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South Africa’s former finmin Nene appointed as advisor at Thebe Investment

22 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Former finance minister Nhlanhla Nene has been appointed as an advisor at Thebe Investment Corporation to help roll-out the firm’s growth plan, his second private sector job in a week.

Nene said on Thursday in an interview with Business Day TV that his appointment will be full-time for a term of two years effective from next month.

“This is interesting that I find myself in the public sector again,” he said.

“It’s going to be an interesting journey and provide me with an interesting opportunity of finding a symbiotic relationship between the private sector and public sector.”

On Monday, Asset management group Allan Gray appointed Nene as a non-executive director, hoping to tap his strategic and leadership skills.

President Jacob Zuma fired Nene, who was keen to rein in government spending in Africa’s most industrialised economy, in December, replacing him with little-known David van Rooyen.

Days later, Zuma appointed Pravin Gordhan as finance minister, giving South Africa its third finance chief in a week after a selling frenzy in the markets.

 

(Reporting by Nqobile Dludla; Editing by James Macharia)

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Tripling of South African bond buying signals new faith in rule of law

18 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – A tripling of South African bond sales this year on Monday added to signs that investors’ faith in its institutions has been somewhat restored following a court ruling against President Jacob Zuma and the appointment of a former finance minister.

Securities exchange figures showed foreign investors bought a net 30 billion rand ($2 billion) worth of South African debt in 2016, compared with 10 billion in the same period last year.

The Treasury is flush with cash after a $1.25 billion 10-year bond sale this month was two times oversubscribed, and bond yields have recouped heavy losses in December after Zuma fired his finance minister, raising fears of political interference.

Benchmark yields, which spiked to a record 10.38 percent after Zuma briefly replaced Nhlanhla Nene with a virtually unknown politician, have since recouped nearly 140 basis points, a third of which was after the ruling against Zuma.

Sentiment, helped by Zuma bringing back Pravin Gordhan as finance minister, improved further after the Constitutional Court found that the president was wrong to ignore an order to repay state funds used to upgrade his Nkandla home.

“Having Pravin Gordhan back in control, and having this noise around Nkandla and Jacob Zuma, is showing the market that South African institutions are still strong,” Investec fixed income portfolio manager Vivienne Taberer said.

Analysts said markets were also cheered by a backlash against the Gupta family and its businesses. South Africa’s four big banks cut ties with a Gupta-owned investment company over criticism that the family has undue influence with Zuma.

“Government and state owned enterprises can get about their constitutionally mandated activities, less encumbered by predatory actions of (the) president and his allies,” BNP Paribus Securities South Africa analyst Nic Borain said.

“We expect markets – especially the bonds, currency and banks – to track the ebbs and flows of Jacob Zuma’s fortunes.”

Added to that, signals from the central bank and Treasury that they will pursue prudent policy have seen South African assets leading emerging market gainers, boosted by signs that the U.S. may not hike interest rates as quickly as expected.

Recent economic data out of China, a major consumer of emerging market commodities, has also lessened worries over a slowdown in the world’s second largest economy.

“If this environment, where we see the Fed not really doing much and being cautious over the balance of this year, continues and we continue to see reasonable data coming out of China … then this constructive risk environment can continue for the next three or so months at least,” Investec’s Taberer said.

The litmus test for assets will be whether credit rating agencies decide to downgrade debt. A cut from Moody’s would mean a loss of its investment grade status and possible ejection from the prestigious World Government Bond Index (WGBI).

“Such an ejection would represent possibly the most dramatic outcome of a ratings downgrade and should be South Africa’s biggest cause for concern,” Citadel chief strategist Adrian Saville said.

 

(By Stella Mapenzauswa. Editing by James Macharia and Louise Ireland)

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Shares in South African airline Comair fall 3% as strike continues

15 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s airline operator Comair’s share price fell more than 3 percent by Friday, the third day of a strike by ground staff demanding higher wages.

Shares in Comair, a franchisee of British Airways and the owner of South African low-cost airline Kulula.com, declined by 3.1 percent to 3.10 rand ($0.2) by 1050 GMT.

The share price has fallen by more than 5 percent since Tuesday, after the United Association of South Africa (UASA) said its members were preparing to strike.

The union wants a 35 percent increase over three years, while Comair is offering a 22.5 percent increase over three years, the airline said on Tuesday.

Both the company and the union were not immediately available for comment.

($1 = 14.5070 rand)

 

(Reporting by Zimasa Mpemnyama; Editing by James Macharia)

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AB InBev agrees concessions with South Africa over SAB deal

15 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Anheuser-Busch InBev will invest 1 billion rand ($69 million) to support small South African farmers as part of concessions agreed with the government to secure regulatory approval for its $100 billion-plus takeover of SABMiller, it said on Thursday.

The world’s biggest brewer said the concessions, which also include a five-year freeze on layoffs, were agreed with the South African Ministry of Economic Development.

“It is expected that the agreement on terms between government and the merger parties will expedite the merger proceedings before the South African competition authorities,” AB InBev said.

“The commitments made by the company are the most extensive merger-specific undertakings made to date in a large merger. In our view, they meet the requirements of the competition legislation,” Economic Development Minister Ebrahim Patel said.

South African Competition Commission this week extended its scrutiny of the deal, saying it needed at another 15 days to complete its investigation. It has already extended the deadline four times.

South Africa has a history of taking its time over approving takeovers partly because competition authorities have a public interest mandate to safeguard jobs, in addition to an anti-trust mandate to protect competition.

In 2011, the regulator told U.S. retailer Wal-Mart Stores not to cut jobs for two years following its acquisition of South African retailer Massmart, delaying implementation of the $2.4 billion deal by at least two months.

The Commission investigates deals for any anti-trust issues and submits its views to the Competition Tribunal, which makes a final ruling on whether a deal should go ahead

Ab InBev has already told European regulators of its plan to sell SABMiller’s premium European brands to try to secure approval for its deal.

($1 = 14.5350 rand)

 

(Reporting by Tiisetso Motsoeneng; Editing by Jane Merriman)

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South Africa’s dollar bond oversubscribed despite political cloud

8 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa has successfully issued a dollar bond overseas to help finance its medium-term foreign currency commitments, the Treasury said on Friday, touting this as a sign of investor confidence despite political upheaval.

Finance Minister Pravin Gordhan has been anxious to reassure investors about continuity in fiscal policy after President Jacob Zuma changed finance ministers twice in less than a week in December, triggering a panic run on the rand.

On Friday, the Treasury said its $1.25 billion 10-year bond, with a coupon of 4.875 percent, had been more than two times oversubscribed, mostly by investors based in Europe and the United States.

“The South African government sees the success of the transaction as an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management,” it said.

Zuma, who has been dogged by controversy over the past decade, is under mounting pressure to quit after the Constitutional Court found he flouted the law by not heeding a directive to make payments for upgrades to his personal home.

Ratings agencies, most recently Standard & Poor’s, have warned they might downgrade South Africa if political issues divert the government’s attention from properly implementing policy.

S&P and Fitch both rate South African credit just one notch above junk, while Moody’s is two notches over sub-investment grade.

Analysts said South Africa had benefited from a general rise in demand for high-yielding emerging market assets after the U.S. Federal Open Market Committee (FOMC) signalled it might be a while before U.S. rates rise.

“There was clearly a window here for them to issue after the FOMC reprice and before a wall of downgrades from the ratings agencies,” Nomura analyst Peter Attard Montalto said.

“They have significant forex deposits already so they can probably wait until next year for the next issuance.”

The rand extended gains against the dollar after the Treasury’s statement, climbing to a session high of 15.0155, up 1.5 percent for Thursday’s close.

Government bond prices also rose, sending the yield on the benchmark bond due in 2026 down 8.5 basis points to 9.19 percent.

The Treasury said the new foreign bond formed part of South Africa’s 2016/17 financing programme and would partly finance foreign currency commitments of $6.4 billion over the medium term.

The coupon for the bond represents a spread of 335 basis points (bps) above the 10-year U.S. Treasury benchmark, which analysts said was in line with South Africa’s current funding rate.

“I don’t think it’s too expensive,” said Rand Merchant Bank trader Gordon Kerr.

The price compares to initial thoughts of plus 350 bps and guidance of plus 335 bps, plus or minus 5 bps.

“There is always demand for our paper and there will always be demand for EM in general because of the nice yields that it provides,” Rand Merchant Bank trader Gordon Kerr said.

 

(By Stella Mapenzauswa. Additional reporting by Olivia Kumwenda-Mtambo in Johannesburg and Claire Milhench in London)

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South Africa’s Eqstra says receives offer, shares jump

8 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Shares in South Africa’s Eqstra surged as much as 15 percent on Friday after the leasing equipment firm said it had received a non-binding takeover offer.

Eqstra, which leases equipment to construction and mining companies, did not name the firm it was in discussions with.

Eqstra’s shares surged more than 15 percent after the announcement, before giving up some of the gains to trade 12 percent higher at 2.09 rand by 1133 GMT.

Eqstra is in a process of selling its non-core assets in the commodities and construction equipment division in order to improve its balance sheet as depressed commodity prices hurt mining companies, its major clients.

 

(Reporting by Nqobile Dludla and Zimasa Mpemnyama; Editing by Tiisetso Motsoeneng and Joe Brock)

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Glencore says South African coal strike violence worsens

7 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Glencore has laid arson charges against a South African mining union as a three-week coal strike turns increasingly violent, the mining company said on Thursday.

Workers from the Association of Mineworkers and Construction Union (AMCU) torched two trucks and offices at the Wonderfontein Mine on Wednesday night, taking the petrol bomb incidents to around 10 since the strike started, Glencore said.

Around 60 striking workers accused of intimidating other employees and damaging nearby farms have been arrested.

AMCU and the police were not available to comment.

Wonderfontein is a joint venture between Glencore and Shanduka Group, which was founded by Deputy President Cyril Ramaphosa. The mine produces 3.6 million tonnes annually.

Glencore said it was engaging with AMCU leadership over a wage dispute.

 

(Reporting by Zandi Shabalala; Editing by Joe Brock)

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South Africa’s February manufacturing output up 1.9% y/y

7 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Manufacturing output grew by 1.9 percent year-on-year in February after contracting by a revised 2.6 percent in January, Statistics South Africa said on Thursday.

On a month-on-month basis, factory production was up 1.3 percent, but was down 0.3 percent in the three months to February compared with the previous three months.

A Reuters poll of economists had expected the headline figure to show manufacturing shrinking by 2.1 percent.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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South Africa’s Eskom says Majuba rail line to be completed in 2017

7 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African electricity utility Eskom said on Thursday that construction of a railway line linking its Majuba power plant with the main coal line would be completed at the end of 2017.

The 68-kilometre corridor is the first large green field freight rail infrastructure project to be carried out in South Africa since 1986, Eskom said.

 

 

(Reporting by Tiisetso Motsoeneng; editing by Jason Neely)

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South Africa considering emergency steel tariffs: WTO

4 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

GENEVA/JOHANNESBURG (Reuters) – South Africa is considering imposing emergency tariffs on some iron and steel imports, it said in a filing to the World Trade Organization published on Monday.

South Africa’s steel industry body requested the temporary trade barrier because a surge in import volumes had caused the industry “serious injury” in the form of lower sales, output, market share and capacity utilisation, the filing said.

It blamed a global steel glut and measures by other countries to protect their steelmakers, as well as new investments by current steel importers, which meant South Africa could expect further increases of imports, the filing said.

The analysis was based on data from ArcelorMittal South Africa, which accounts for 70 percent of local production of the affected goods.

South Africa’s steel sector is facing catastrophe and ArcelorMittal may have to close down if the government does not act soon, labour union Solidarity said.

“If there are no concrete plans on the table to assist the struggling steel industry by the end of April, the primary steel industry in South Africa will perish,” said Solidarity’s steel spokesman Marius Croucamp. Another steelmaker, Evraz Highveld Steel and Vanadium, shut its doors in February, shedding around 2,200 jobs in the process. South African trade authorities indicated earlier that they would decide in June whether to aggressively protect steel manufacturers, Solidarity said, but this would be much too late according to the union. ArcelorMittal last month said it would raise steel prices from April as it tries to stabilise its business after heavy losses due to competition from cheap imports. South Africa last year slapped a 10 percent tariff on imported steel, but the emergency tariff, which would not apply to imports of stainless steel or silicon electrical steel, would provide much greater protection.

 

(Reporting by Tom Miles and TJ Strydom; editing by John Stonestreet)

 

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