Flash Briefing: Manuel says Eskom is an albatross, Mbalula felt ‘violated’; ‘fantastic’ progress US/China trade talks

By Linda van Tilburg

In today’s global business headlines:

  • Negotiations on the US trade war with China is going so well that it has been described as ‘fantastic’ by National Economic Council Director Larry Kudlow. He said they have mechanisms for enforcement which is unparalleled, and the Chinese delegation has expressed willingness to make key structural changes to prevent intellectual property theft. However, President Donald Trump’s Vietnam summit with Kim Jung-Un unravelled early as the North Korean Leader is not prepared to let go of his nuclear weapons. Added to that US economy growth slowed to 2.6% in the fourth quarter, ending 2018 on a softer note after the 3.4% rise in the third quarter. It was however better than the 2.2% predicted by analysts. Consumer spending rose by 2.8% which contributed to the numbers while residential investment and imports suppressed the growth.
  • In the UK, Rolls Royce’s troubles with its Trent 1,000 engines led to a £2.9bn pre-tax loss compared to profits of £3.89bn a year ago. The firm also withdrew its bid for a new Boeing plane. The company’s shares fell by 4% on the news. And talking about Boeing, British Airways announced that it was buying 18, 777 fuel efficient Boeings from the US with an option for a further 24 saying they got it at a bargain, not the listed price. And to another B-word Brexit, why somebody is bullish about it. Goldman Sachs says the pound rally has further to go as Brexit hedges are unwound. They are reading the fact that Prime Minister Theresa May avoided another bashing by her ministers and the pro-Brexit camp following her decision to give Parliament the option of postponing Brexit rather than crashing out without a deal, as a good sign.
  • From Israel comes the news that Prime Minister Benjamin Netanyahu was notified that his attorney general plans to put him on trial for bribery and fraud following a two-year investigation. It is the first time that a sitting Israeli leader has come so close to criminal charges and it is just 40 days before a closely fought election in the country. Netanyahu, who professed his innocence, is however entitled to a hearing to give his side of the story, which could take months. The charges may erode Netanyahu’s chances in the election; one poll indicated that it could lose him four parliamentary seats and his ability to form a coalition.
  • News from our continent, is that the defeat of market-friendly opposition leader Atiku Abubakar in the Nigerian elections was met by the worst slump in stocks since June 2016. Abubakar disputed the election result in which President Buhari easily won a second term. Shares in Nigeria’s 10 largest banking stocks fell by 4.6% at the close of day and the benchmark stocks index was in its third day of retreat.
  • In South African related news, former Finance Minister Trevor Manuel said at the Zondo Commission of enquiry that Eskom is like an albatross around the neck of the fiscus. He said the power utility used to be an institution with a credit rating that was stronger than South Africa, but Eskom cannot be allowed to go down. Manuel related how an emotional Sports Minister Fikile Mbalula revealed to 80 ANC-leaders that he was told of his promotion to Cabinet by the Guptas before President Jacob Zuma informed him as evidence of how Zuma had abdicated the responsibility of appointing Cabinet ministers to the two brothers. His view was that Mbalula ‘felt violated’ about being told by a Gupta brother about his promotion. Ajay Gupta was quickly as always to reply in his safe exiled position to the allegations saying it was his brother Atul who told Mbalula but was reacting to media speculation. Manuel said Ajay Gupta should come back to South Africa to testify in person.