🔒 Members Only Ep 3 – Rand’s GNU verdict, demented Biden and Paul Theron

In episode three, Alec Hogg and Bronwyn Nielsen focus on what the Rand is telling us about deliberations around SA’s Government of National Unity – and point to the disastrous performance by Joe Biden sparking a potential late change in the Democratic Party’s Presidential candidate. Also in this episode, Paul Theron on BizNewsTV and offshore investing.

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Highlights from the interview

In their weekly members-only discussion, Alec Hogg and Bronwyn Nielsen covered a wide array of global and South African topics. Bronwyn, speaking from Puglia, Italy, highlighted the football fever engulfing the region amidst political negotiations back home. Alec delved into South Africa’s tumultuous government of national unity negotiations, noting recent twists involving ministerial appointments and their impact on the Rand. The conversation turned to U.S. politics, scrutinizing Biden’s debate performance and its implications for global markets. They also dissected corporate scandals like Steinhoff, revealing layers of complicity and governance challenges. Shifting to economic insights, they analyzed Naspers’ strategic shifts amid global competition, reflecting on its enduring ties to South Africa despite evolving business models. Throughout, they pondered leadership continuity in both politics and business, underscoring the complexities of succession planning and corporate governance. Their discussion underscored the interconnectedness of global events and local economies, offering members insights into navigating turbulent geopolitical and economic landscapes.

Edited transcript of the interview

Alec Hogg (00:09.013)
It’s Friday morning, and that means time for members only. Bronwyn Nielsen, the founder and CEO of the Nielsen Network, is with us to discuss the big stories of the past week.

Alec Hogg (00:30.389)
Where are you, Bron? Where are you now in the world?

Bronwyn Nielsen (00:35.63)
I’m just outside of Rome, in Puglia, on the Italian coast, the Adriatic.

Alec Hogg (00:48.085)
Are they all football mad there with the euros going on?

Bronwyn Nielsen (00:54.126)
100 percent. Streets are full, lots of celebrations. Mostly, I’m just escaping winter in South Africa, Alec.

Alec Hogg (01:05.332)
OK, well, it seemed like winter in the government of national unity negotiations yesterday. We had a piece earlier in the week from John Madison. Lovely to have John writing for Bizznews. He and I go way back; he’s a very good political commentator and author. Early in the week, he said Jordan Hill Lewis was set to become the minister of trade and industry. Someone in the ANC must have read that and panicked, given that the communists have been running that portfolio since Rob Davies and Ibrahim Patel. It would have meant big changes if Hill Lewis took over. Suddenly, after an agreement seemed set, the ANC said no to the trade and industry position for the DA appointee. So, we’re back to the brink again.

Bronwyn Nielsen (02:58.286)
Alec, is it true that the Minister of Tourism was offered instead of Trade and Industry?

Alec Hogg (03:15.186)
What we know is that letters are going between the two political organizations, which you wouldn’t do in business negotiations, and they’re getting leaked. These are the guys with 62 million people’s futures in their hands, and you’d hope they’d handle things better. But it seems things might not be as bad as anticipated. Yesterday, media and social media were full of predictions from so-called experts saying this is the end of the government of national unity. But I want to share my screen and show you what’s happening with the Rand because this tells us a lot.

Bronwyn Nielsen (04:34.062)
Perfectly.

Alec Hogg (04:36.208)
If you go into the homepage, as a premium subscriber, you can click on BN portfolios. There it is, Rand dollar, Rand pound, Rand euro, and the business portfolios. This shows how the Rand has performed. In early June, there was skepticism about the government of national unity. The Rand dollar rate on June 8 was 18.89. As it appeared the government of national unity was happening, the Rand improved to 17.91 on June 19. But in the last five days, it reversed to 18.52 when predictions said the unity government was falling apart. However, there’s been an improvement to 18.36, suggesting someone knows something. When people put a lot of money in international markets, they usually know something. So, don’t believe it’s dead and buried yet; negotiations are likely ongoing.

Bronwyn Nielsen (08:26.83)
Talking about acting in an adult manner and international markets, we got to talk Biden and Trump. Four hours ago, that debate was online.

Alec Hogg (08:43.691)
Extraordinary. Here’s the YouTube video of the first debate of the 2024 campaign. There is deep panic in the Democratic Party about Biden’s performance, which they think will hurt down the party ticket. Some are questioning what to do about it. Biden’s performance was seen as bad, with Trump taking full advantage. Even CNN and Bloomberg report that the Democratic Party is looking for an alternative. It’s serious stuff, and we should care because it’s 26% of global GDP.

Bronwyn Nielsen (11:12.526)
What were they thinking in terms of succession planning? This has been in play for so long. It’s about succession planning, whether for a business or a country.

Alec Hogg (11:39.369)
It’s extraordinary. In business, facts matter. You can’t mislead people for long. But in politics, it’s different. Trump was lying, and Biden has dementia. These two are vying to be the leader of the free world. Hopefully, our government of national unity will work out in the end, just like these things often do.

Bronwyn Nielsen (12:41.39)
Let’s talk a little about Steinhoff. The CFO is testifying. Have you covered that?

Alec Hogg (12:52.809)
We had a piece yesterday. Steinhoff is like an onion; we’ve only seen the outer layers. The story will unfold more, especially now that Yuster is no longer with us. He didn’t do this alone, just like Bernie Madoff. The big story is about those close to Yuster who knew what was going on. This writer is looking into it, and although his book will take a year, it’s good to know professionals are investigating. Steinhoff is not finished yet.

Bronwyn Nielsen (14:18.798)
And those high-profile board members on the Steinhoff board through thick and thin—there are boots shaking because we’ve just scratched the surface.

Alec Hogg (14:52.617)
My view differs. Having served on boards, you can only believe what you’re given. It’s tough to question everything, and you trust the auditors. But auditors say it’s not their job to find fraud. So, there’s a conundrum. Managers need to be honest, and we need to disincentivize dishonesty by throwing the book at them. But how many crooked managers or insider traders go to jail? Not many. So, where’s the disincentive? I have sympathy for the board members, but the managers inside knew what was going on. The conspiracy of silence came from them.

Bronwyn Nielsen (16:25.262)
And with huge board packs come huge board fees.

Alec Hogg (16:32.073)
Not in my case. But you’re right. They better do their work for the bucks they earn. You spoke to Paul Turon recently. Tell us about that.

Bronwyn Nielsen (16:57.55)
It was great catching up with Paul. His investment stance hasn’t changed. He holds a big offshore portfolio with growth stocks like Apple, Microsoft, and Nvidia. He’s a buy-and-hold guy. He mentioned Amgen, which is developing a new weight-loss drug that’s a pill, not an injectable. He’s very enthusiastic about it. In South Africa, Paul still likes Aspen, linked with Eli Lilly for weight drugs, and holds Richemont. Internationally, he likes LVMH in luxury goods.

Alec Hogg (19:08.489)
We had a story on Richemont this week. LVMH’s chairman bought shares in Richemont. The suggestion is that LVMH might buy Richemont. Rupert has 10% equity but controls 51% of the shares. So, he has control. It’s interesting that Richemont might be in play.

Bronwyn Nielsen (20:11.694)
Paul mentioned that too. He talked about Johann Rupert’s succession plan and his children’s involvement. But he doesn’t have Johann Rupert’s ear.

Alec Hogg (20:41.506)
I was blocked by Rupert on Twitter, but he was keen on his son Anton getting more involved. Anton seems to have moved off the scene, though. Rupert controls 51% of the company despite having only 10% equity. This structure is interesting. When you dig beneath the surface in business and politics, you find fascinating details. Biden’s deficiencies are now visible, and there’s panic. Planning should be better.

Bronwyn Nielsen (22:16.974)
Exactly, Alec. It blows my mind. But it makes us feel better about being South African when we see the international space.

Alec Hogg (22:39.007)
It does, but there’s a lot behind the scenes going on. If the DA did not support Cyril Ramaphosa or decides not to support him in the first vote of no confidence, that might be the end of Ramaphosa. But before we go, we’ve got to talk about our big South African giant, Naspers.

Bronwyn Nielsen (23:08.91)
Yes.

Bronwyn Nielsen (23:17.454)
Their e-commerce business turned profitable. They were very pleased about that performance and spoke extensively about iFood, OLX, and PayU. Despite receiving competition from Amazon, Shein, and Temu, they remain committed to South Africa. Irvin, the interim CEO, reiterated their commitment.

Alec Hogg (24:18.014)
I think it’s nice to see their commitment to South Africa. I had personal experience with this many years ago. BizNews was approached to take over FinWeek in partnership with Naspers. After doing due diligence, I decided not to pursue it because print publications didn’t seem to have a future.

Alec Hogg (26:44.09)
The board of Naspers was adamant about producing an Afrikaans version of FinWeek, despite the additional costs. This shows how boards have disproportionate power in decisions. Today, media is a small part of Naspers’ portfolio, yet the board’s South African roots influence their decisions. This is similar to how SABMiller, once a major contributor to South Africa, has changed since becoming a subsidiary in a multinational. It’s why I’m glad Anglo-American wasn’t bought by BHP Billiton, as it would have likely been spun off like Billiton into South32. Naspers’ recent results reflect their continued connection to South Africa.

Bronwyn Nielsen (29:02.414)
Absolutely, there’s so much news coming next week. Alec, I can’t wait to see who you get into the studio to talk about South Africa’s reality. Looking forward to BizNews TV as you take us through this journey.

Alec Hogg (29:24.569)
Yes, lots more to come. Enjoy Italy, Bronwyn. We’ll be in touch next week. Maybe we should run a quiz on where you’ll be next Friday. Catch up for our weekly members-only session. Until next time, cheerio.

Bronwyn Nielsen (29:44.718)
Bye, Alec.

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