BizNews Edge: Cyril's impeachment battle heads to ConCourt, billions wiped off AI chip stocks

Two judges signed the same court order and can't agree on what it actually stops. Now Ramaphosa's impeachment fight is headed to the Constitutional Court, with the ANC's own GNU partner pushing Parliament to keep working in the background regardless. Meanwhile South Africa's bookmakers want prediction markets like Polymarket treated as illegal, three JSE-listed companies posted results pulling in three different directions this morning, and overnight a sell-off in AI and chip stocks wiped billions off names like Nvidia and SK Hynix. Alec Hogg unpacks what's actually driving each story, and what it means for your money..Listen here.Episode breakdown.[00:05] ALEC HOGG: Tuesday the 28th of July, I'm Alec Hogg. This is your BizNews Edge.[00:15] ALEC HOGG: There's no single big interview leading the show today. Instead, a properly busy morning across politics, regulation and results. We bring you up to date on that, on what happened overnight, and on what's happening in the global markets right now. But we start at home with Phala Phala back in court. That's the attempt by his enemies to get President Ramaphosa out of the top job in the country, to get him impeached. Then there's a regulatory punch-up looming over political betting. Three sets of major corporate results landed within hours of each other this morning. One had very little impact. Another saw its share price up sharply. And the final one, a JSE favourite, has come under pressure, not living up to expectations. Then finally, we'll get into what's rattling stock markets overnight and this morning, all around the world: a brutal sell-off in AI and in chip stocks. Let's get into it.[01:23] ALEC HOGG: Starting with Phala Phala, and an update today from our contributing editor [name unconfirmed] on BizNews.com. You can go and read the story there. In essence, the ATM party's leader, Vuyo Zungula, has taken his fight to the Constitutional Court, appealing last week's High Court order that halts Parliament's impeachment hearings against President Ramaphosa. The catch, [the editor] writes, is that the two judges who granted that order at the High Court don't even agree on what it stops. One says everything's frozen. The other says only the evidence hearing is frozen, not the preparatory work.Democratic Alliance figure Geordin Hill-Lewis, who's not in Parliament, remember, he serves as Mayor of Cape Town and has purposefully stayed away from taking a seat in President Ramaphosa's cabinet, wants Parliament to keep preparing regardless, so that it's ready to move the moment the courts clear the way for the impeachment. Not good news for the ANC's biggest partner in the Government of National Unity.None of this touches the merits of the case itself. That's a separate review, due in September, into whether the original panel report was even fair to begin with. Whatever the courts decide, that Phala Phala sofa cash will keep haunting Ramaphosa throughout the election campaign coming up in November, or at least the campaign up until the election in November, even though removing him would need a two-thirds majority that the ANC doesn't have.[03:10] ALEC HOGG: Next, there's a fight brewing in the gambling industry over something most South Africans haven't even heard of yet: prediction markets. They're making a big noise globally. Here, not just yet. Well, the South African Bookmakers Association is trying to make sure they don't even get here. It's released a position paper arguing that platforms like the global Polymarket, which is accessible here in South Africa too (more than 700,000 rand was recently wagered on who will become Joburg's next mayor), are functionally just betting exchanges wearing a different label.The bookmakers' case: letting people profit from a politician losing, or a policy failing, creates the same match-fixing style incentives that plague sports betting, except now aimed squarely at elections and government decisions, with zero South African oversight, taxation or consumer protection attached. The problem too is the depth of the markets, because if you don't have very deep markets where buyers and sellers of ideas can trade against each other with high liquidity, they can be far too easily manipulated. The Bookmakers Association's recommendation is blunt: treat unregulated prediction markets as illegal offshore betting exchanges until Parliament actually gets round to legislating them.[04:54] ALEC HOGG: Onto those financial results now, starting with Kumba, the iron ore producer, which released interims this morning. They tell the story of a company doing most things right operationally, but with the macro backdrop working against it. Six-month earnings fell by about a third, on lower prices, a stronger rand, plus freight and input costs linked to the Middle East conflict. Even so, Kumba generated enough cash to declare a solid interim dividend, and the balance sheet remains comfortably net cash positive. Management held its previous full-year guidance and is leaning on a new efficiency drive to claw back profit margins in the second half. It's a disciplined operator working through a tough patch, not a broken one, and investors tended to agree: Kumba's share price was virtually unchanged today.[06:05] ALEC HOGG: A recent listing on the Johannesburg Stock Exchange, following its acquisition of MultiChoice, is the French media group Canal+. It also reported half-year results this morning, and the headline number is a 40% jump in revenue. Most of that is simply MultiChoice now being incorporated into Canal+'s accounts, rather than organic growth. But the more interesting story is the MultiChoice turnaround underneath it. Earnings there surged after the group killed off the loss-making Showmax streaming service and signed up subscribers here at the fastest pace in a decade. Worth noting for local investors: Canal+ now carries a secondary listing on our own JSE, alongside London. Full-year guidance from the company is unchanged, and the shares jumped almost 7%.[07:14] ALEC HOGG: So, the no-move at Kumba and the big move at Canal+. Now the one that fell, a surprise for many of its fans: Boxer, the wholesaling group that's keeping Pick n Pay alive. There's a bit of a wobble from the company this morning, not a profit warning, just the market's verdict on a trading update, covering the 20 weeks in its most recent reporting period. Turnover growth roughly halved over the past 20 weeks, because falling prices on maize meal, rice and flour ate into the rand value of sales, even as Boxer kept adding customers and market share. So the operations of the business are still healthy, but times are tough at the moment, even for a star performer like Boxer.The share price gapped down hard at the opening on release of the SENS announcement. At one point it was off by more than 6%, though it has recovered somewhat, still 3.5% down at lunchtime. That extends a slide that's already cost the stock close to a tenth of its value this month. Management insists profit margins are holding up, but for now the market isn't convinced.Pick n Pay's chief executive, Sean Summers, will be at the BizNews Conference, BNC#9, in less than two weeks' time, and he'll no doubt have something to say about Boxer too, because the controlling stake Pick n Pay holds in Boxer is worth more than Pick n Pay's own share price, which tells you the market generally thinks Pick n Pay itself isn't going to come right. The fact that Boxer has now hit a bit of a bump won't be good for confidence in Summers's turnaround.[09:20] ALEC HOGG: Now to the international front. You've seen a lot of volatility in global markets, not least on the tech side. Some are saying it's a long overdue correction; others say it's the start of something that will worry investors for quite a while. Let's pick up with our partners at Bloomberg, and today the news isn't good.[BLOOMBERG NEWS]: A global sell-off in AI-related chip stocks is accelerating, as investors question whether the industry's spending boom can deliver long-term returns. In South Korea, SK Hynix has now shed a large chunk of market value since peaking in June, while Samsung has fallen more than 12% in today's trading. Across Asia, a Bloomberg index of semiconductor shares is on course for its biggest one-day drop since March.[10:15] KIM FORREST (Bokeh Capital Partners): How much are these companies spending, and will they ever get it back? Is the business model sufficient to drive revenues and earnings higher? And probably at this point, we're thinking more about margins and earnings in the future, right? We don't really care about what's happening today.[BLOOMBERG NEWS]: Kim Forrest says investors also fear the AI spending boom is becoming increasingly circular. Those concerns intensified after Nvidia unveiled more than $750 billion in new AI deals, including financing for customers buying its own chips. Market fears are also mounting over China's rapid progress in advanced chip-making, after reports that a state-backed company has begun mass-producing sophisticated lithography machines.[11:21] ALEC HOGG: Nvidia's share price was down 5% last night. That word, "circular," is worth pausing on, because it's the phrase investors are most nervous about in tech right now. So what does it mean? Circular funding describes tech giants investing in each other, only for the same money to cycle straight back as revenue. Nvidia is the poster child: it's committed tens of billions to OpenAI, the company behind ChatGPT, and to the cloud provider CoreWeave, both of which then spend a large chunk of that same money buying Nvidia's own chips. Sounds a bit like bartering. Economists have taken to calling it a financial ouroboros, a snake eating its own tail, and CNBC's Jim Cramer has openly compared it to the dot-com bubble of 2000. The worry isn't that the technology is fake, it's that revenue counting might be doing the same work twice, and so boosting the valuations of stocks when the underlying numbers are actually doubling up.Not everybody's losing sleep over this, though. Here's Robert Schiffman, Bloomberg's senior tech credit analyst, whose job it is to check what the credit picture looks like in the tech sector. He's got a more balanced, and much more bullish, take.[12:49] ROBERT SCHIFFMAN: If you take a step back... so Nvidia's in the news today, most-read article, "the sky is falling." But what has Nvidia done over the last five years? Its stock, and I'm a credit guy, its stock is up a thousand percent. Its stock is still up 5% year to date. The S&P is up 6, 7%. The Nasdaq is up 6 or 7%. We don't go up every single day in equity markets. We don't go tighter every single day in credit markets. So we're going to be a little bit bouncy. But that being said, what gives me my bullish viewpoint is, quite frankly, the fundamentals. The evidence that growth is here, and it's only getting bigger and better, and it's going to stay, hasn't gone away.Now, from the credit markets, it scares people a little bit, because you have to finance it. You've got to put in the work, the time, the effort and the money up front, and you don't see it for a few years. Alphabet last week, cash-flow negative. I'd argue, listen, I said this three months ago when Nvidia reported: I thought it was the best print, potentially, in the history of the stock market, and the stock was down. Alphabet's numbers were enormous. You've heard it, cloud AI growth was 82% in the quarter, but they boosted capex again by another 10 or 15 billion dollars. So the world starts to freak out that they can't afford it, that there's not going to be enough money to lend to these companies. The cost of capital is getting way too high, and "the sky is falling." Quite frankly, it just isn't.I think the real question is: are we spending too much money on something today that we could spend half as much on tomorrow? The real fear is that China comes in and just creates a better, cheaper mousetrap, and everyone's sitting on trillions of dollars of spending, and if they'd just waited a couple of years, they could have spent half the amount.[Bloomberg journalist]: We've already talked about this, is it the Chinese model, where some companies are playing around with it?[ROBERT SCHIFFMAN]: Yeah. This is the DeepSeek scare from last year that we spoke about. And I think the answer is no. If we look back at what happened with DeepSeek, right, it was this moment where everyone was panicky, and then what happened? We hit all-time highs again.[15:08] ALEC HOGG: What a fascinating time to be alive. But if you read the book Engines That Move Markets, by Alasdair Nairn, who used to work for Sir John Templeton, you'll see that you can never predict what's happening today by what's happened in the past, but history certainly rhymes. There was a fascinating interview earlier this month with James Gubb [name unconfirmed], who'd done a lot of research. He wanted to find out for himself what the AI boom was all about, and he came to the conclusion that in past cycles like this, past massive waves of innovation, what invariably happened was that those who made the investments, who made the huge capex investments, and we're hearing that now from Meta, from Alphabet, from Amazon, these companies were often the ones that imploded and didn't benefit from it. It was the second and third wave of buyers, the second and third purchasers, who did well, or those who were selling the picks and shovels.Anyway, that's the Edge for today. Thanks, as always, for spending time with me. For more, head over to BizNews.com. I'm Alec Hogg. Until tomorrow. Cheerio.

BizNews Edge: Cyril's impeachment battle heads to ConCourt, billions wiped off AI chip stocks

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