By Linda van Tilburg
In today’s business headlines:
- Tesla sustained another blow by Wall Street analysts as Morgan Stanley slashed its worse-case scenario for the share price to just $10 over concern the company has saturated the electric-car market. Tesla shares have dipped to below $200 in the past few days for the first time since 2016. At the opening of trade in New York it opened 4.5% lower at $196.04. Analysts say demand was at the heart of the problem. Tesla has grown too big relative to near-term demand. David Kudla from Mainstay Capital Management warned that Tesla may be shifting to insolvency.
- 173 companies including footwear giants, Nike and Adidas have signed an open letter to US President Donald Trump in which they say that tariffs on shoes made in China will be catastrophic for the American economy. This came after the Trump administration barred American companies from selling to Huawei without a US government license. The microchip sector has also warned that the combination of 25% tariffs on Chinese goods and the blacklist could spark a round of earnings warnings. China has in the meantime responded to the Huawei ban saying it amounts to bullying and the country sought European Union assistance. The company’s representative at the EU, Abraham Liu said “Now it is happening to Huawei, tomorrow it can happen to any other international company.
- An ex- Credit Suisse Group AG banker became the first person to plead guilty in what US prosecutors called a $2bn fraud and money-laundering scam tied to loans to Mozambique that were used to pay bribes and kickbacks dubbed the Tuna Bond Scandal. She is Detelina Subeva, a former vice president in the bank’s global financing unit, who pleaded guilty to one count of conspiracy to launder funds. The case centres on deals that allowed Mozambique to borrow $2bn for maritime projects and coastline protection in 2013. Manuel Chang, Mozambique’s former finance chief who is also sought in connection with the tuna bond scam was arrested in South Africa and has said he’ll fight extradition.
- News from the United Kingdom is that Jamie Oliver’s restaurant business in the country has collapsed into insolvency, leaving more than 1,000 jobs at risk after the celebrity chef failed to turn around the performance of his eateries. Accounting firm KPMG has been appointed to oversee the immediate closure of 22 Jamie’s restaurants in the UK. The procedures do not affect Oliver’s international business.
- On the Johannesburg Stock Exchange, the all share index ended slightly lower yesterday at 55,523. The biggest winner of the day was Resilient Property Income Fund, with a 5.1% rise in its share price, while another property fund Rebosis was down more than 11%. Mining group Assore was up 5% and MMI Holdings traded 4.5% higher. Also down was Netcare losing 5.7% of its value. The rand ended the day at 14.39 to the dollar after a low of R14.49 during the day’s trading. Emerging market currencies are expected to be under pressure with the US-China trade war hotting up.
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