Flash Briefing: Gold still gaining; Big Tech backlash; Eskom needs more cash; Sasol, Naspers

By Alec Hogg

Today’s Biznews Flash Briefing:

  • The gold price is on its longest winning streak in almost a year and a half, rising for the eighth consecutive trading session on Friday. This is the metal’s longest upward run since January 2018. The gold price benefits when investors become anxious about the US economy and seek alternatives to stocks, oil and other risky assets. The price gained a further $5 an ounce on Friday to $1,340, pushing the JSE’s gold share index up another 1.2%, taking its improvement to over 30% in little more than a week. South African gold shares were stimulated by a weaker Rand, which clawed back a few cents on Friday to just under R15 to the US Dollar, but is still 50c worse than Tuesday morning. Investors were jolted by an ANC statement after last weekend’s Lekgotla that it wants the SA Reserve Bank to expand its mandate to include growth and employment. Yesterday, Johannesburg’s Sunday Times newspaper reported this controversial amendment had not actually been agreed at the Lekgotla, but that four paragraphs had been added to the final statement under the instruction of controversial ANC secretary general Ace Magashule.
  • The global backlash against Big Tech intensified over the weekend when G20 Finance Ministers said they have agreed to new rules to tax companies like Facebook and Google, regardless of their physical presence. After meeting in Fukuoka, Japan over the weekend, the finance ministers issued a communique stating that before the end of next year they will finalise an agreement on new rules that will transform international tax laws and lead to higher tax bills for Silicon Valley giants. The finance ministers also noted their concern around the trade war between the US and China but offered no suggestions on how to defuse tensions.
  • On the sidelines of the G20 meeting in Japan, South Africa’s National Treasury director general Dondo Mogajane admitted that the country needs to inject even more than the already promised R69bn into Eskom. This follows statements from finance minister Tito Mboweni and Eskom chairman Jabu Mabuza that the R33bn a year allocation for the next three years won’t be enough. Mogajane told Bloomberg that the extent of the extra funding still needs to be finalised but “we know we don’t have a choice…it’s an issue of how much and when.” He said that over the next few weeks the government would share firm views on the kind of support required.
  • Rand hedge stocks Sasol, which rose 3.5% and Naspers, up 2.5%, were among the JSE’s best performers on Friday, benefitting from the recent weakening in the currency. The price improvement was welcome respite for Sasol shareholders who have seen their shares tank after news of big cost overruns at the group’s massive new chemicals project in Lake Charles, Louisiana. Despite Friday’s improvement, Sasol shares are still down 14% in the past month. Naspers, on the other hand, has been benefitting from global investor interest after its announcement that it will be listing its international assets in Amsterdam next month. Friday’s bump took its improvement in the past two weeks to 12%.