By Alec Hogg
In today’s global business news headlines:
- In Washington yesterday, South African Reserve Bank governor Lesetja Kganyago re-iterated the argument for an independent central bank, describing it as a shield against bad political leadership. He told an audience that included high profile economists Larry Summers and Stan Fischer, and the IMF number two David Lipton, the law of probability means sooner, or later countries get a bad leader so “there is nothing undemocratic about buying some insurance against this eventuality. Independent central banks, like judiciaries, are useful parts of those insurance policies.” Kganyago said that the independence of the SARB made it much easier for him to refuse demands for additional funding from State Owned Enterprises that were part of South Africa’s regrettable State Capture project.
- The chief executive of the world’s biggest asset manager predicts global stock markets are poised for what he calls a “melt-up” as signs of economic health in the US and China encourage investors back into the markets. Blackrock’s Larry Fink told the Financial Times of London yesterday: “There’s too much global pessimism. People are still very underinvested. There’s still a lot of money on the side-lines and I think you’ll see investors put money back into equities.” In the first three months of the year Blackrock consolidated its position as the world’s biggest money manager with assets under its control growing by $65bn to over $6.5trn at the end of March. Almost a third of that is invested through the iShares ETF business Blackrock acquired from Barclays in June 2009.
- The share price of embattled tech business EOH yesterday surged on heavy trading volumes as investors gave a thumbs up to its decision to shed R1bn of non-core businesses and investments. When releasing the interim results yesterday, CEO Stephen van Coller, who joined the group from MTN in July last year, said EOH would be restructured into four units. After offloading now unwanted parts, he expects that within two years operating profit will improve from the current R387m to around R600m. The EOH share price jumped 55% to top R20 a share yesterday, double where it started April and the highest in three months. But in spite of this sharp improvement, the price is still a long way off the elevated levels of R100 a share where it traded as recently as November 2017.
- The recent strength of South African share prices was evident again yesterday with the overall index gaining more than 1% with buying focus shifting this time to telecoms stocks. MTN and Telkom both rose almost 4% with other recent laggards Aspen, Discovery and Investec once again among the leading gainers of heavyweight shares. The share price of hospitals group Mediclinic, however, fell by a further 2% yesterday to a close of R56.40 which is virtually half the level of a year ago. Thankfully for investors who follow the Biznews SA Champions portfolio, despite having to swallow a 26% loss, Mediclinic was ejected from the portfolio at a price of R98.45 in February last year.
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