In the debut episode, editor Alec Hogg provides context on the past week’s developments of relevance for the BizNews tribe.
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Extended transcript of the video ___STEADY_PAYWALL___
00:07 – Alec Hogg:
BizNews turns 11 years old on Sunday. Last year, because it was our 10th anniversary, we had a special birthday celebration with a conference in Hermanus to test out to a large degree what we did in March this year at BNC6. It worked so well that we will be having our first investment conference also in Hermanus on the 12th of September. But this year, for our 11th birthday,
And because this is the first of August, we are bringing you NewsWrap. It’s a weekly summary of developments of the past few days that were most relevant for the community that we serve. This week, we are not covering two of the big stories of the moment. The attack by the Israeli of some of the Hamas leaders is a little early for us to get some video coverage of.
But we do have a lot of coverage on the website. It’s a concerning situation. And Andrew England, who used to be the Financial Times’ South African correspondent, now he’s looking after the Middle East operation, writes that we are getting close to another Middle Eastern all out war. That piece is on BizNews there for you to read. And if you’ve been following biznews.com lately, you will know that there is a lot of discussion.
and certainly there’s been a lot of attention given to the series of essays written by Richard Wilkinson about the Pretoria High School for Girls. It’s a little outside of our sweet spot, but it’s a very important story and one that you can read all about there. In essence, 12 young girls, some of them prefects, were members of a WhatsApp group. They have been accused of…
using racist language in that group and all of the girls who were members of it, those who spoke about it and those who didn’t, those in other words who were just following it, have been suspended. It’s only a few weeks to go until the prelim results, rather prelim examinations and then of course the matric exams. So there’s a lot of unhappiness about it, but particularly because the Gauteng Education Department has taken this very seriously. They’ve got involved. There’s been grandstanding.
It’s a heck of a story. We don’t know which side is actually right or wrong, but it all boils down to what was in those WhatsApps. Richard Wilkinson says it was entirely innocent and not racist. Clearly there are others who believe differently. But let’s kick off NewsWrap with the other big story of the week. The arrest of 95 Libyans at a suspected secret military training camp.
in White River. That’s in Mpumalanga, about 350 kilometres northeast of Johannesburg. My colleague Chris Steyn spoke to the leader of the United Independent Movement, Neil de Beer. She does so every Sunday and Neil gives us an inside track into what’s happening in the political environment. Let’s have a look at part of that clip.
Read more: De Beer: SA – A portal to terror
03:30 – Neil de Beer
But I will give a feather to the cap, to the police, and to the entities that today, they reacted and they were on site. But something’s wrong, Chris.
03:39 – Chris Steyn
On 95 Libyans were arrested. Where were they going to be deployed as security guards, Neil?
Neil de Beer
So you look at the video, people like myself that come from there, and you look at the training camp facility. Let’s quickly discuss one thing. A security guard, which they say the 95 people were there for. They were there for security guard training. What the hell are the kinds of security premises these people are going to protect? Rubbish. So let me go through it…
There is a place and you can see the new minister, Mchunu , and the National Commissioner walking with a camera crew and you can see there is what we call a live scenario setup. It is a S-shaped trench covered with sandbag leading up to an underground bunker. Now I don’t know what kind of training a security guard needs to defend a line of trench warfare and underground bunkers.
So you can fool some, some of the time, but not all, all of the time. The kind of uniform, the kind of discussion, I saw them practicing house clearing, I saw them practicing shoot and move. This is not a normal security guard training, unless this security is being done in the middle of either Iraq, Iran or Afghanistan. Rubbish! This was a camp, in my opinion, allegedly set up to train people for war. And that’s that.
05:05 – Alec Hogg
Extraordinary story, isn’t it? And we got more information on the whole military training camps from another interview.
that Chris did and here is a story that you just have to be following. Some years ago a member of the South African Police Services decided that she would give a cross information to her superiors and indeed went as far as the President’s office to give over hard disks and other information about this kind of nefarious activity. Her name is Patricia Morgan-Mashale.
She also gave the information to the then Commissioner of Police Bheki Cele. Well, Patricia, for her troubles as being a whistleblower, was then given a lot of trumped up charges. She had to go off for seven months into hiding, fearing for her life. And this week it all came to a head. She went to court and was acquitted on all charges. Chris spoke with her about this in the week.
Read more: Acquitted SAPS whistleblower reveals secret military training camp cover-up…
06:34 – Patricia Morgan-Mashale
I was in hiding for almost seven months. I was in total, total hiding where I could not move around. So yes, because of those charges, because as you can remember, there was a warrant of arrest issued against me and a Red Alert was issued against my name, meaning that I was one of the most wantef criminals in South Africa or let me say internationally because if there’s a Red Alert it means that you are wanted internationally.
For all my trouble, I ended up losing my job, I ended up being arrested, I ended up in leg irons; all they wanted was to see me either dead or in prison.
The message that I for other whistleblowers is I always say to people that don’t be derailed. If you know you do the right thing, stand by your convictions. I know you’re going to stand alone. And it’s cold. It’s hard to stand alone. But stand by your convictions.
07:34 – Alec Hogg
What a story. We’re still there with our continent and another of the stories that Chris picked up this week. She really has been busy and the community is loving the videos that she’s putting together. You can get them by the way, on BizNews.com or on the BizNewsTV YouTube channel.
was about the Great War of Africa. Now, many people might not have been following this that closely, we were terribly excited between 1998 and 2003 about our new democracy here in South Africa. But while things were going in the right direction here at last after a long time of an undemocratic state, to the north, not very far away, there was a war which killed
five million people either in the fighting or through malnutrition and displaced seven million of them. This is known on the continent as the Great War of Africa and it had its roots in the genocide in Rwanda in 1994 when the part of those allegedly committing the genocide left the country and went into the eastern part of
DRC, the Democratic Republic of Congo. The Rwandan forces have from time to time attacked those who had fled and this has escalated into a conflict situation that brought the Great War of Africa and thereafter needed 14,000 peacekeepers from the United Nations. Well, the Southern African development community in its wisdom.
decided that it would do a better job of protecting people in Rwanda. The UN peacekeepers are leaving and amongst the forces who’ve gone in there are South Africans. In fact, it’s South Africans, Tanzanians and Malawian troops that are trying to keep the peace against impossible odds. Chris spoke to retired Colonel Wyatt about the situation and he had some pretty scathing things to say about are troops who, by the way, a number have died already and questioned exactly what the preparations had been and in his opinion, they’ve been sent there on a mission impossible.
Read more: Why SA “irritates” “most” African countries…
10:01 – Col. Chris Wyatt
They’re like lambs sent to the slaughter. They’re being sent there with insufficient resources, improper medevac, no air support, insufficient logistics. The South African government has to pay contractors to fly Russian aircraft to send resources up there.
It’s something that South Africa should not be involved in. I mean, it’s all part of the egotistical foreign policy of the African National Congress, all started by Nelson Mandela, you know, interfering in other African countries’ business. It’s not a good look. It’s not a good thing. And lives are being wasted unnecessarily, not just South African lives, but civilian lives here because the South Africans have been accused of targeting civilians in one of the attacks about 30 kilometers from Goma earlier this year. It’s a real mess and I don’t see what they get out of it. Well, arguably, there’s been a war with Rwandan of the DRC since the 1990s. Kagame has been supporting rebels in the Eastern Congo for decades and getting away with it.
10:57 – Alec Hogg
Quite a story and one that here in South Africa we haven’t really been on top of. You can be sure that at BizNews we will be giving you all of that news as we go forward. Another unfortunate story, I suppose the way to put it, is the in the past week decision by TOTAL, the French
multinational oil company to pull out of the deep water oil and gas discoveries in the southern Cape Coast. They are called, one is called Brulpadda and the other one Luiperd and these were heralded as fantastic finds. In fact they are the biggest finds ever for South Africa but not quite big enough to justify a on-site
conversion of the gas into GTL or gas to liquid. As a consequence, Total was going to need to have an offtake agreement with someone on the Cape Coast. And because of the engagement that it had with Petro SA being so dysfunctional, it was unable to do that. The upshot about all of this is that this week, Total withdrew from an 80 billion rand
project. It has already spent about 8 billion rand on the exploration but decided that it wasn’t going to throw good money after bad. It couldn’t get a deal together with an off take from Petro SA, which by the way needs the gas for the Moss gas operation. And as a result of that, I got hold of the Shadow Minister of Minerals and Petroleum, James Lorimer.
We’ve got fantastic reserves up on the West Coast near the Namibian border. And potentially this is where Total is going to be refocusing its attention. But let’s hear what James had to say about the loss to South Africa of the pulling out from the southern Cape fields by Total. So the departure of Total, maybe for us as taxpayers, can you give us an indication of
Had they gone ahead with Brulpadda and Luiperd? Had there been no obstacles to the investment? How much investment would it have been? And what kind of tax revenues would South Africa have earned from a field of that size?
Read more: Total’s gas exit – PetroSA blunder loses SA R80bn investment, R100bn in lost taxes
13:52 – James Lorimer
The total project was probably going to be worth $4 billion, of which they’d spent about 10%. So $400 million. So let’s translate that yourself into RAND. That’s a lot of money.
Um, depending, depending on who you, you, you listen to, um, they reckon that there was about 10 billion worth of tax revenues a year over the life of that project. Um, that’s not inconsiderable. And yeah, they’re all the, uh, the life was probably, probably, uh, I would think in excess of 10 years. Uh, so that’s, you know, it’s a nice chunk of change. Um, and then, you know, that’s without all the, the things that go along with that.
the jobs that they were expecting would be created. Simply the resource, the gas that we would have had to power that Turiqua plant, and if they’d built a gas to power plant in Mossel Bay, I mean, that would have been a lot cheaper than the diesel that they’re using for the peaking plants at the moment. So huge savings there, plus possible other uses of, industrial uses of gas in the Southern and Eastern Cape. So that’s a huge loss to the economy.
14:51 – Alec Hogg
I also asked James what would happen next and he shared that a South African company, HCI, has got 10% of this project. So HCI’s share price hasn’t really reacted, which I found rather strange because you would have thought that there would have been quite a bit of investor value that has now been lost but presumably the share price has been under pressure for so long that it really hasn’t made any difference.
But James’ thought was that HCI would now go out and try and find other partners because the discoveries are there, the gas is there. It is 175 kilometers offshore and it is in the Mozambican current, which is a 5 kilometer strong current that makes it difficult to work, but they have far worse currents in the North Sea and they’re pulling out a lot of oil and gas there.
That’s the next installment in the saga. Of course, the resources haven’t gone. Trouble is, it’s gonna be years now before a new project can actually bring them to fruition. That number of 10 billion Rand in lost taxes every year times 10 years is where we got to our headline of 100 billion Rand in tax revenues
welcoming Total into the country. They could surely have done so much better, but when cadres are deployed, you know what the consequence is. Well, somewhere that we have done pretty well on the continent and here in South Africa is in cell phones and The Economist, which is our partner at Buznews, we are the only licensee of The Economist on the African continent, this week
had a look at the artificial intelligence boom and did some extrapolation on whether or not Africa would benefit from it or be left behind. The idea was that Africa could indeed leapfrog as a result of AI, but that it would have to apply the lessons that were learned in the past and particular from the cell phone industry. Let’s have a listen to the part of the leader from the economist which makes has the most relevance on this topic.
17:17 – The Economist
The continent does not have enough data centers, the brick and mortar sites where cloud computing happens. The Netherlands, population 18 million, has more of these than all of Africa and its 1.5 billion people. As a result, data must cross half the world and back, leading to painful delays.
If Africans are to do movie animation, run sophisticated weather forecasts, or train large language models with local content, they will need more computing capacity closer to home. To fix this, governments should learn from the mobile boom and cut red tape. Starlink, a satellite internet firm, could be a stopgap, but regulators have blocked it in at least seven countries, including South Africa.
Heavy taxes on data access drive up costs for consumers, discouraging them from using it and firms from investing in providing it. Governments could do much to help simply by getting out of the way. Development institutions, for their part, should be doing more to help finance this vital infrastructure because of its widespread benefits for growth and employment. The new digital revolution will create opportunities for Africa to catch up with rich countries, but if the continent lacks the right infrastructure, it will instead fall further behind.
18:44 – Alec Hogg
Interesting that the point was made there about Starlink, which is banned in South Africa because the South African government demands that there is a 30% BE allocation. Elon Musk says, no thank you.
Well onto markets and Elon Musk wasn’t the happiest guy in the world after the markets reaction to the Tesla results. They knocked the share price down quite significantly. But there is a view that the great rotation is now starting to happen. In other words, big tech stocks have had a fantastic run, especially the Magnificent 7 of which Elon’s Tesla is one, but that their day in the sun is now drawing to a close.
and that it’s time for value stocks and for smaller stock, smaller cap shares to have their period of market appreciation. The Financial Times, which is another of our partners of which we are also the only Africa licensee, put together this piece, which I’m sure you’re going to find very interesting on where big tech might be heading into the future.
20:07 – FT News Briefing Host
US investors are punishing companies more than usual when they miss the mark on earnings. We saw a sell-off last week in big tech stocks that dragged down the market across the board. And along with the pivot away from big tech stocks, investors are eyeing up smaller companies. Here to explain is the FT’s Rob Armstrong.
20:36 – Rob Armstrong
The picture is really quite varied. So one stock that did terribly after its earnings was Tesla and one has to say its earnings report was pretty dreary. Revenue is extremely slow in the car business, and Elon Musk and the other executives are keen to talk about robo-taxis and humanoid robots and software, but the market would have preferred probably to see them sell a few more cars. But what is interesting is that another big tech company that actually reported quite solid reports, Alphabet, parent company of Google, actually got punished after reporting decent numbers that met expectations.
21:06 – FT News Briefing Host
And so there’s a story here about very high expectations going into these earning reports. Is this sell-off a sign that these stocks are maybe overvalued?
21:33 – Rob Armstrong
Well, certainly, however you measure the valuation of the very big tech stocks, they’re about as expensive as most of them have ever been, and they’ve had an absolutely glorious multi-year run. So one interpretation of what’s going on here is if you’ve been a big investor in these names, Meta, Apple, Google, Amazon, Microsoft, you’ve made a lot of money. And maybe now you’re thinking it’s been a good run.
If things don’t look as rosy as they once were, maybe it’s time to put the money somewhere else. So the place people seem to be putting their money is into small cap stocks. Well, I think in a certain sense, it’s a mirror image of what we’ve seen with big tech. Small stocks have had a terrible run over the last couple of years. They’ve become enticingly cheap and it feels like an opportunity. Another important point about the small caps is they will benefit more.
than tech companies and big companies, if interest rates do come down. They tend to have more debt, their businesses are more economically sensitive. So if, as we expect, the Fed is tiptoeing towards a rate cut, if not this week, then in September, it might be a good time to be in small cap stocks, or that’s what the market seems to be telling you.
22:56 – FT News Briefing Host
What does this all mean for big tech going forward, Rob?
Rob Armstrong
Well, it’s a question of whether some other part of the stock market can take the leadership role that was held by, you know, what came to be called the Magnificent Seven being a group of enormous US tech companies for so long. So these stocks are enormous. They account for something like 25% of the S&P 500. If the index is to continue its great run.
A lot of other stocks are going to have to step up if the big seven are just going sideways or heaven help us even falling. Heaven help us even falling. Well, that will certainly put a dent in many portfolios, including the business model portfolio, which we heard this week over the last 10 years is one of only 10% that outperformed the world MSCR world index and the S&P 500 index.
Well, that’s a good for you if you’ve been following that portfolio over the past 10 years. Something we have been following is the Corion Report every month. Just after the month end, I have a chat with David Bacher where we have a look at what happened for stocks in the previous four weeks or the previous month. We usually take them a couple of days to put it together, but just as supposed to help us with this show today, they brought out the Corion Report.
today and so we can take a little clip from the conversation that David and I had earlier where you’ll see that South Africa has been one of the art performers at the of the moment and certainly in the month of July. Breaking down into the different Olympic events.
Read more: July may have been start of market’s Great Rotation back to value, SA – Bacher
24:49 – Alec Hogg
So this one you call the hundred meters. Explain exactly what we see on screen.
David Bacher
We titled it 100 meters because it is only a month. So it is a bit of a dash in terms of investing in the long-term investment plan. But what we’re seeing on the screen is the UK and South Africa winning the race. They were up over 4%, 4.5% and 4.9%. Well, the two bigger economies, America and China, were only slightly up. So it was a nice month for South African investors.
in dollar terms, the currency also appreciated. So certainly if it was a race, South African UK would be winning. And it’s actually quite interesting to note that our market is actually quite similar to the UK in many drivers. Both markets have very large financial sectors, cyclical companies, and shares that are considered value shares, which the whole value investing had a really good month. And both countries had recent…
elections and both those elections illustrated political stability, which is obviously favoured by the market and hence our market and the UK really outperformed global equities.
26:14 – Alec Hogg
Well, to a large degree, you saw there that the South African equity market was up by over 4%, but it was across the board. Bonds 4% and also property was up by a similar amount 4%.
Those are big numbers. If you just multiply them by 12, but in annualized basis, it’s almost 50%. So a big rebound. And what is interesting was that South African investors and global investors who follow the South African markets actually took a bit of a breather in June, waited until they could see the government of national unity settling down. And in July gave it a big vote of confidence. So it’s early days for the GNU, but at least
we are seeing that there is cold cash coming in to support it. You get the feeling that every month that the government of national unity holds, every month that there’s progress, you might see a little bit more of the foreign investment capital coming into South Africa and I can tell you that is the biggest benefit that any of us could hope for because as a developing country, South Africa needs capital to grow.
And that means we need to pull in money from elsewhere in the world. And they’ll only do that if they think they’re going to be, first of all, their capital is going to be safe. But secondly, that they’re going to get a good return on investment. And as the capital comes in, it creates jobs. That’s what it’s all about. Well, that’s good news, but even better news is what’s been going on at the Olympics. And tonight, Tajana Smith, formerly Tajana Schoenmaker, will be competing
for a second gold medal. She’s in the final for the 200 meters breaststroke. She’s got a compatriot with her as well. So the two South African girls in that race. And we have got Pieter Coetzee, who’s in the backstroke finals. So who knows, with a bit of luck, a little later this evening, this is Thursday, the 1st of August, we might see South Africa earning more medals to go along with the three that we have already.
Tatjana incidentally up to this point anyway has got 100% of South Africa’s gold medals or we got three medals and she’s got one, only one is gold and she had 66% of the total medals that South Africa won at the previous Olympics where we only came back with three. Tatjana had the gold and the silver. Let’s be pulling for her tonight. But ahead of the swimming we did have a chat with Wayne Riddin who is an expert on the sport. And this was the way that he explained the opportunities or the potential of our golden girl before she became once again the nation’s favorite.
Read more: Olympic surprises? Assessing SA’s swimming, rowing gold medalists and the emerging talent
28:37 – Wayne Riddin
So is Tatiana going to be fast enough because her entry time is into the 105.5 at the moment going into it? But I do believe that she’s got the talent. It’s not really the talent that is going to come through in that preparation. It’s really the nerves that come with it and everything because everybody that gets a lane in that final…
There’s a chance. So, you know, everybody wants it just as bad. So can that person come together in the final? That’s what the big question is gonna be. The turn of breaststroke for her, she’s got more opposition than what she did have in 2021. So, you know, it’s gonna be a tough one for her. So that expectation, we should just calm it down a little bit and say, you know what, if you get a medal, that’ll be great. And let’s just hope that she can rise above that level.
And she has the character. She’s done the training. She is a professional swimmer. And I believe it’s possible. It’s just that the other people are also wanting it and people mustn’t forget that. Yeah, indeed, indeed she does. Well, it is interesting that she won the gold in the 200 meters, which is the one that she’s contesting. And she went one better in the 100 meters.
30:06 – Alec Hogg
Let’s see. Well, this has been News Wrap from the team at BizNews. Hope you enjoy it. And I hope you’re gonna join us again. 6 p.m. live on all of our social media channels next Thursday. Until then, I’m Alec Hogg. Cheerio!
