News In Brief – Wed 7 June 2023
Wednesday, 7th June 2023
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Zuma loses (again) in the High Court – this time against Downer and Maughan
The Pietermaritzburg High Court has ruled that Former President Jacob Zuma's private prosecution of prosecutor Billy Downer and journalist Karyn Maughan constitutes an abuse of court process. The judgment exposes Zuma's motives for the prosecutions: to hinder Downer's independent work, further delay his corruption trial, and silence Maughan's reporting. This decision has broader implications as unchecked private prosecutions undermine democracy and divert judicial resources. The Helen Suzman Foundation (HSF), as a friend of the court, argued against Zuma's actions, and welcomes the court's affirmation that relief can be sought against spurious private prosecutions before a full criminal trial.
Renegergen share price recovers 7.5% on $750m funding approved for gas project
Renergen, a natural gas and helium producer, has received approval from the United States International Development Finance Corporation for a US$500 million senior debt funding, subject to a completion of a mandatory Congressional notification period, and a further US$250 million debt facility from the Standard Bank of South Africa for the construction of Phase 2 of the Virginia Gas Project. CEO Stefano Marani said: "Having achieved this major milestone bears testament to the quality of the Virginia Gas Project and the impact it can have both locally and globally. The many months of hard work are starting to lay the foundations for the Phase 2 plant, and we are excited to be working with our partners in the US, and to be welcoming our new South African partners, Standard Bank."
Godongwana says there will be no exemption after all on "wasteful expenditure" by Eskom
SA's Minister of Finance Enoch Godongwana has decided not to grant Eskom, the country's power utility, a partial exemption from disclosing irregularities and financial losses in its annual financial statements. A statement from National Treasury says the Minister acknowledges Eskom's efforts to combat fraud and corruption but believes that it needs to do more to reduce these issues before he will consider an exemption. The National Treasury has considered public comments and engaged with various stakeholders, including auditors and accounting bodies, regarding the compliance reporting requirements for State-Owned Entities like Eskom. Although irregular expenditure doesn't necessarily imply corruption, it is seen as a measure of financial management in State-Owned Entities, which face more stringent reporting standards than commercial companies.
SA's business confidence drops for fifth straight month, lowest since the pandemic
The RMB/BER Business Confidence Index (BCI) fell for the fifth consecutive quarter in Q2 2023, reaching a level of 27, the lowest since 2020. Only about a quarter of respondents were satisfied with business conditions. The decline in confidence was attributed to factors such as decreased business activity, persistent power outages, rising interest rates, and cost pressures. The survey covered senior executives in various sectors, with three out of five sectors experiencing a decline in confidence. Consumer-facing sectors, including new vehicle dealers and retailers, were particularly affected. Manufacturing and wholesale sectors also saw a drop in confidence. Building contractors' confidence remained unchanged, while sub-contractors fared better due to spending on load-shedding mitigation measures. Load-shedding, weak exchange rates, diplomatic relations, and high interest rates were identified as major concerns. The overall economic outlook remains challenging, and sustained improvement in confidence will require ongoing economic reforms and addressing structural issues.
Spar share price rises strongly on disclosure of Allan Gray accumulation
The share price of embattled retainer Spar rose almost 5% this morning after a required notice on SENS disclosed that Allan Gray has been buying the stock and now owns 10% of the company's shares. Spar has been through a turbulent period over the past 12 months, losing over one third of its value Bargain hunters may well see the interest of Allan Gray as signallng the bottom. Today's price improvement, however, is a mere blip in the stock's recent history as the graph below illustrates.
UK house prices in May fall for the first time in 11 years
The House Price Index compiled by UK home loan provider Halifax house prices fell by 1% year-on-year in May, recording the decline since 2012. The UK's average property price is now £286,532. Halifax says the decline can be attributed to the comparison with strong prices last year. Although prices have dropped by approximately £3,000 in the past year and £7,500 from the peak in August, they remain £5,000 higher than the end of the 2022 and £25,000 higher than two years ago. The housing market's brief upturn in the first quarter of the 2023 diminished due to rising interest rates, impacting household budgets and fixed-rate mortgage deals. With expectations of further rate increases and fixed mortgage rates rising, confidence in the UK housing market is declining, leading to cooling demand and the anticipation of further price decreases.
CDE report explains how Pretoria's poor policy and bad governance are wrecking SA's GDP growth
A report released today by Ann Bernstein's Centre for Development and Enterprise highlights South Africa's anti-growth strategy as the cause of its slow economic growth over the past 15 years. The report identifies ten factors hindering growth, including poor policy and governance at Eskom, fiscal policy violations, corruption, crime, logistical challenges, mining uncertainties, decaying public infrastructure, ineffective local government, inhibitive economic transformation policies, and a lack of leadership. The report emphasizes that the cumulative effect of these factors has severely impacted the country's growth prospects, leading to deteriorating infrastructure and increasing indebtedness. For the executive summary of the report, click here.
Soweto's Msanzi Youth Choir makes history in the US – watch
The choir from South Africa was so inspired by Nightbirde's story, and her song "It's Ok" that they chose to cover it. The beautiful tribute left everyone emotional, and for the first time in America's Got Talent's history the Golden Buzzer was awarded by the audience.
Ramaphosa meets CEOs amid investor concerns
President Cyril Ramaphosa met with business leaders, including Daniel Mminele (Chairman of Nedbank Group Ltd.) and Ralph Mupita (CEO of MTN Group Ltd.), to address concerns over the country's energy crisis, logistics, and ties with Russia. Discussions focused on inclusive growth, restoring economic confidence, and job creation. Economic stagnation, power cuts, crime, infrastructure decay, and foreign policy missteps are driving investor unease. Executives are growing impatient with Ramaphosa, who seeks reelection, and warn of the risk of a failed state and criticise the country's Russian ties. -Bloomberg
Investec acquires majority stake in Capitalmind, expanding presence in M&A market
Investec has purchased a majority stake in boutique M&A firm Capitalmind Group as part of its strategy to strengthen its position in the international mid-market space. The subsidiary of Investec will increase its stake to around 60%, up from 30% acquired two years ago. The financial terms of the deal were not disclosed. This acquisition follows a trend of larger banks acquiring smaller investment firms due to the decline in global M&A activity. –Bloomberg
Chances of SA grid failure extremely low – Report
According to a detailed report by Kela Securities, the risk of a nationwide blackout lasting two weeks or more in South Africa is highly unlikely due to measures in place. The country's 50Hz electricity frequency is vital, and deviations can lead to blackouts. However, South Africa has automated load shedding and backup plans to manage frequency. In case of a blackout, power plants can be quickly restarted using hydro and gas turbines, bringing most of the country back online within hours. The main challenge is repairing distribution infrastructure and coordinating supply to fully restore power. Political interference and inadequate maintenance contribute to the current situation, requiring proper maintenance and short-term load shedding as solutions.
BRICS leaders to meet online – or meeting moving to China?
Conflicting reports on the upcoming BRICS summit scheduled for mid-August in South Africa. Business Day reports that president Cyril Ramaphosa's cabinet is considering a recommendation to move the summit to China, to avoid the potential arrest of Russia's President Vladimir Putin. The country's alignment with Russia has caused market instability and strained diplomatic relations with trading partners. South Africa must act on an ICC warrant of arrest against Putin as a signatory to the Rome Statute, whereas China is not. India is not a viable alternative as it will host the Group of 20 summit. The final decision is pending recommendations from an interministerial committee.
Semafor, however, runs with a "scoop" that SA is considering hosting the BRICS summit online to avoid Putin's potential arrest. The US-based online publication says the virtual summit would still include most events in South Africa, but the leaders' meeting would be held online. It says other options being considered include Putin attending without arrest, changing laws to ignore the warrant, or China hosting the summit. South Africa aims to avoid alienating its BRICS partners while navigating national interests.
SARB Governor warns about impact of ANC stance on Russia
SA Reserve Bank Governor Lesetja Kganygo repeated in Parliament yesterday that the country's neutral stance on Russia's invasion of Ukraine could have financial consequences. Appearing before the Standing Committee on Public Accounts (SCOPA), Kganyago highlighted that the country's non-aligned position may lead to a threat to its participation in the global financial system, potentially resulting in secondary sanctions and a halt in capital inflows. He also emphasized the need for South Africa to address its Financial Action Task Force (FATF) greylisting and take remedial actions to restore financial stability within the next two years.
The SARB also announced this morning that South Africa's gross gold and foreign exchange reserves fell by $424m in May to $61.3bn. It says this was mainly due to a decline in the gold price, valuation adjustments from US dollar appreciation and foreign exchange payments by the government.
AI outperforms traditional models in predicting breast cancer risk.
Artificial intelligence (AI) has demonstrated superior accuracy in predicting breast cancer risk compared to traditional methods, offering potential for earlier diagnosis and improved preventive measures, according to a study published in Radiology. By analysing mammograms using five AI algorithms, the research found that AI models surpassed the standard Breast Cancer Surveillance Consortium (BCSC) in predicting zero to five-year risk. The study highlights the promising role of AI in healthcare, particularly in radiology, though it emphasises the importance of human oversight and regulatory controls before widespread integration.