SA attracts $16bn; Hurry up and fix Eskom, investors urge govt; 2020 EM outlook; Intu plunges

By Jackie Cameron

President Cyril Ramaphosa says the government is on track to lure $100bn in new investment within five years, with more than $16bn already committed and many more projects in the pipeline. He was speaking to Bloomberg television. Investment pledges include:

  • Pulp and paper maker Sappi said it will spend R14bn ($944m) at four of its plants over the next five years.
  • Toyota Motor Corp. intends to invest R2.4bn on building a new hybrid model passenger car in South Africa from 2021.
  • The New Development Bank will earmark a minimum of $1.6bn for infrastructure development projects next year.
  • Clothing retailers including Woolworths, Foschini and Edcon committed to spending R6.5bn on new manufacturing capacity that will create 20,000 jobs.
  • Seven vehicle manufacturers, including BMW AG, Ford Motor Co. and Volkswagen AG plan to establish a R6bn fund to encourage more black South Africans to participate in the industry over the next decade.

Anglo American sees South Africa’s struggling state-owned power utility and regulatory uncertainty posing major risks to its operations in the country, where it’s planning to boost spending to expand output for platinum, manganese and iron ore, says Bloomberg. The challenges posed by Eskom have emerged as the key issues the company is having to deal with constantly, Anglo Chief Executive Officer Mark Cutifani told delegates at an investment conference in Johannesburg. Eskom, which produces about 95% of South Africa’s power, has been forced to implement rolling blackouts that caused economic output to contract the most in a decade in the first quarter.

Eskom is being hammered as global investors take a dim view of government plans to fix the ailing power utility. Some investors are getting out of Eskom dollar bonds amid concern South Africa is taking too long to implement a turnaround plan and explain what it will do about the utility’s $30bn of debt, says Bloomberg.

For many emerging markets, 2020 is looking slightly better than 2019. But, if there is a global slowdown, South Africa is not far behind Argentina in the vulnerability stakes, say economists. In a goldilocks scenario, Fed rate cuts will stabilise US growth – gifting emerging markets with steady capital flows and strong external demand. But that’s not guaranteed: If an escalating trade war turns a global slowdown into a global downturn, a combination of weaker exports and capital outflows could push vulnerable emerging markets back to the brink. In that risk-off scenario, Bloomberg Economics’ scorecard suggests Argentina and Turkey are most vulnerable to disruption, while South Africa and Colombia not far behind.

House Democrats are opening the public phase of their impeachment inquiry of Donald Trump next week with some of the central witnesses who have detailed the president’s pressure on Ukraine to investigate a political rival, says Bloomberg. The public hearings will begin Nov. 13 with William Taylor, the current top US diplomat in Ukraine, who described the conditions that Trump and his associates set for Ukraine’s new president to receive military aid and a coveted White House meeting, says the news agency.

Following what analysts have described as an awful and nasty trading update, Intu stock plunged more than 20% on the Johannesburg stock exchange on Wednesday. Intu has dropped more than 80% over the past year. The property company, which invests in UK real estate, blames Brexit for poor letting activity. It is considering selling assets to shore up its balance sheet, it said in a statement on Sens.