The most interesting thing in this interview, I think, is the point that Clive Ramathibela-Smith makes when discussing the platinum strike. He notes that the same issues keep rearing their heads, and comments, “It’s a prosperous country and a prosperous nation, and we’re still dealing with issues that should have been deal with, I reckon, about 20 years ago.” He adds that we should have had an economic CODESA, referring to the negotiations to end apartheid in South Africa.
I think the idea of an economic CODESA is a great one. If the platinum strike has taught us anything, it’s that management and workers do not share a common vision of what the rules of the game should be in business. An effort to build consensus on what the South African workplace should look like would be fantastic, and would save enormous amounts of money, time, and trouble. – FD
GUGULETHU MFUPHI: Time now for us to check in with the market performance in mid-day trade and what you see behind me, is both the banking and financial sphere providing the market with some support, but all of that being eroded by resources and industrial stocks appearing to cool the market down so far today.
Some company stocks that are in focus: Sasol, as we’ve just heard with some news coming in, that the Competition Tribunal has fined one of their subsidiaries with regard to price fixing back in 2004 to 2007. Not any reaction so far that we see, but the share price still with a positive territory bias.
Mixed Cinematics as well, out with results today. Although the dip report in operating profits, shareholders do still appear quite optimistic on that view with regard to the share.
Looking at the platinum producers, we know that the Mining Minister is due to meet up with the mining producers today. It does appear as though a little bit of nervousness regarding the share price movements today, expressed by the shareholders.
Now, turning our attention onto the Alsi and what all of this means, we still see no major movements on that front – currently, sitting at forty-nine-thousand-eight-hundred-and-eighty-nine points so far today, but the interesting one that we’ve been keeping our eye on all week is the local currency. That’s sitting at R10.70 – similar levels to where we were yesterday.
That’s the market update so far.
ALEC HOGG: Well, let’s get a more in-depth view of how the market’s trading. We’re joined by Clive Ramathibela-Smith.
GUGULETHU MFUPHI: Say it like an Italian, Alec – Ramathibela. There we go.
CLIVE RAMATHIBELA-SMITH: That sounds like it. I did say it’s Italian. It’s Tswana-Italian, so you don’t have to be so bright eyed.
ALEC HOGG: Smith, with an English accent?
CLIVE RAMATHIBELA-SMITH: Well, I’m obviously the only black Smith in my family.
ALEC HOGG: Oh Clive, this could keep running all day. Tell us about the platinum stocks, all the red clips we saw on the board.
CLIVE RAMATHIBELA-SMITH: It’s quite remarkable Alec, because at the same time as we’re trying to sort out the economy of the country, here we are. Is it five months now?
ALEC HOGG: 180 days.
CLIVE RAMATHIBELA-SMITH: 180 days. What my concern is it’s not just about the issues that the guys are trying to resolve. We know the new Minister’s getting involved immediately, taking his glasses off, and saying ‘let’s get this sorted’, but it’s the actual impacted areas that we’ve been talking about – it’s the gift of the givers, what they’ve been doing in Rustenburg and the surrounding areas. It’s not just affecting those people. It sounds funny, but people are losing their cars. They were repossessed. I was looking at one of my mates who works within that area from one of the companies that actually repossesses cars. They repossessed over 150 cars already in the last four months.
ALEC HOGG: Does he come from the Smith side?
CLIVE RAMATHIBELA-SMITH: I’m quite the opposite in fact. The idea that I have here is that when will we as South Africans wake up, to make sure that this never ever happens again? Now, you hear about NUMSA talking about going into a strike as well. It’s just so frustrating. It’s a prosperous country and a prosperous nation, and we’re still dealing with issues that should have been deal with, I reckon, about 20 years ago. [Inaudible 0:05:06.2] always says ‘you should have had an economic CODESA’. Maybe that’s where we should be going. That’s what should have been done.
GUGULETHU MFUPHI: These ongoing wage strikes: is this influencing your investment decisions?
CLIVE RAMATHIBELA-SMITH: No, because we’re long-term investors and you would have noticed that the market in fact, has continued to surge/spike what we’ve had on the macroeconomic side of things. What’s important for us when we look into these particular things, we look at the companies and their performance independently and not so much the geographical surroundings. That’s very important to us as long-term investors. The other thing that is influencing us as well, which I know you’re going to mention a bit later on, is the Rand, which is quite concerning and quite scary, in fact. All people are talking about the weakening economy that’s creating the Rand. I think that is absolutely incorrect. I think it has more to do with what’s taking place globally. It has more to do with the Dollar, what it has been doing, and how it’s been performing.
If you look at the Euro Zone and how that’s been performing… In fact, if you compare the actual Rand to the rest of the emerging markets that we can say we are peers, but really, those economies are totally different to the structure we have here in the local markets. However, those currencies have not been looking good either. If you do a buck-for-buck comparison, you’ll see that the Rand has been looking slightly better than the rest of those economies.
ALEC HOGG: Yes, but over the last three years it’s been a one-way bet. If you bet against the Rand, you’d have made money and I guess that’s what’s concerning. There’s nothing that seems to be able to shake it out of the emerging market pack, and I think that’s why people are raising a few flags.
CLIVE RAMATHIBELA-SMITH: How do you explain the Rupee? India for example, I reckon in the next ten years that will be the biggest economy, second to America or second to China. Who knows – whichever one comes first, because of the fact that they have the diversification, the have the principles, and they have the policies, but they’re not trickling down.
ALEC HOGG: Maybe in the next 100 years, Clive. Warren Buffett will not invest in India, even though [Arjud Jane? 0:07:14.3] who’s from Indian D-Centre is one of his closest counterparts. The reason he says he won’t is because it’s too corrupt. Once they get the corruption out of the way, they might start getting legitimate foreign investment.
CLIVE RAMATHIBELA-SMITH: The friends that they have with the new government…
ALEC HOGG: Good guy.
CLIVE RAMATHIBELA-SMITH: He’s a good guy and he was nobody. He was a shopkeeper at one time.
ALEC HOGG: They often make the best leaders – people who come from humble beginnings.
CLIVE RAMATHIBELA-SMITH: Humble beginnings, yes, so that’s one interesting aspect. Do you think they’re still the BRICS? I’ve never believe in the BRICS. I still don’t believe in the BRICS.
ALEC HOGG: It’s a little bit of a pinprick.
GUGULETHU MFUPHI: Not making much of a mark, there.
ALEC HOGG: At least we’re one of the five. At least, Zuma sits at the same table as the other four guys.
CLIVE RAMATHIBELA-SMITH: Yes, I’m getting happier now as we’re getting closer to the World Cup, because focus has moved from South Africa to Brazil. I’m hoping that will distract investors and maybe they might just say ‘well, why is it that everybody’s focusing this way? Best to look at what’s actually left there in Africa’.
ALEC HOGG: What about Sasol (before we forget to talk to you about this one), Clive? It’s been a fantastic run. It had a terrific run on the JSE, but this…yet another Competition Commission fine…
CLIVE RAMATHIBELA-SMITH: Half-a-billion.
ALEC HOGG: That’s a lot of money. It does go back a long way, though.
CLIVE RAMATHIBELA-SMITH: It’s a slap on the wrist.
ALEC HOGG: Really?
CLIVE RAMATHIBELA-SMITH: You’ll see. In fact, I can tell you now. Traders are waiting to see what the response is going to be and close to 5:00 today, I can bet you the stock will be up again. The reason why that is, is because they anticipate that obviously many people will start dumping it because of that news, but I reckon if you’re good trader and you’re smart, you’ll wait for that period – 4:30 to 5:00, which we like to talk about and where everybody gets [inaudible 0:08:56.5]. That’s when this value will actually go. I’m willing to say that by tomorrow morning, if you look at the future…probably by the close of business, that stock will be up another 25/30 bibs.
ALEC HOGG: You heard that from a long-term investor.
GUGULETHU MFUPHI: A long-term investor, quite clearly, hey.
ALEC HOGG: Tomorrow morning.
GUGULETHU MFUPHI: All of a couple of hours. Just on Sasol, I’m sure you believe their future growth story, particularly coming from the U.S. where they might benefit from fracking projects unfolding regularly.
CLIVE RAMATHIBELA-SMITH: There are a number of stories taking place in Sasol. One of my biggest stories about Sasol that I like is their African Growth story, and nobody talks about that and what they’re trying to achieve in this particular continent. The only way that we can actually get that… These types of stories worry me, because you were talking about DTI earlier on. They do a lot of work with Sasol and in the African continent. If you look at the DRC for example, that project that is taking place with the cement companies – they’re going to be building a dam – you won’t believe this, but Sasol is involved in that, supplying gas etcetera. Those are the interesting things that we never hear about, and that’s why their stock will still be maintaining its growth despite what happens in the Competition Bureau. The important thing is to have a long-term view. If you have a long-term view of Sasol, always bear in mind that they are just that type of strong company that have produced over and over, over the past few years.
ALEC HOGG: So use any weakness that might come in through the course of the day as a buying opportunity.
CLIVE RAMATHIBELA-SMITH: Absolutely – spot on.
GUGULETHU MFUPHI: You mentioned cement players there as well, and just yesterday, we had news of Lafarge wanting to consolidate its African assets. It’s set to list on the Nigerian Stock Exchange. I recall, when we spoke to Ketso Gordhan from PPC, he said that on the African landscape, the pie is big enough for all the cement players there. Is PPC one that you should look out for?
CLIVE RAMATHIBELA-SMITH: I don’t have PPC in my portfolio, but I do think that there’s many ways of getting into that particular sector if you want to play ‘big boy’. If you want to play with the small guys, you look at your PPC, and you look at your Lafarge. Dangote – liquidity is also an issue and if you’re going to be competing with them – and perhaps that’s what these guys are going to bring into the Nigerian Stock Exchange: a bit of liquidity, because they have more experience in here. On our local bows, for a long time I understand that fundamentally they know how to raise cash, which is important. I know how to raise cash, too. I don’t know if you’re interested. Those aspects are very important.
ALEC HOGG: Why am I not surprised?
CLIVE RAMATHIBELA-SMITH: I like challenges. What are they going to call it – the new cement people?
GUGULETHU MFUPHI: Lafarge Africa.
CLIVE RAMATHIBELA-SMITH: Lafarge Africa.
GUGULETHU MFUPHI: Did you want something more exciting – more ethnic?
CLIVE RAMATHIBELA-SMITH: It sounds French, doesn’t it? It sounds very French.
ALEC HOGG: Madame Lafarge. That was Clive Ramathibela-Smith from Inkunzi Investments.
