – also due to a strike at oil and gas fields in Norway. The rand was last at R16.55/$.

Cosatu plans national strike tomorrow

Cosatu is urging workers to take part in a national “stayaway strike” tomorrow in protest against corruption, retrenchments and unemployment, gender-based violence and attacks on collective bargaining. Due to the Covid-19 pandemic, workers have been asked to stay at home, rather than congregate in the streets.

PPE suppliers at tribunal

A special tribunal will today hear arguments about whether the bank accounts of 40 Gauteng-based contractors who benefited from PPE contracts should remain frozen. Earlier, it granted an urgent application by the SIU to freeze R38.7 million held in the contractors’ bank accounts. The companies are linked to a Gauteng health department PPE tender that was allegedly irregularly obtained.

6 October

Multichoice rockets 9% after Canal+ takes stake

The French media company Groupe Canal+ now holds 6.5% of Multichoice, the company announced on Monday. The share price of Multichoice, which owns DStv, rocketed by 9% in response. 

Multichoice’s share price. Source: Sharenet

Canal+ is owned by Vivendi, which is also the owner of one of the biggest record labels in the world, Universal Music Group, as well as the advertising giant Havas.

“As a publicly held company, MultiChoice regularly engages with its strategic partners and maintains an open dialogue with the investment community. The Groups policy is not to comment on its individual shareholders nor on its interactions with them. The Company remains committed to acting in the best interests of all shareholders and to create sustainable long-term shareholder value,” Multichoice said in a statement.

Fuel price cuts from Wednesday

From Wednesday morning, 93 petrol will be 23 c/l lower, while 95 petrol will decrease by 32c/l. Diesel will be lowered with some 90c. This is thanks to a stronger rand last month, and a falling oil price. The Brent crude oil price fell from an average of $44.78 per barrel in August to $40.82 in September, while the average rand level was R17.28 in August, and R16.72 in September.

On Monday, oil prices rebounded as US president Donald Trump’s doctors suggested that he could be discharged from hospital today. Trump’s illness triggered uncertainty in the market. Brent crude oil was back above $40 a barrel. The rand was trading firmer at R16.44/$.

NUM to strike at De Beers, Exxaro

Members of the National Union of Mineworkers (NUM) are set to down tools at De Beers, Exxaro and Petra Diamonds after they failed to reach a wage settlement at the Commission for Conciliation, Mediation and Arbitration (CCMA).

The planned strike at the three companies had been given the go-ahead by the CCMA, with the union saying it was now finalising logistics.

The NUM wants an 8% increase at De Beers, while the company is offering 1.5%. Exxaro Coal is offering 5, against the union’s 7.5% demand.

SAA, Mango strike agreement with technical services

After threatening to stop supplying services to SAA and Mango, South African Airways Technical reached an agreement with the airlines, who have agreed to pay in advance for maintenance work on their aircrafts. Both SAAT and Mango are subsidiaries of SAA, which is in business rescue and still awaiting a R10.5 billion bailout from government.

SAAT employees were paid only 25% of their salaries in September.

Gautrain workers start strike

Fin24 reports that Gautrain services will continue on Monday, even as workers go on an indefinite strike over a pay hike. The National Union of Metal Workers of South Africa (Numsa), is demanding an 8% increase for its members at Gautrain and has rejected the 4% offer on the table. Gautrain says it is implementing a “contingency plan”, which includes additional security.

2 October

Gold rallies, oil slumps after Trump diagnosis

Global equity markets and oil plunged on Friday, while gold spiked after US president Donald Trump said he and his wife had tested positive for coronavirus.

The Brent oil price was down 3% to below $40 a barrel, while gold jumped 3% to $1,909/oz.

Sasol in deal to sell half of Lake Charles

Sasol plans to sell a 50% stake in US base chemicals business, including its beleaguered Lake Charles project, to Dutch chemicals multinational LyondellBasell in a deal worth $2 billion. The proceeds will be used to lower Sasol’s debt burden of $10 billion.

Lake Charles has been hit by huge cost overruns – it cost double the budgeted amount – and other technical problems. 

The unit will become a joint venture between the South African company and LyondellBasell, Sasol said in a statement Friday. The deal is expected to be completed this year.

The article has been updated to reflect that Sasol is selling a stake in its base chemicals business in the US.  

1 October

Two women take CEO, CFO positions at Spur

Val Nichas has been appointed as the new CEO of the Spur Corporation, which also owns Panarottis, John Dory’s, RocoMamas and Hussar Grill. Nichas was formerly the managing executive for quick service restaurants at Famous Brands, which owns Steers, Debonairs Pizza, Wimpy, Mugg & Bean, Fishaways and Milky Lane.

Spur also announced that its CFO, Phillip Matthee, has requested to stand down from his current position for personal reasons. He will take a senior operational role within the group’s finance department.

Cristina Teixeira, previously CFO of Group 5 and the Consolidated Infrastructure Group, will take his place.

Christo Wiese resigns as Shoprite chair after 41 years

Christo Wiese will retire as a chairman of Shoprite next month. Wiese has been Shoprite’s chairperson since 1979, and will be followed up by the chairperson of Absa, Wendy Lucas-Bull. Last year, shareholders holding 61% of the shares in the company voted against his re-appointment as chairman.

Wiese was once South Africa’s richest man, Bloomberg reported. But much of his wealth was lost after he exchanged Pepkor for shares in Steinhoff. He was its biggest shareholder at the time 90% of its share value was wiped out, and is currently suing Steinhoff for R59 billion.

Rand at the best level in a week

The rand reached R16.67/$ this morning – its best level in a week. The currency has recovered from a low point of R17.23 a couple of days ago. Risk appetite improved overnight amid renewed hopes for a stimulus deal in the US, and positive US jobs data.

Also, South Africa’s trade surplus increased in August, with the country exporting R38.9 billion more than it imported. Exports were up almost 9% than a year ago.

Dollar/rand exchange rate. Source: XE

Big day for spectrum

Icasa is expected to publish an invitation for telecommunication companies to apply for spectrum today. Mobile operators have long blamed the lack of spectrum for SA’s high data prices. 

In July 2016, Icasa invited applicants for spectrum licences, but the courts halted the process. Government argued that its policy regarding spectrum had not yet been finalised and that the sale risked only benefitting big companies with access to capital.

Capitec rallies after results

Capitec’s share price gained another half a percent early on Thursday, after a rally of more than 5% yesterday. Its share price climbed above R1,000 after it released its results

Capitec’s headline profit fell by 78% to R650 million in the six months to end-August.

The group impaired R5.8 billion for bad debts, and rescheduled payments for R7.5 million in loans.

“Banking clients’ income was negatively impacted by the lockdown and decreased by 25% in April 2020 compared to March 2020. By August income had returned to March 2020 levels,” Capitec said.

Its share price is still down 30% from its highest level over the past year, but has doubled from recent lows.

Capitec’s share price. Source: Google

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