SA slips to third; Inflation rises; Hands off our savings; Medical scheme suspensions; Richemont, Sasol

By Linda van Tilburg

  • Consumer inflation has risen by 4.3% in August from the 4% recorded in July, which is the fastest pace of acceleration in a year. The biggest contributors to the increase were food and utilities with mealie meal rising sharply with super maize costing 18% more than in August last year and special maize prices jumping by 27.5%. The overall cost of electricity rose by 11.8% after most municipalities set their new annual rates and tariffs in July.
  • The R2.4trn savings industry has a request for the ruling party: stop threatening to dictate where funds must invest and get going on projects that pensions can help finance. The CEO of the Association for Savings and Investment South Africa, Leon Campher said the government could prescribe but nothing will happen unless it had proper projects. President Cyril Ramaphosa last month echoed the ANC manifesto saying a discussion was required to investigate the use of prescribed assets as a tool for fostering economic growth. A lack of detail on how retirement funds could be forced into investing in state-owned companies or government projects has stoked concerns it could leave pensioners poorer if these don’t make inflation-beating returns.
  • Global markets were wavering yesterday in anticipation of a US interest rate decision. On the JSE, the All Share Index was down 1.1% and Industrials dropped by almost 2.5%. The Rand ended the day on R14.62 to the greenback. Luxury goods company Richemont slid by almost 6% on the JSE as UBS changed ratings in the European luxury sector saying that it may be nearing the end of the recovery cycle. UBS predicted the most risk for Richemont, which it downgraded to sell from neutral.
  • Sasol is planning to sell its South African coal-mining business. Bloomberg reports that Sasol will begin a formal sales process in the coming weeks but the company did not comment on which assets have been earmarked for divestment. It comes as Sasol grapples with cost overruns and delays at its US chemicals project. Selling its coal mines may also help Sasol to reduce it environmental liabilities as more investors are focusing on how business affects climate change.
  • Yesterday was a bumper day for corruption busting: The Council for Medical Schemes has suspended five officials including two executives and three senior managers over allegations of irregularities following anonymous tip-offs on its hotline. The allegations include irregular placement of schemes under curatorship, irregular appointment of service providers and having personal lifestyles not matched by salaries among other, to mention a few. SAA is planning to take nine dockets to court. The Chief Risk and Compliance officer, Vusi Pikoli told a Parliamentary committee that in one of the cases former directors of the airline are implicated in corruption. The airline is also planning to make a submission to the Zondo Commission; and the Special Investigating Unit is trying to recover more R560m lost due to irregularities in the awarding of contracts by former directors of the SABC. SIU Head Andy Mothibi told Parliament that they were trying to recoup losses by withholding the pensions of former bosses Hlaudi Motsoeneng and James Aguma.
  • South Africa has fallen to third place in the latest ‘RMB Where to Invest in Africa‘ ratings behind Egypt and Morocco. Egypt is now the most attractive market for investment and Morocco lies second. South Africa has slipped from its second place in the previous report because of depressed levels of growth and a lack of structural reform. It is however still seen as Africa’s hotspot for portfolio investment and its financial markets and level of financial inclusion is seen to be a cut above the rest.