Trade war “off”; US shares 1H surge; Anglo’s $8.5bn to SA; King Price swoops; Trans Hex rebounds

By Alec Hogg

  • The year long on-off-on trade war between the US and China is apparently off again after the countries’ leaders lunched for an hour and a half on Saturday. They met on the sidelines of the weekend’s G20 meeting in Osaka, Japan. Presidents Donald Trump and Xi Jinping said their negotiating teams would get back together; that the proposed 25% US tariffs on a further $300bn of Chinese goods would be suspended indefinitely; and that curbs would be removed on Huawei buying from US tech companies. The news is likely to provide further impetus to a US stock market which closed the first half of 2019 up 17% – the most in two decades. The Dow Jones Industrial Average had its best June since 1938.
  • On Friday, international mining company Anglo American plc disclosed in its 2018 tax and economic contribution report, that South Africa remains the group’s most important area of operations. The reports says two thirds of Anglo’s 70 000 global staff are employed in the country while a third of its global contribution of almost $26bn is into SA, comfortably the largest of the 12 major geographies in which it operates. London-headquartered Anglo, which was founded in Johannesburg by Sir Ernest Oppenheimer 101 years ago, says it contributed $1.4bn in taxes to the South African Treasury in 2018; paid $1.8bn in wages and invested just over $1bn in capital expenditure here. Around half of Anglo’s total contribution to the SA economy last year was via $4.1bn in procurement from local suppliers.
  • Still with mining, South African diamond producer Trans Hex, posted a strong turnaround in the year to end March, delivering profit of R144m compared with a loss of R229m in the previous 12 months. As a result, its per share net asset value rocketed from 152c to 268c. Trans Hex shares have been one of the JSE’s worst performers in recent times, falling 90% from the recent R5.50 peak of early 2017 to the current 56c. A decade and a half back the shares traded at R30 each. In financial results released on Friday, the company says the rough diamond market is expected to remain weak until September, but expects the supply:demand balance to improve next year with higher prices anticipated.
  • Another major step was taken on Friday in the unwinding of the collapsed Abil group, with the sale of its insurance arm Standard General. The insurance company, which is housed Abil offshoot African Phoenix, will generate R520m for shareholders. After paying a R380m dividend to African Phoenix, Stangen is to be sold to privately owned King Price Insurance, which was founded in 2012 by entrepreneur Gideon Galloway. King Price has enjoyed rapid market share growth primarily because of its innovative approach of reducing car insurance premiums to reflect the devaluating value of the vehicle.
  • South African shares ended slightly firmer on Friday with the JSE’s all share index rising a quarter of a percent, taking its gain in the first half of 2019 to a healthy 11.5%. Of the individual counters, recently depressed Glencore shares rebounded strongly on Friday, improving 7% in the session, while Italtile edged higher again, taking its gain since Tuesday to 10%.  Platinum miner Northam fell 4% against a generally firmer resources trend while other losers on Friday were retailer DisChem, also down 4%, and insurer Santam, which lost 3%.