Newly-appointed Eskom chief executive Tshediso Matona is the right person for the job, the Black Business Council (BBC) said.]]> |||
Johannesburg - Newly-appointed Eskom chief executive Tshediso Matona is the right person for the job, the Black Business Council (BBC) said on Wednesday.
It cited his experience as a leader, a public servant, and accounting officer for the departments of trade and industry and public enterprises, the BBC said in a statement.
Public Enterprises Minister Lynne Brown announced Matona's appointment on Wednesday.
Matona is currently director general at the public enterprises department.
The BBC said under Matona's stewardship the department enjoyed years of clean audits.
He played the role of activist shareholder, ensuring some state-owned companies in the public enterprises department's portfolio improved their performance and profitability.
It hoped that under Matona's leadership Eskom would improve its communication with important parties such as big business and small and medium enterprises.
“The BBC wishes Mr Matona great success in his position and will always be willing to support Eskom in its efforts to provide a reliable and affordable service to South African consumers,” the council said. - Sapa]]>
South Africa's rand recorded a fourth straight day of losses against the US dollar.]]> |||
Johannesburg - South Africa's rand recorded a fourth straight day of losses against the US dollar on Wednesday, pressured by the downgrade of the country's four largest banks and stubbornly high inflation.
The market woke up to news on Wednesday that Moody's had cut by a notch the long term local currency deposit ratings for Standard Bank of South Africa, FirstRand, Nedbank and Absa Bank, the local operation for Barclays Group Africa.
The ratings agency cited the recent R17 billion bailout of African Bank by the central bank as a reason for the downgrades.
The currency suffered another broadside as month-on-month consumer inflation quickened to 0.8 percent in July from 0.3 percent in June. Monthly prices slowed year-on-year but remain above the central bank's 6 percent target.
The rand eased to 10.6795 by mid-morning on news of the banking downgrade and by 17:05 SA time had reached its softest in a week of 10.7000 versus the greenback after the inflation release, easing 0.5 percent from its New York close.
The rand also weakened in-line with a broader emerging market (EM) slide against the US dollar which was strengthened by positive housing data.
“The negative impact of the cuts has been masked by the fact that a lot of EM currencies are underperforming,” said Sean McCalgan, an economist at ETM Analytics.
“It is apt though that the downgrades took place as a response to the risks that the banks face in these sorts of weak growth conditions, where consumer finances are under a lot of strain.”
Government bonds strengthened slightly, with yields on both the 2015 paper and the longer-dated 2026 paper down 1.5 basis points, to 6.575 percent and 8.245 percent respectively. - Reuters]]>
South African stocks ended a touch higher as gains in bourse heavyweights such as BHP Billiton offset sharp falls in banks and retailers.]]> |||
Johannesburg - South African stocks ended a touch higher on Wednesday as gains in bourse heavyweights such as BHP Billiton offset sharp falls in banks and retailers.
Banks featured on the decliners' list, a day after Moody's downgraded the big four lenders, citing a lower likelihood of support from the central bank to protect creditors in the wake of African Bank's debt crisis.
Standard Bank dropped 1.54 percent, Barclays Africa gave up 2.1 percent, FirstRand was off 1.3 percent and Nedbank lost 0.9 percent.
But some investors say the step taken by Moody's was not warranted because the four banks had different business models to the collapsed African Bank.
“Maybe this is a little bit premature. They probably could have waited another six or so months to see what happened,” said Richard Segal, emerging markets strategist at Jefferies.
On the upside, bourse and mining heavyweight BHP Billiton was up 1.6 percent at 353.14 rand, recouping some of the losses suffered in the previous session when it held off on a share buyback.
Rival Anglo American added 1.19 percent, tracking higher metal prices.
The JSE Top-40 index edged up 0.25 percent to 46,313 and the broader All-share index inched up 0.14 percent to 51,436.
With more interest rate hikes predicted, investors also offloaded retailers as fears grew the spending power of households, whose debt to disposable income is at worryingly high levels, would diminish further.
Massmart plunged 8.6 percent to 134 rand after the unit of Wal-Mart flagged a 29 percent decline in first-half profit.
Rival Shoprite, which posted its slowest profit growth in 15 years on Tuesday, fell 2.4 percent to 142 rand.
Trade was active with 165 million shares trade, slightly below last year's daily average of 176 million shares, according to preliminary bourse statistics. - Reuters]]>
Global steel production rose 1.7 percent in July over 12 months, driven mainly by growth in Chinese output.]]> |||
Paris - Global steel production rose 1.7 percent in July over 12 months, driven mainly by growth in Chinese output, the World Steel Association (WSA) said on Wednesday.
Steel is used in most industrial processes and is an important indicator of economic activity.
The latest data showed that steel production reached 136.8 million tonnes last month.
Production rose by 1.5 percent in China which accounts for half of all steel made worldwide.
Ukraine, which has seen several months of intense fighting between pro-Russian rebels and government troops in its restive eastern region, posted a net loss in production, down 11.7 percent to 2.5 million tonnes.
Most of the steel produced in Ukraine is made in the east of the country which is the focus of unrest by pro-Russia separatists.
Output by Russia rose by 8.1 percent to 6.2 million tonnes.
Production was stable in Japan at 9.3 million tonnes but grew 1.5 percent in South Korea to 68.3 million tonnes and India's output grew 1.7 percent to 7 million tonnes.
Output fell 2.0 percent across the European Union to 13.3 million tonnes, although Germany's production rose 1.5 percent to 3.4 million tonnes and France's also grew 1.6 percent to 1.4 million tonnes.
Italy's annual production fell 3.6 percent to 2.0 million tonnes.
The United States saw an increase in steel production, up 2.3 percent to 7.6 million tonnes.
The WSA said the capacity utilisation rate of its 65 member countries reached 75.4 percent, down 2.9 percent from June and 1.2
percent annually. - Sapa-AFP]]>
A year after the re-election of longtime leader Robert Mugabe, the country is facing new financial hardships.]]> |||
Harare - It is 4 a.m. and people are already lining up outside Zimbabwe's main passport office - four hours ahead of opening time - in hopes of securing a passport that will allow them to escape their country's dearth of opportunities and search for work abroad.
Several million Zimbabweans left for South Africa and other countries during past economic turmoil.
Now, a year after the re-election of longtime leader Robert Mugabe, the country is facing new financial hardships.
Zimbabwe's unemployment rate is estimated at 80 percent, pushing many people try to earn a living as street traders.
An informal economy has mushroomed around the passport office, where young men charge $5 (R54) to hold a place in the line for those eager to return to bed for a few hours.
By 5 am, the line stretches for blocks.
Hustlers point potential customers to a makeshift studio where a generator powers a photocopying machine and instant photo service.
“Make sure you have copies of your birth certificate, national ID and two passport photos ready to avoid delays,” they say.
Zimbabwe, a once-prosperous nation of 13 million people in southern Africa, has struggled since 90-year-old Mugabe defeated rival Morgan Tsvangirai in a 2013 vote marked by allegations of irregularities.
Mugabe's victory ended an uneasy power-sharing deal with the opposition, but foreign investors have been deterred by concerns about corruption and government policies to force foreign-owned and white-owned businesses to cede 51 percent of their shares to black Zimbabweans.
Hundreds of manufacturing companies have closed in the past year.
Finance Minister Patrick Chinamasa has acknowledged that the economy is struggling, cutting growth forecasts for 2014 by half to 3.1 percent.
The World Bank forecasts 2 percent.
The fallout is putting pressure on the passport department, which is unable to meet demand even though it prints 3,000 passports a day.
“There is a high demand for passports in Zimbabwe as people are leaving to escape the economic crisis the country is facing,” Registrar General Tobaiwa Mudebe, who heads the passport department, told a parliamentary committee in July.
Zimbabwe's exports are faltering.
A massive debt means Zimbabwe cannot borrow enough money, even from allies such as China, to make ends meet.
The United States has sanctions against Mugabe and his closest associates over human rights concerns.
The government, which has blamed economic woes on Western sanctions, adopted the US dollar as an official currency in 2009 to curb inflation that had soared to more than 1 billion percent.
Torn $1 and $2 notes are now the major currency on the streets.
A growing scarcity of dollars has led some pro-government analysts and politicians to call for a return to the Zimbabwean currency.
Passports are only issued at the Harare office, so many people travel long distances.
Felix Zengeya, 30, came from Mutare city, 300 kilometres (190 miles) away, to try to replace his passport and return to South Africa, which has one of Africa's biggest economies.
He had fled economic hardship in Zimbabwe in 2008, but returned when the economy improved.
But now he has given up hope of getting a job in Zimbabwe's diamond mines.
He would leave his wife and 4-year-old daughter if he heads south again.
South Africa recently tightened immigration rules which could have frozen Zengeya and tens of thousands of other Zimbabweans living in that country under a 2009 special dispensation.
But after pleas from Mugabe's government, South Africa has agreed to extend the special allowance for Zimbabwean immigrants to stay until 2017.
Yet, for Zengeya, his mind had been set even before the decision to relax immigration rules for Zimbabweans was made.
“I am going,” he said.
“Even without papers, I can find work.” - Sapa-AP]]>
Gautrain bus drivers went on strike, forcing certain bus services to be suspended, the Bombela Concession Company said.]]> |||
Johannesburg - Gautrain bus drivers went on strike on Wednesday, forcing certain bus services to be suspended, the Bombela Concession Company said.
“Please note that a wildcat strike by Gautrain bus drivers in Johannesburg has resulted in the suspension of bus services from Park, Rosebank, Sandton, Midrand, and Rhodesfield stations,” spokesman Errol Braithwaite said in a statement.
“There will be no bus services on any of these routes for the rest of the day (Wednesday).”
Braithwaite urged commuters to follow Gautrain on social media so that service information could be distributed as quickly as possible.
“Train services are unaffected. Further information will be distributed as soon as it becomes available.” - Sapa]]>
Heineken, the Amsterdam-based brewer, has reported first half earnings that show a small drop in both revenues and profits.]]> |||
Amsterdam - Heineken NV, the Amsterdam-based brewer, has reported first half earnings that show a small drop in both revenues and profits - but says its underlying performance was good.
Net profit was 631 million euros (R9 billion), from 639 million euros in the same period a year ago.
Sales were down 1.4 percent to 10.2 billion euros, which Heineken, the largest brewer by sales within Europe, said was partly due to the strong euro.
Stripping out currency and acquisition effects, Heineken said beer prices were up 1.5 percent, and volumes increased 3.9 percent.
Chief executive Jean-Francois van Boxmeer said Wednesday the company's operations grew on a like-for-like basis in almost all regions in the first half but warned that growth in underlying profit and revenues would “moderate” in the second half. - Sapa-AP]]>
Moody's surprise downgrade of South Africa's four biggest banks sent shares in the lenders lower and piled further pressure on Africa's most developed economy, analysts said.]]> |||
Johannesburg - Moody's surprise downgrade of South Africa's four biggest banks sent shares in the lenders lower on Wednesday and piled further pressure on Africa's most developed economy, analysts said.
South Africa's central bank criticised the one-notch cut for the local currency deposit ratings for Standard Bank of South Africa, FirstRand, Nedbank and Absa Bank - Barclays Africa Group's local operation.
Local economists also questioned the downgrade to Baa1 - Moody's eighth highest investment rating - saying it did not take into account the banks' balance sheets.
Moody's decision, announced on Tuesday, followed the collapse of a much smaller lender, African Bank, earlier this month, which needed a $1.6 billion (R17 billion) bailout from the South African Reserve Bank (SARB).
The ratings firm said SARB had limited the risk of contagion but showed it was willing to impose loses on creditors.
South Africa's banking index was down 1.8 percent by 16:20 SA time, with Barclays Africa Group off 2.4 percent, Standard Bank off 2.2 percent, and FirstRand and Nedbank both off 1.5 percent.
“The biggest four financial institutions in South Africa represent an entirely different business model to (African Bank),” said Razia Khan, Head of Africa Research at Standard Chartered.
Analysts said the downgrade was expected to rein in lending and could even lead to a cut in the sovereign rating as the economy suffers from the fallout.
In June, Standard & Poor's cut South Africa's credit rating while Fitch affirmed the rating but put the country on its negative watch.
South African consumers are struggling with rising interest rates, high inflation, rising debts and job insecurity at a time when one in four people are without work.
Retail sales contracted month-on-month in June, growth in households' disposable income has slowed and banks have pulled back from extending credit, instilling tighter lending criteria partly to stave off bad loans.
“Weak economic growth appears to have been a substantial driver of Moody's ratings action. There is concern about consumer affordability pressures and high consumer debt levels,” said Khan.
The South African Reserve Bank (SARB) has repeatedly cut its economic growth forecast, which now stands at 1.7 percent for this year, as a series of strikes, including a five-month long work stoppage in the platinum sector, hurt growth.
With second quarter GDP data due next week, economists are mixed about the ability of the economy to avoid a recession, after the economy contracted in the first quarter.
But economists said South Africa's banks face stringent regulations, which had helped most of them weather the global financial crisis better than lenders in more developed markets.
South African banks have a capital adequacy of 14.87 percent and impaired advances constitute 3.57 percent of gross loans, according to the central bank.
Patrice Rassou, Cape Town-based head of equities at Sanlam Investment Management, said Moody's was caught off guard by the problems at African Bank, which was crushed by bad loans as its core market of low-income borrowers failed to repay debts.
“Now they are trying to remedy that by painting everyone with the same brush. The key issue is why didn't they see the problems before hand.”
The SARB said it disagreed with Moody's reasoning, arguing that the country's banking sector remained “healthy and robust” despite the problems at African Bank.
Although South Africa's big four banks had participated in the unbridled unsecured lending that characterised much of 2010-2012, these loans accounted for just over a tenth of overall credit exposure, analysts said.
The downgrades might now impinge on the lenders' ability to raise offshore money, some analysts said.
“On a comparative basis, South African banks will find their ability to compete for business in Africa curtailed since the cost of funding, particularly non-rand funding, will increase,” said Elena Ilkova, a credit analyst at Rand Merchant Bank. - Reuters]]>
US stocks were little changed after two days of gains, ahead of the release of minutes from the most recent Federal Reserve meeting.]]> |||
New York - US stocks were little changed Wednesday after two days of gains, ahead of the release of minutes from the most recent Federal Reserve meeting, as investors shrugged off bleak earnings forecasts from some retailers like Lowe's and Target.
Investors will peruse the Fed minutes, which will be released at 2:00 p.m. (20:00 SA time), for clues on how soon the central bank plans to hike interest rates.
At a two-day meeting of the Federal Open Market Committee in July, the Fed had trimmed its monthly bond-buying program by an additional $10 billion (R107 billion).
An annual meeting of top central bankers in Jackson Hole, Wyoming, from Thursday through Saturday will also be eyed for possible insight into the path for US monetary policy.
“We know what is going to happen this year, we are looking into next year and for that we need the sort of stuff that comes out of this conference,” said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.
The benchmark S&P 500 is less than 10 points off an all-time intraday high of 1,991.39 reached on July 24.
Lowe's Companies shed 0.4 percent to $51.29, paring earlier losses after it cut its full-year sales forecast.
The world's No. 2 home improvement products retailer reported better-than-expected second-quarter results.
Fellow retailer Target Corp rose 0.9 percent to $59.78, shaking off initial declines after second-quarter earnings fell shy of analysts' estimates and the company cut its full-year outlook.
The S&P retail index gained 0.3 percent and was on track for its fifth gain in six sessions.
Lowe's and Target “are companies with specific issues as opposed to representing what is going on in the broader retail market,” Forrest said.
“(Target) has a path out of it, they've changed the leadership that brought these results and Wall Street is always willing to overlook someone else's results.”
The Dow Jones industrial average rose 13.45 points or 0.08 percent, to 16,933.04, the S&P 500 gained 0.42 points or 0.02 percent, to 1,982.02 and the Nasdaq Composite dropped 7.03 points or 0.16 percent, to 4,520.49.
American Eagle Outfitters was a bright spot in the retail sector after second-quarter results beat expectations and it forecast third-quarter earnings that were in line with the current estimate.
Its shares climbed 7.1 percent to $12.41.
Hertz Global Holdings tumbled 10.8 percent to $28.15 after the rental car company withdrew its full-year financial forecast and said it expects 2014 results to be “well below” its previous guidance due to business challenges and costs. - Reuters]]>
The poor would feel the effects of changes in consumer price inflation (CPI) more severely than others, FNB said.]]> |||
Johannesburg - The poor would feel the effects of changes in consumer price inflation (CPI) more severely than others because of the higher weighting of food in their expenditure baskets, FNB said on Wednesday.
“However, this situation may be slowly turning for the better as food price inflation seemingly starts to turn the corner downward,” household and property sector strategist John Loos said in a statement.
The lower income group had a CPI rate of 6.76 percent in June, which declined to 6.61 percent in July.
“However, while starting to slow, this rate remains higher than the very high expenditure group's 6.3 percent in July, with the other three expenditure groups somewhere in between,” Loos said.
“For the time being, therefore, the lowest income groups continue to experience the highest consumer inflation.”
Earlier on Wednesday, Statistics SA said the CPI for all urban areas was 6.3 percent in July compared to 6.6 percent in June.
On average, prices increased by 0.8 percent between June and July this year.
Loos said food and non-alcoholic beverages remained one of the most troublesome areas of CPI, with the inflation rate of this sub-index well above overall CPI at 8.83 percent year-on-year.
Of some consolation, especially for lower income groups, was that the sub-index's year-on-year rate had not become worse in the past two months.
One of the implications of the latest CPI figures was that FNB expected a further 25 basis point interest rate hike before the end of 2014, bringing the prime rate to 9.5 percent.
They further expected it to rise to 10.25 percent at the end of 2015.
CPI was forecast to average 6.2 percent for the entire 2014, and move back to an average of 5.5 percent in 2015.
This was based on the assumption that the rand performed fairly well, and that its year-on-year rate of depreciation would gradually diminish, now that a very weak base had been created.
StatsSA said most municipalities introduced new tariffs in July each year, resulting in housing and utilities contributing 0.5 of the 0.8 percent price increase.
Electricity tariffs increased seven percent, slightly lower than the maximum 7.4 percent stipulated by the National Energy Regulator of SA.
Water and assessment rates, which were not regulated, increased more, by 9.2 percent and 7.2 percent respectively.
The petrol price increased by a moderate 29 c/l in July, which brought the annual increase in petrol down to 8.3 percent, from the short-term peak of 14.3 percent seen two months ago.
Last July, the annual increase in the petrol price was 22.6 percent.
Food inflation appeared to be moderating as prices dropped from last month in the bread and cereals (one percent), meat (0.3
percent) and fats and oils (1.4 percent) categories.
The drops were largely as a result of improved harvests of grains (maize and wheat) and oil-bearing plants (sunflowers). Maize forms a large part of the feed for cattle and chickens. - Sapa]]>