Investors ditch SA assets; Mabuza’s two Eskom hats; Rupert emigration chatter grows; Brexit weighs on pound

By Jackie Cameron

• Foreigners are ditching South African assets at the fastest pace on record as concern mounts that the government will lose its last investment-grade rating. Overseas investors have sold a net $4.8bn of South African equities and bonds in 2019, reports Bloomberg. The dumping of South African stocks and bonds is at its fastest pace since at least 1998. Outflows, particularly from fixed-income securities, have accelerated since the start of June as ratings companies and banks become more bearish about South Africa’s outlook. The rand weakened 2.5% against the dollar last week, its worst performance since February, after Moody’s Investors Service warned that the government’s plan to double financial support for state power firm Eskom was “credit negative.” Moody’s is the only major ratings company that still grades South African debt above junk. Despite the outflows, demand among local investors is helping to prop up South Africa’s assets. The country’s main stock index has risen 11% in dollar terms this year, though some analysts urge caution about that figure because large companies are massaging that figure.
• Eskom’s overworked chairman Jabu Mabuza has been given even more work to do at Eskom. He has been appointed as acting chief executive of troubled power utility following a board meeting on Monday. Public enterprises minister Pravin Gordhan said: “I have informed the Eskom annual general meeting this afternoon of my decision to appoint Jabu Mabuza as the interim executive chairman for Eskom and acting CEO of Eskom.” He said Mabuza will be executive chairman and acting CEO for three months, during which time the board will find a new chief to lead the cash-strapped state-owned power utility, according to reports. Last month, Mabuza raised eyebrows when he accepted yet another directorship. Mabuza took on a non-executive director role at pay-TV company MultiChoice. He is also chairman of the Anheuser-Busch InBev’s Africa board, Sun International and the Casino Association of South Africa.
• Former Eskom CEO Brian Molefe, who was exposed as being a Gupta and Zuma lackey by the last public protector, Thuli Madonsela is fighting in court to keep a R30m early retirement pension payout. But, the Solidarity union is pushing the National Prosecuting Authority to pursue fraud charges against Molefe. Fin24 reports that Solidarity plans to enlist the help of Gerrie Nel, the former prosecutor who pursued Oscar Pistorius, to bring Molefe to book.
• News that Johann Rupert, one of South Africa’s richest men, is contemplating emigrating has got South Africans buzzing on social media. Reports on an edited extract from Pieter du Toit’s book The Stellenbosch Mafia highlight that Rupert doubts the future of South Africa. The Financial Mail reports Rupert as saying: “I’ve told some in government and the ANC in private as much: if Sars ever again tries to sabotage me … I have been by far the highest individual taxpayer in this country for the past 20 years. Our family companies are the biggest payers of dividends from outside into the country, more than what the rest of the JSE does combined,” he says. Rupert, continues the publication, says that he’s never taken money out of the country either. “I promised Gerhard de Kock [a past governor of the SA Reserve Bank] that if he allowed me to build Richemont overseas, I wouldn’t take money out,” he says. “Both Remgro and Richemont grew from the tobacco empire first started by his father, Anton Rupert, in 1948 under the name Rembrandt. In the 1970s the Ruperts began diversifying, and played a formative role in creating many blue-chip SA enterprises – such as FirstRand, Vodacom and Distell. In 1988, Richemont was born.”
• The British pound fell to a two-year low as Prime Minister Boris Johnson’s government ramps up preparations to leave the bloc, come what may, on Oct. 31, reports Bloomberg. Boris Johnson was in Scotland for crunch meetings with First Minister Nicola Sturgeon, who has been itching to have a second referendum on Scottish independence. Scotland voted overwhelmingly to stay in the EU and the Scottish National Party lost their campaign for Scottish Independence in a referendum on the basis that many Scots wanted to stay in Britain as a way to secure membership of the EU. Scottish Conservatives leader Ruth Davidson warned the prime minister she will never support his fall-back plan to take the UK out of the European Union without an agreement.