Property sales perk up; PIC cleans up act; 570% Inflation shocks Zim; EOH blacklists 50 companies

By Jackie Cameron

  • South Africa’s residential property market has taken strain along with the country’s economy. But, the latest FNB Property Barometer suggests that the housing market could soon take a turn for the better. The FNB Market Strength indices reveal that there is an improvement in purchasing activity, albeit small, and a reduction in supply of property available for sale. This improvement, say FNB’s economists, is to some extent related to easing in buyer despondency post elections, an increase in bargain-hunting and sellers withdrawing properties because they can’t achieve their prices. These developments are reflected in the steady growth in mortgage extension, which has averaged 4.3% y/y year-to-date, versus 3.4% y/y in the same period last year. But, keeping a lid on prices is a continued surge in the supply of new flats and townhouses and emigration-related sales, says the bank. FNB expects interest rates to be cut by at least a quarter percent before the end of the year, which should help this improvement in the housing market maintain momentum. Considering all of the above, we continue to expect house price growth to average between 3.5% and 4% y/y this year and in 2020.
  • The Public Investment Corporation, Africa’s biggest fund manager, is cleaning up its act following a series of controversial deals involving politically connected individuals. The PIC has featured in the enquiry into state capture. As a first step, the PIC is separating the roles of chief executive officer and chief investment officer after criticism that too much power was concentrated in the role of CEO, reports Bloomberg. The position of CEO, currently filled by Vuyani Hako in an acting capacity, will be advertised, with the recruitment process running in parallel with other executives “due to urgency,” PIC Chairman Reuel Khoza said in a statement to parliament on Tuesday, says the news agency. The PIC, which oversees mainly pension funds of state workers, will also add or fill the roles of chief risk officer, chief technology officer and chief operating officer. Fund investment panels have been abolished so that decisions go through the investment committee and the fund manager will aim to eliminate most fees paid to “middlemen” and will encourage whistle-blowing, he said. During the government probe witnesses alleged that questionable investment decisions were made and politicians attempted to influence others, says Bloomberg.
  • Hyperinflation and currency devaluation have hit Zimbabweans hard. Bloomberg reports that inflation in Zimbabwe is estimated to be anywhere from 230% to 570%. And, while that percentage range is hard to digest, in reality what it means is that people can no longer afford to get transport to work. Bloomberg says that government workers in Zimbabwe may be forced to stay at home after surging inflation slashed the value of their pay by more than 90%, the main public-sector union said. Zimbabwe is grappling with galloping price increases and a plunging currency that have spawned shortages of fuel and food, says the news agency. A currency devaluation earlier this year means that state employees who previously earned an average of $500 a month now earn $40, the Apex Council Chairwoman Cecilia Alexander said in a statement on Tuesday. As a result, some workers have become incapacitated and are having to borrow money for transport to get to work, Alexander told reporters in the capital, Harare.
  • EOH blacklists 50 companies in connection with corruption and has announced it will sell another R1bn in non-core businesses as it restructures. As Bloomberg reports, EOH will structure operations into three units and sell assets that don’t fit with the revised set up, the Johannesburg-based company’s chief executive officer, Stephen van Coller, said by phone. The firm has already sold 15 assets generating about R750 million, he said. “We managed to strike a new deal with the banks last week, where 75% of sales goes to the banks and the other 25% will be used to grow the business,” said Van Coller. “Two years from now, the business will have gross debt of less than R1.5bn.” Van Coller, a former vice president of MTN and head of Absa’s investment-banking unit, was named CEO in July last year. He has been tasked with EOH’s turnaround after allegations of mismanagement. Microsoft Corp. cancelled a contract with EOH in February following anonymous complaints, continues Bloomberg. EOH dropped 1.8% in Johannesburg as of 9:32am. The stock has plunged 59% this year, says Bloomberg.
  • Sasol, South Africa’s global energy and chemical company, could be suspended from trading on the Johannesburg Stock Exchange. The company said that it has not released its 2019 provisional financial results and annual financial statements in accordance with the JSE listings requirements. As a result its listing on the JSE is under threat of suspension and possible removal. An annotation to that effect will also be made on the JSE trading system, which will be removed as soon as Sasol’s 2019 financial results and annual financial statements are released, now expected at the end of October. Sasol was among the best movers of the day on the JSE, with its stock price moving up more than 4% by the end of the trading session.