Prosus soars on debut; Friend in Moody’s; Shake the Baobab tree; SA/UK trade deal

By Linda van Tilburg

  • Shares in Prosus, the Naspers spin-off which includes the groups 31% stake in Chinese tech giant Tencent, surged on its debut on the Euronext stock exchange in Amsterdam jumping by as much as 32% above its reference price in early trading. The listing created one of Europe’s largest internet companies vindicating the decision by CEO Bob van Dijk to move away from Johannesburg. It is now the third largest company on Euronext by market capitalisation. From its early surge from a reference price of €58.70 it settled around 26% higher on €74.28. The indication is that most of Naspers shareholders will take the immediate capital gains tax hit and opt for Prosus shares instead of getting more Naspers shares. Naspers CFO Basil Sgourdos told Biznews the company is seeing an overwhelming move towards the Prosus shares. The listing resulted in massive volumes of stock shifting on the JSE as more than 3.3 million Naspers shares traded hands. The All Share Index rose by 1.64%.
  • South Africa has dodged the Moody’s downgrade bullet again. While financial markets have been pricing in a downgrade for months and the two other major rating companies have had South Africa on junk for two years, Moody’s said the country’s investment rating was probably safe for another 12 to 18 months. The ratings agency said President Cyril Ramaphosa needed time to implement economic reforms including fixing the loss-making power utility Eskom. Analysts have warned that if a plan is not forthcoming or is found to be insufficient, Moody’s will pull the trigger and downgrade South Africa to junk.
  • Meanwhile Finance Minister Tito Mboweni who has tabled a turnaround plan for the economy has taken to Twitter to inspire his followers to get out of their comfort zones and shake things up. “Rock the boat, shake the baobab tree! Do the unusual, disrupt the comfort zones” were some of his chants saying the country needed movement and disruption. He was taken to task for his chants by the deputy-president of the EFF, Floyd Shivambu who said disruption was not what was needed from the minister of finance. It fell on death ears as Mboweni also told his supporters he will stop tweeting until Dezemba as he takes time to reflect.
  • Mboweni’s call comes as business confidence has slumped to its lowest level since the 1980s, a period characterised by disinvestment due to apartheid. The sentiment index compiled by the South African Chamber of Commerce and Industry declined to 89.1 last month from 92 in July, the lowest level since April 1985. The chamber said the current state of fiscal deficiencies, social injustices and unemployment necessitates urgent adjustment. The chamber added its voice to calls for action saying this state of affairs is the likely cause of crime, violence and looting and anti-foreigner sentiments dominating news headlines.
  • There seems to be one block who will seamlessly trade with the United Kingdom after Brexit. South Africa and the other four members of the Southern African Customs Union, Botswana, Lesotho, Namibia and Eswatini have reached a deal to govern trade between them if the UK leaves the EU on 31st of October. Trade industry minister Ebrahim Patel said he doesn’t foresee any fundamental change in trading conditions such as tariffs between southern African countries and the UK and EU after Brexit. The UK is South Africa’s fourth-largest trading partner.
  • The latest Brexit news is that Scottish judges have ruled that the suspension of the British Parliament is unlawful. It prompted opposition parties to demand that the Houses of Parliament be recalled.  Meanwhile one of the plans that Prime Minister Boris Johnson is believed to field to prevent the Irish backstop is to build a bridge over the Irish Sea to link the UK and Northern Ireland. This could be another bomb that Boris has to defuse as there are WW II munitions in that stretch of water.