Xenophobia crackdown – 600 arrests; Moyo-Manuel battle continues; MTN R5m WhatsApp fine; How Trump’s Tweets move markets

By Jackie Cameron

  • South African authorities are cracking down on the perpetrators of a series of xenophobic attacks that left at least 12 people dead, Police Minister Bheki Cele said. The police have arrested 639 people so far, Cele told reporters Monday in Johannesburg. The clashes began after a South African taxi driver was shot dead Aug. 27, allegedly by a suspected Nigerian drug dealer, in Pretoria, says Bloomberg. Scores of foreign-owned shops were looted and torched in the ensuing violence, says the news agency. The attacks spread to Johannesburg last week, leaving 10 people dead and more than 50 shops and several vehicles destroyed. After a brief lull, the violence resumed in Johannesburg on Sunday. Police used stun grenades and rubber bullets to battle protesters armed with knives and sticks seeking to drive African migrants out of the city, says its reporters. At least two more people died. Calm had been restored by Monday morning, according to the police.
  • Old Mutual has once again blocked its CEO Peter Moyo from returning to work. Old Mutual’s share price has suffered in the boardroom battle between Moyo and former finance minister Trevor Manuel. The stock has fallen more than 11% since the CEO was first suspended, compared with a 4% decline in the five-member FTSE/JSE Africa Life Assurance Index, reports Bloomberg.
  • MTN has been fined R5m for increasing the price of WhatsApp bundles without giving sufficient notice to the regulatory authority. As Fin24 reports, in April last year, MTN lowered the bundle price to R10. MTN saw a 300% increase in WhatsApp usage in just eight weeks, which it said threatened its 3G network.But it only gave the Independent Communications Authority of SA (Icasa) two working days’ notice before the increase took effect. It is obliged to give the authority at least seven days’ notice.
  • The dominance of Naspers over the South African stock market is about to be reduced – partially at least, says Bloomberg. And that’s good news for a number of fund managers concerned about the tech giant’s weighting in the main local index. After Naspers lists its unit Prosus NV in Amsterdam on September 11, the company will drop to about 15% of Johannesburg’s equities benchmark from a massive 21% currently, Peter Takaendesa, a Cape Town-based fund manager, estimates.
  • JPMorgan’s “Volfefe Index,” named after Trump’s mysterious covfefe tweet from May 2017, suggests that the president’s electronic musings are having a statistically significant impact on Treasury yields. Work by Citigroup shows that the president’s tweets are generally followed by a stretch of higher volatility across global currency markets. And there’s little sign traders are growing numb to these messages, says Bloomberg. The two Wall Street banks are trying to measure the market impact of Donald Trump’s tweets, says Bloomberg. Analysts at JPMorgan Chase & Co. have created the Volfefe Index to quantify what they say are the growing effects on US bond yields, it reports. Citigroup Inc.’s foreign exchange team, meanwhile, report that these micro-blogging missives are also becoming “increasingly relevant” to foreign-exchange moves. The number of market-moving Trump tweets has ballooned in the past month, with those including words such as “China,” “billion,” “products,” “Democrats” and “great” most likely to affect prices, the analysts found. “Trade and monetary policy have become an increasing focus for the executive branch, and everything from casual sentiments to seemingly formal policy intentions have been disseminated, globally and instantaneously, via this carefully scrutinised social media platform,” Bloomberg quotes JPMorgan analysts Josh Younger and Munier Salem as saying. “In response, a broad swath of assets from single-name stocks to macro products have found their price dynamics increasingly beholden to a handful of tweets from the commander in chief.” The president has averaged roughly 10 tweets a day since the start of 2016, with 10,000 tweets occurring after his inauguration in 2017, according to JPMorgan’s analysis. Trump’s Twitter activity reached a low of five tweets per day heading into his official inauguration, but has picked up substantially since late 2018 – with his highest number of tweets in the past four years occurring in recent months, says Bloomberg. “Citi’s work shows that the president’s tweets are generally followed by a stretch of higher volatility across global currency markets. And there’s little sign traders are growing numb to these messages. “Analysts at Bank of America Merrill Lynch published a note last week concluding that days during which Trump tweets relatively frequently tend to see negative stock returns of 9 basis points on average. Days with fewer presidential tweets tend to see positive returns of 5 basis points on average,” adds Bloomberg. Its reporters note that the S&P 500 is up more than 35% since Trump won the 2016 election.
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