David Shapiro: Cyril’s tough Covid-19 rules encourage wealthy to invest outside SA

South Africa's booze ban has angered far more people than those who are missing out on their favourite tipple. Businesses that are in the alcohol business chain are in jeopardy after being ordered to stop operating again – and without notice. This is on top of the enduring mystery about how South Africa's ban on tobacco sales can halt the spread of the coronavirus and ensure there are enough hospital beds to cope with the pandemic. There's also the impression that ANC leaders are enjoying the extra power that comes with being able to make laws unilaterally, as is the case in a national disaster. Closely followed stockbroker David Shapiro tells BizNews founder Alec Hogg that the type of decision-making seen this week encourages the wealthy to seek investment opportunities outside South Africa. – Editor.David Shapiro, Alec Hogg on Covid-19 restrictions, including prohibition.David isn't it funny, we go on to a noontime webinar and, so help me, the hackers try and bring us back down. Anyway, we've got CloudFlare to bump them off, but it really is irritating that people think they can target you when you are supposedly at a weak point. Fortunately, we've got the best in the business to sort them out. Did you listen to Cyril Ramaphosa last night? .___STEADY_PAYWALL___.No, for no other reason than we had load shedding. I read the headlines, I know about what's happening. It's a kind of a step backwards. I understand what they're doing, but there's still a lot of anger out there and a lot of concern. My big concern is if we go backwards, I think people get taken down another notch. Economies are driven by confidence, that's what gets people to go out and spend and to do things. .We've been very patient and we understand the consequences and that, but when you feel that you're making progress and then have to go backwards. I think it has a very, very negative consequence. What we must understand as well, is I know the liquor side, it's rather unfortunate that we have people who get drunk and drive and cause accidents and full hospitals and so on. It's also an indictment on our law enforcement agencies and that but hurts all the retailers. .They are big into cigarettes and they are big into liquor as well, whether it's Spar, whether it's Chequers, no matter who it is, it's a big part and a big margins there as well. So it's going to be felt in the retail industry. .David, I'm seeing some very uncomfortable parallels here with the 1930s in the United States economy contracting and then the politicians at that stage thought they could apply rules, like prohibition. All it did was give us Al Capone gangsters, the craziness that went on during that period until they were eventually forced to relent. This prohibition because that's what it is. No more alcohol will be sold. It almost looks like a very, very blunt tool that is being applied without any engagement. .We're going to have people from the liquor industry joining us later to give their thoughts but from the statement that they issued today, there was no consultation. They were never told. They were never asked. They were never given any options of how they could help in preventing the excess or decrease in deaths which come from, again, the sale of alcohol. It looks like we just got a command council, old Soviet-style, do it my way or else. .You've touched on a very sensitive point. We're perhaps topping the league, but this is the biggest concern about the lockdown. Overall, in the global economy that governments are just taking it upon themselves. They've forgotten about the consultative process, the democratic process. They're just doing things of their own accord. .You even see it in the financial sectors even here, Stephen Koseff, I'm not having an attack on him but he said, you know, companies should just be allowed to issue shares. Hold on a sec, we know you're in trouble, but you're still going to have some kind of process. You can't just override these kinds of things and just issue shares in the same way as you can't just close down business without some kind of consultation. .You are going back to that and you're driving this underground. People will find liquor that off the back of a truck, which is exactly what it did in the bootlegging days. People who want to drink will drink. They will find it. They are going to have people over. They are going to have dinner. It's the same as smoking, I haven't seen people dropping down dead from not having their smokes. They are getting it somewhere, so people are benefiting. I'm on your side in this respect, I think that this is not going the right way and the process are not correct. .As an investor, you would be looking at either brilliance or incompetence or they are captured. It's got to be one of the three. It's either brilliant because they know something that we don't either. They're making stupid decisions or it's captured in that the government is a gangster state as it's been written time and time again. You've got one of those three and I think any rational person is going to ask the question on those three. How are the investment markets voting? .That's where we being misled. At the moment, the markets are doing pretty well here but when you analyse it, it's not South Africa inc that is recovering. Yes, there's a lot of trading taking place in underlying shares but overall, that side of the economy is under huge pressure. There's been big, big selloffs. Even in banks, there's been a recent recovery and in one or two other shares but overall, South Africa Inc is under enormous pressure. .If not for gold shares, if not for the mining shares, which are all things that are happening outside our border, the iron ore price, the copper price, the gold price. We mine 100 tones here, so we are hardly big miners. So that's keeping the JSE take that away, you've got a different picture that has emerged which is showing very, very weak underlying businesses. That's what you've got to look at to see how the business community are coping with it and wait until the results start to come out, which we've already started to see in the form of trading statements, a lot of pressure. That's where taxes are collected. Taxes are collected from the money that's made in South Africa, not from Prosus, not from BHP or Anglos, not from those mines that are collected in Brazil or wherever they operate, so understanding that. .Where's the disconnect here, because if you continue to play the game that's being played. In other words, we are all-powerful politicians, we will decide what is good for you in South Africa. I get that the politicians are elected and they can until they get checked out of office, believe that. .There's a disconnect between what they're doing and the reality. How are they going to fund all of this? How are they going to pay the salaries at the end of the month? How are they going to continue to keep the wheels of the economy running or the public sector, which is one-third of the people employed in this country, who then get paid by those in the private sector? Where does that disconnect come or are they gambling with this? .They just hope that something happens that gets them out of the poo, and it's not going to happen. In other words, you're right to be fearful, your right to bring up those things. It just doesn't balance. How you're going to save SAA, how are you going to save all these institutions? The only way you can do it, which is not going to happen because Tito won't allow it, is to print money. That's the only way you can start creating Monopoly money as it happened in Zim, but they're not going to allow that. God forbid that happens because Rand will just tank. So we haven't got the money and nor is there a plan or a coherent plan to get this right. .The money's here Alec, the actual money is hidden. What you've got to do is create the confidence that people feel that they want to spend it or they want to make the investment and that's where the disconnect coming. .The governments saying, we know better, we know how to do this. Don't interfere and business people say, just let us be part of it. Come and consult us. We will do it but you've got to get away from ideology and you've got to get away from this almost authoritarian approach and let us do what we're good at. From my point of view, that's where the disconnect coming is this developmental state. Now we know what's good for you. We're not China and we haven't got 2,000 years of culture behind us to do that. That's where the worry is actually available. You see that in the kind of results that are coming out and in SA inc companies. .David from your clients, you've got lots of wealthy clients, people who make huge contributions to this economy through their taxes. What are they feeling about what they see, the way that the government has been handling this whole thing? .I've been talking about it the whole morning. They are hugely concerned and you always ask me where I invest. I think the safe haven or the safety valve, OK, we'll live here as ex-pats, but we're going to protect our money by taking it offshore. That's what we've seen happening, people are very nervous about investing in South Africa. .Whatever money they have is being channelled offshore correctly, it is a correct decision. They'll bring it back if there are opportunities here. At the moment, there are far better opportunities elsewhere than in South Africa. Create the environment, put out a red carpet, ease back on so many of the constraints and inhibitions that you create in the market. Just forget about the ideology. Forget about politics. Let's get growth going. Let's get businesses up, but we cant make headway and this is an example, but you dare not challenge them. .There's my question for you, is this government incompetent, captured or brilliant? .I wouldn't say the last, but I think it's more prominent in captured. We don't know who the advisers are. We don't know what goes around cabinet meetings and where these decisions are getting made. The other point is that, yes, there are the opposition parties as well. Consult and bring them in. It is a democracy, I know you're the leading party, but it doesn't mean that they marginalise. It doesn't mean that there are other people with other views in the country. In fact, I suppose the same thing applies in America as well. You don't get all the views, and in America, 50% of the people didn't vote for you or more than 50%. .Represent the entire nation and use the brains. Use whatever you can get from the nation. That's what I find just astonishing in this country, that we do have a history of good governance, we do have a history of very competent business people who have pulled us out of a lot more very, very difficult times. Find them. Use them. Talk to them. Doesn't happen. .An interesting point that you make. How many people voted for the ANC? What was the percentage at the last election? .Call it 60%. Was it less than that, I don't know?.If you consider how many people didn't vote, you don't really have a divine right to rule like an autocracy. Are people now getting angry? .I think people are getting very, very angry now, the wrong kind of people. The people who've got the money and they've got the money to invest. Those are the ones that are getting very angry and those are the ones you need. Tito understands, if you speak to them, they know exactly what needs to be done, but I don't think it's shared right across the table or around the table. .David Shapiro, as always, calling a spade a bloody shovel.

David Shapiro: Cyril’s tough Covid-19 rules encourage wealthy to invest outside SA

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