QE won’t happen – Kganyago; What rich people fear the most in SA; Eskom pumps up Exxaro profits; PPC

By Jackie Cameron 

• South African Reserve Bank Governor Lesetja Kganyago dismissed suggestions the central bank’s inflation-targeting mandate be broadened and that it undertake quantitative easing to support an economy facing its deepest contraction in almost nine decades. “Quantitative easing will become appropriate when interest rates are at the zero lower bound and there is deflation risk,” Kganyago is reported as saying. “While inflation has eased and created space for lower rates, I am not aware of any professional analyst who projects deflation in South Africa.” The central bank has been buying government bonds in the secondary market since March and insists it’s aimed at reducing market dysfunction and is not quantitative easing, says Bloomberg. It held R38.3bn ($2.2bn) in government securities at the end of July. Quantitative easing would allow investors to shift risk to the public balance sheet at a higher price, effectively leading to a bailout for the private sector arranged by the central bank, Kganyago said. It would also discourage new investors from buying long-term government debt because there won’t be enough yield or compensation for the longer-term risks, he said.
• Wealthy individuals in five African nations including South Africa, Nigeria and Kenya see political instability as a significant threat to the preservation of their assets, a study finds. Researchers from Johannesburg-based Intellidex surveyed 265 individuals in various industries across these countries to compile the report. It found that Africans were most concerned about political risk, with 82% of South African respondents citing it as significant. That compares with 67% in Ghana, 64% in Nigeria and 55% in Kenya. Only 31% of Mauritian respondents saw the political environment as a threat. Personal safety and security was another common concern for wealthy Africans; most respondents placed it at first or second on their list of concerns. South Africans placed it only fourth and are more concerned about stock market volatility and taxes. The main vehicle for consolidating and preserving wealth is property, with the exception of South Africa where investments in equities took the lead. For more on property and managing your assets, sign up for the BizNews Finance Friday webinar. Today, global and SA property expert Andrew Golding, of Pam Golding Properties, and award-winning financial planner Debbie Netto-Jonker, who divides her time between Australia and South Africa, will be on hand to answer your questions.
• PPC, South Africa’s biggest cement maker, is considering a rights issue of about R1.25bn ($71.7m) to refinance both its domestic and international operations, according to people familiar with the matter. The Johannesburg-based company owes lenders including FirstRand’s Rand Merchant Bank, Nedbank Group and Standard Bank Group a combined R750m by the end of March 2021, sources told Bloomberg. The balance of the funding effort will go toward PPC’s other units across sub-Saharan Africa, including the Democratic Republic of Congo, they said.
• South African coal company Exxaro Resources reported a 40% jump in core earnings due to higher coal exports and a favourable exchange rate offsetting one-off items. Higher coal revenue was mainly driven by increased volumes of sales to power utility Eskom and a 39% rise in export volumes during the half-year, it said.