- KPMG South Africa, at the centre of the state capture scandal that shattered the SA economy, will become the nation’s first major auditor to stop offering consulting services to listed clients in an attempt to further rebuild confidence in the firm’s operations, reports Bloomberg. “The objective of such a move is to help restore trust in the profession, as it removes any perception of conflicts of interest with our audit work for listed entities,” KPMG SA Chief Executive Officer Ignatius Sehoole said in a statement on Monday. The change will come into effect on March 31. Over the last three years, the firm has put in place measures to clean up its business following a revenue drop brought about by various scandals. In late 2017, KPMG SA came under fire for work done for a politically-connected family accused of plundering the South African government’s coffers. The company also published a misleading report on the nation’s revenue service. The shift will apply to KPMG’s 28 audit clients listed on the Johannesburg Stock Exchange and won’t affect the number of personnel in its consulting and tax advisory services arm, Sehoole said on a separate video conference call. KPMG SA will continue to add staff, guided by the needs of clients, and is planning regional consolidation in southern Africa to help drive efficiency, he said.
- The rand’s world-beating rally may be blinding traders to risks ahead. The South African currency has gained 5% against the dollar this month, the most out of more than 140 currencies tracked by Bloomberg. It’s riding the wave of a global risk-on trade spurred on by a weaker dollar, prospects of US stimulus and the global hunt for yield. Vaccine rollouts across the world have also helped to improve the outlook for the global economy, boosting the prices of metals and other commodities. Against this backdrop, traders have looked past South Africa’s fiscal challenges. They’ll be reminded of them when Finance Minister Tito Mboweni presents his annual budget to lawmakers on Feb. 24. “While South Africa is one of the worst-performing economies in the emerging-market space from a macro standpoint, the market seems to like the rand,” said Cristian Maggio, head of emerging-market strategy at TD Securities in London. “Either the hunt for yield is a blinding factor, or the rand is set for some sharp repricing.”
- Signs of a widening embrace across the financial services industry sent Bitcoin to new heights, with the cryptocurrency closing in on $50,000 for the first time before falling back. A week after Tesla announced its $1.5bn investment in Bitcoin, the digital asset continues to make inroads into traditional finance, including news that an investment unit of Morgan Stanley is considering whether to bet on Bitcoin. Canada also approved the first North American Bitcoin exchange-traded fund. Meanwhile analysts at fund manager ARK, one of the US’s hottest fund providers, say that Microstrategy, Square and Tesla are showing public companies the way to add Bitcoin as a legitimate alternative to cash on their balance sheets. ARK believes Bitcoin will serve as an alternative to fiat cash. It says that if all companies in the S&P500 were to diversify 1% of their cash balances into Bitcoin, its price could reach $80,000, while a 10% allocation would add $400,000.
- Platinum surged above $1,300 an ounce for the first time in more than six years on bets that a recovery in industrial demand and stricter emissions rules will tighten supply of the metal. Gold edged lower. Tougher pollution regulations requiring vehicle makers to use more platinum in catalytic converters are supporting prices, said Margaret Yang, a strategist at DailyFX. Platinum has gained 21% this year, narrowing the steep discount with sister-metal palladium, which was the star performer over the two previous years. “Platinum has largely outperformed gold since November 2020 as reflation hopes and a projected recovery in global auto sales brightened the demand outlook for the white metal,” said Yang. After years of surpluses, Covid-19 mine shutdowns in South Africa saw the platinum market deficit widen to 400,000 ounces in 2020, Johnson Matthey said in a report last week. While the market could return to a surplus this year, disruptions at a key refinery in the country improved the immediate outlook for the metal.
- Steinhoff’s share price gained about 20% on news that former auditor Deloitte has agreed to pay $85m to certain claimants as part of the retailer’s proposed $1bn global lawsuit settlement plan, and that a company opposing the plan had withdrawn its court application. The announcement sent Steinhoff’s Johannesburg-listed shares soaring 15.70% to reach their highest in nearly two and a half years, while its primary Frankfurt-listed shares jumped by 18.55% by 1231 GMT, says Bloomberg. The moves takes the scandal-hit retailer a step closer to a settlement plan proposed in July after an accounting fraud in December 2017 prompted investors to dump its shares and led to a string of top level resignations. “The settlement by Deloitte is not in any way an admission of any liability for the losses incurred by Steinhoff and its stakeholders as a result of the accounting irregularities at Steinhoff,” Deloitte said in a separate statement.
- Shoprite Holdings said on Monday its profits for the half year that ended Dec. 27 will be higher by between 12.5% and 22.5% compared with the same period a year ago. Home market sales, which account for over three quarters of the company’s total sales, grew by 5.6% for the half year, said Shoprite, the country’s largest retailer by market capitalisation. The Shoprite share price perked up on the news, but barely registered a change by the close of trade.
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