The world is changing fast and to keep up you need local knowledge with global context.
By Jackie Cameron
- The battle between Old Mutual’s sacked CEO Peter Moyo and the life assurer’s chairman, Trevor Manuel, has intensified, with Moyo claiming that he was fired in a tit-for-tat type move after raising a red flag about Manuel’s conflicts of interest. Trevor Manuel, a former finance minister, allegedly had conflicts of interest in stewarding a deal that saw Old Mutual delist from the London stock exchange and list on the JSE in 2018, reports Fin24. In papers filed in the South Gauteng High Court, Moyo said that friction between himself and the company started in March 2018, when he raised concern about what he perceived as “triple conflict” on the part of board Chairman Trevor Manuel during the process of the company’s Managed Separation, says Fin24. The process saw the company delist Old Mutual plc from the London Stock Exchange and list Old Mutual Limited on the JSE in June 2018. Moyo explained Manuel’s conflicts of interest. “He said one of the companies which stood to benefit from shifting the listing involved a transfer of R5bn from Old Mutual plc to the new entity was Rothschild, the company of which Manuel was chairman. Manuel was also at the time a director at Old Mutual plc and chairman of Old Mutual Limited. “I openly voiced my objections to Mr Manuel about the impropriety of his participation in any discussion regarding the proposed takeover of the Old Mutual Plc liability, which was in the nature of a guarantee in favour of an American company,” Moyo is reported as saying. Moyo has described his suspension and firing last month as “devastating and humiliating”. He held the position of CEO of Old Mutual for two years.
- South Africa’s rand started the week stronger after the United States and China agreed to restart their troubled trade talks, lifting the mood across emerging markets, Reuters reports. At 0625 GMT on Monday, the rand traded at 14.0500 versus the dollar, around 0.2% firmer than its previous close. Government bonds were also stronger, as the yield on the benchmark 2026 bond fell 3.5 basis points to 8.06%, says Reuters. After meeting Chinese President Xi Jinping in Japan on the sidelines of Group of 20 summit, President Donald Trump said he would hold back on new tariffs. China is South Africa’s top trading partner, and the rand is used by some investors as a proxy for emerging market risk, so the rand has tended to move on news on the US-China trade war, notes Reuters.
- The improvement in the relationship between China and the US also helped lift Wall Street’s main indexes, with the S&P 500 hitting an all-time high. Technology stocks gained on growing optimism around US-China trade talks and a likely reprieve for Chinese telecoms company Huawei, reports Reuters.
- The South African economy has been shrinking, but rand hedge stocks have been powering up returns from JSE shares, says Bloomberg. Even as the economy endured its worst contraction in a decade in the second quarter, the Johannesburg Stock Exchange’s benchmark index was charting gains that reached 10% by the end of June. Powering up returns has been global demand for materials and to investors seeking havens in precious metals in uncertain times. “An index of platinum companies has outshone all other sectors, surging more than 60% as miners enjoy bumper prices for the palladium and rhodium they extract alongside their main product. Gold miners are up 46%, reflecting bullion prices at six-year highs. More broadly, mining companies which account for a quarter of Johannesburg’s market value, have gained almost 30%, on pace for the best year since 2016. “With the South African currency vulnerable to the vagaries of global trade tensions and emerging-market volatility, many of the equities traded in Johannesburg offer an enticing zone of shelter for investors.” Market giant Naspers Ltd., which accounts for 19% of the main index, contributed the most points to the benchmark’s advance as it climbed 22%, says Bloomberg. The second half will see Naspers listing Prosus NV, the vehicle for its international assets, in Amsterdam. That will chip away at the skewed valuation of the media and internet group, which the market puts at less than its 31% stake in Tencent Holdings Ltd.
- President Cyril Ramaphosa is considering whether to back a proposal to improve troubled Eskom Holdings SOC Ltd.’s debt terms by closing polluting coal plants early to make way for renewable energy, reports Bloomberg. “A special purpose vehicle would lower interest rates paid by the state-owned utility by accelerating the closure of coal-fired stations, according to a person familiar with the matter who asked not to be named because the information isn’t public. The plan was submitted to Ramaphosa by a task team, which has suggested a range of options for rescuing Eskom, the person said.” Eskom is struggling under R440bn ($31bn) of debt and expected to report another loss for the financial year, points out Eskom. Ramaphosa said last week that the government would soon give Eskom “a significant portion” of the R230bn it needs over the next decade to remain solvent. “Development finance institutions are interested in the Eskom debt plan, which would unlock as much as R200bn of climate change mitigation funding at discounted interest rates, Johannesburg-based City Press reported last month, citing Grove Steyn, a member of the task team. South Africa currently generates about 90% of its electricity from coal.”
- Late on Monday, R14.16 would buy you one US dollar, R17.89 would get you a pound and the rand was trading at R15.99 against the Euro.
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