Flash Briefing: Tongaat suspended on JSE, LSE – Deloitte in crosshairs; gold excites; Trump ignites

By Jackie Cameron

In today’s Biznews Flash Briefing:

  • Trading in Tongaat Hulett’s securities on the Johannesburg Stock Exchange and London Stock Exchange has been been suspended. This follows a delay in the publication of its financial statements and a review into past financial practices, the company, which initiated the suspension, said. Tongaat Hulett is at the centre of an accounting scandal. With operations in South Africa, Mozambique and Zimbabwe, Tongaat said last month that its 2018 results could face a potential hit of up to R4.5bn ($306.38m) following a review of its accounting practices. In a statement, Hulett’s board said that suspending trading in its shares is intended to “protect investors” as there is “insufficient reliable financial information” in the market for informed decisions to be made. The suspension will also allow management more time to complete the restatements and for the completion of a forensic investigation, it said. “This decision has not been taken lightly. Whilst the board is conscious that some shareholders or potential investors would prefer to retain the ability to buy and sell shares, the board believes that the temporary suspension is in the best interests of shareholders as a whole,” the board stated.
  • Questions are again being asked about the integrity of accountants at Deloitte, which were auditors to Tongaat and Steinhoff – another South African multinational involved in financial irregularities. The Steinhoff share price collapsed in 2017 after it emerged that the German authorities were investigating its financial records. Since then, Steinhoff has teetered on the brink of collapse; its bosses, including former CEO Markus Jooste, have were involved in developing a complex web of transactions designed to feather their own nests at the expense of unsuspecting shareholders.
  • The Independent Regulatory Board for Auditors is reviewing the work Deloitte did for Tongaat. Deloitte is also reviewing its work done for the company and, unsurprisingly, has said there is still no evidence of wrongdoing. Big auditing firms are in the grip of a reputational crisis. For example, KPMG was centre stage of the state capture scandal, after it emerged that it had helped former president Jacob Zuma’s friends, the Gupta brothers, dodge tax and use taxpayers funds to pay for a private family wedding.
  • In global news, President Donald Trump has his eye on cracking down on French wine imports to the US. He has promised to do “something” about French wine that he says is allowed into the US virtually tariff-free while France imposes duties on US wine, calling the arrangement unfair, reports Bloomberg. “France charges us a lot for the wine. And yet we charge them very little for French wine,” Trump complained in an interview with CNBC anchors on Monday after visiting Normandy last week.President Donald Trump has also threatened to raise tariffs on China again if President Xi Jinping doesn’t meet with him at the upcoming Group of 20 summit in Japan. Trump was asked in an interview with CNBC on Monday whether tariffs on about $300bn in Chinese goods would be enacted immediately if there’s no meeting at the summit later this month.
  • Amid global volatility gold is seen as a safe haven asset. Bullion could touch $1,400 an ounce this year as investors hedge risk, according to Rhona O’Connell, head of market analysis for EMEA and Asia regions at INTL FCStone. Spot gold was at about $1 326 an ounce on Monday after jumping to a 13-month high of $1 348.31 on Friday on the back of a weaker-than-expected US jobs report for May, reports Bloomberg. “All the dominant asset classes have a question mark over them at the moment, which is generally when gold comes into play,” O’Connell said by phone before this week’s Asia Pacific Precious Metals Conference in Singapore.
  • On the Johannesburg stock exchange, the big movers up were Vivo, Dischem and Woollies – all gaining between about 5 and 6.5%; while Harmony and Anglogold were the big losers, shedding just under 5% of their value.
  • Late on Monday, the rand was trading around R14.82 to the greenback, R16.77 to the Euro and R18.80 to the British pound.