By Alec Hogg
In today’s global business headlines:
- Chinese share prices, which have risen by a third this year to become the world’s best performers for 2019, have further upside according to a couple of investment heavyweights. Last week, China’s weighting in the MSCI global index was raised from 0.7% to 3.3%. This will oblige index tracking funds to invest at least $3bn extra into Chinese shares according to US investment bank Morgan Stanley. China specialist Harvest Global Investments, which has $120bn in assets under management, says the weighting increase is likely to make this a year of record inflows into Chinese shares. South Africans are among the beneficiaries of this popularity via the JSE’s biggest weighted stock Naspers, whose share price is closely tied to its 31% owned Tencent, the Chinese internet giant. Tencent’s share price has reflected China’s improved status among global investors, rising 33% in the last four months.
- January’s deadly slimes dam burst in Brazil, where 186 people are confirmed dead and another 122 are still missing, has claimed its first corporate casualties with yesterday’s resignation of the chief executive and two lieutenants at Brazilian mining giant Vale. The resignation of Fabio Schvartsman comes after Brazilian prosecutors asked for his removal, and that of two other top Vale execs. This followed the provision of evidence that the company was aware the slimes dam was unsafe but had pressurised inspectors to give it a clean bill of health. Schvartsman and his two colleagues resigned within hours of the document’s public release yesterday. Vale’s share price has fallen 16% since the disaster happened a month ago.
- Still with mining, the American state of Nevada came top of 83 mining jurisdictions in the 2018 Fraser Institute’s annual survey of mining’s most attractive destinations. Nevada, which rose from third in 2017, was followed by Western Australian (5th in 2017) and Canadian province Saskatchewan which fell one place last year. At the other end of the table, Venezuela replaced Guatemala as the earth’s least attractive place for mining investment. Botswana was best of the African countries in 32nd place, with South Africa in 43rd and Zambia 45th. This was South Africa’s third successive year of improvement with its score improving from 53.6 in 2016 to 62 in 2017 and by a further three points in the latest ranking. The 2018 gain was primarily because of a sharp rise in the policy perception section where SA rose almost 20 positions into the mid 50s from 7th above last.
- In other South African related news, major retailing group Edcon secured a life-saving deal with creditors almost a year after it began negotiating the refinancing of a debt mountain created in 2007 by private equity investors Bain Capital. The deal ends a year of negotiations by CEO Grant Pattison, who initiated his rescue plan after moving into the hot seat last February. Edcon announced late on Friday that lenders, landlords and the Public Investment Corporation have converted R2.7bn into equity, removing all of the group’s interest-bearing debt. The deal saves the jobs of 30,000 staff and many more in the supply chain of 750 companies. In an update to its own shareholders on Friday evening, JSE-listed Redefine Properties said it would convert Edcon’s R54.6m debt into equity and from April, has agreed rental reductions of R14m on space occupied by the Edgars and Jet brands.
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