South Africa collected R986.4 billion in revenue during the 2014/15 fiscal year, Minister Nene revealed.]]> |||
Pretoria - South Africa collected R986.4 billion in revenue during the 2014/15 fiscal year, Finance Minister Nhlanhla Nene said on Wednesday, but did not give an estimate for expenditure as had been expected.
Nene told a news conference he would give a budget deficit forecast for 2014/15 in June. Treasury Director-General Lungisa Fuzile said the estimate for the deficit was likely to be narrower than the shortfall predicted in February.
In its budget review in February, the Treasury predicted a R152.4 billion shortfall for the year which ended on March 31, representing 3.9 percent of gross domestic product.
“The deficit for 2014/15 will certainly be lower than the February budget estimate,” Fuzile told a news conference.
“We won't be able to give any estimates now in the event of any economic events that may delay us from achieving our fiscal targets. If something does happen we will be able to revisit our expenditure and revenue plans,” he said.
Nene said in February he would raise income tax rates for the first time in 20 years to boost revenue, as Africa's most developed economy struggles to grow due to structural constraints including chronic power shortages.
The revenue collection outcome for 2014/15 compared with a R993.6 billion target set in February, Nene said.
Shares reversed early losses after data showed manufacturing activity across the euro zone accelerated.]]> |||
London/Paris - European shares reversed early losses after the first major data of the new quarter showed manufacturing activity across the euro zone accelerated faster than previously thought last month.
Markit's final March manufacturing Purchasing Managers' Index (PMI) was at a 10-month high of 52.2, beating a preliminary reading of 51.9, adding to signs the bloc's economy is recovering.
After Chinese data rattled markets on Wednesday, German manufacturing PMIs beat a preliminary reading and French data showed a less severe contraction than first estimated.
Spanish and Italian PMIs helped both national blue-chip indexes up 1 percent, hitting their highest levels since 2010.
At 10:01 GMT, the FTSEurofirst 300 index of top European shares was up 0.8 percent at 1,597.97 points.
The benchmark index surged 16 percent in the first quarter as the European Central Bank pumped out money and the euro weakened.
The oil price fall has eroded earnings growth forecasts for 2015 to a 4.7 percent rise, with downgrades led by oil majors. However, the economic boost of lower energy prices could reverse the downgrade trend.
“The improving economic outlook, for example today's stronger PMI data, coupled with lower input costs (particularly energy costs) and higher overseas earnings thanks to the weaker euro, will drive an earnings upgrade cycle,” Neil Wilkinson, European fund manager at Royal London Asset Management, said.
Shares in Swiss chocolate maker Barry Callebaut surged 7.9 percent after it reported higher half-year sales and profits, as cost cuts helped counter the impact of the surging Swiss franc. It also confirmed its mid-term targets subject to currency swings.
Neopost bucked the trend, dropping 6.2 percent after posting disappointing results.
The FTSEurofirst 300's top faller was Fortum, down 7 percent as it traded “ex-dividend” without entitlement to the latest payout and was also cut to “underperform” from “neutral” by Macquarie.
Patrick Craven, who has headed up Cosatu's communications unit for decades, has decided to leave the federation.]]> |||
Johannesburg - The dismissal of former Cosatu general secretary Zwelinzima Vavi has resulted in its first floor crossing.
Patrick Craven, who has headed up Cosatu’s communications unit for decades, has decided to leave the federation.
This follows Vavi being dismissed on Monday on for a range of reasons, including not fulfilling his duties.
Craven’s decision to leave Cosatu was apparent when journalists arrived at a press conference to be addressed by Vavi in Johannesburg and he was outside welcoming them.
He told reporters he had no choice but to leave South Africa’s largest labour federation.
“I’m no longer employed by Cosatu. I handed in my resignation yesterday,” Craven said.
He was uncomfortable justifying the reasons for Vavi’s axing on behalf of Cosatu as he would have to “defend the indefensible”.
He also said Cosatu was destroying “freedom” by ordering its affiliates not to attend meetings with Vavi or give him a platform.
Craven’s decision does not come as a surprise. He and Vavi are widely known to have a close relationship.
It is unclear what role Craven will now fulfil.
Axed Cosatu general secretary Zwelinzima Vavi believes he is innocent - and he’s busy weighing his options.]]> |||
Johannesburg - Axed Cosatu general secretary Zwelinzima Vavi believes that he was unfairly dismissed and there is a chance he will fight it.
He told reporters in Johannesburg on Wednesday that he remained convinced that he had done nothing wrong, let alone break the law as alleged by forensic auditors.
“I am further in consultations on whether or not I should challenge my extremely irregular, illegal and completely unjustified expulsion as general secretary of Cosatu,” Vavi said.
He said the law dictated that he had to be subjected to a hearing by an independent person before any action was taken.
Vavi is also considering going to court on what he says is defamation by Cosatu’s central executive committee.
He was in consultation with his lawyers and family on what to do.
Vavi was flanked by six leaders from Cosatu’s affiliates at the press conference.
They and others would hold a meeting later this month to consider options.
While speculation is rife that Vavi will head up another federation, he would not answer questions on this. Instead, he said it would be up to workers to form a federation.
Vavi and his allies are planning several meetings across the country.
Group Labour Editor]]>
An interest rate increase is what’s needed to stem the rand’s worst run of quarterly declines on record, says Bidvest Bank.]]> |||
Johannesburg - An interest rate increase is what’s needed to stem the rand’s worst run of quarterly declines on record, according to Bidvest Bank Ltd. That may not be immediately forthcoming.
The South African currency has weakened against the dollar for 12 consecutive quarters as the Federal Reserve prepares to raise borrowing costs and electricity shortages, low commodity prices and slow global growth burden the domestic economy. The rand’s slide is weighing on local bonds, with foreign investors selling more rand debt than they bought for a third straight quarter, according to data compiled by Bloomberg. The South African Reserve Bank hasn’t raised rates since July.
“If we don’t keep up with the Fed hiking cycle, this currency is going to be taken to pieces,” Ion de Vleeschauwer, chief currency dealer at Johannesburg-based Bidvest, said by phone on March 30. “If the Reserve Bank does not do anything to interest rates this year, then the big numbers” of 13 and 14 may come into play, he said.
South African Reserve Bank Governor Lesetja Kganyago left rates unchanged on March 26 for a fourth successive meeting even as the rand slumped to a 13-year low against the dollar on March 13. While policy won’t be dictated by the Fed, looming inflation threats from rising electricity tariffs and a new tax on gasoline may force the central bank to tighten policy, Kganyago said. The bank doesn’t have a target for the rand and has said it won’t increase borrowing costs to support the currency.
The rand gained 0.4 percent to 12.0817 per dollar as of 9am in Johannesburg, rebounding from a 4.9 percent slump in the first three months of the year. Yields on benchmark rand bonds due December 2026 dropped three basis points to 7.76 percent. The yield climbed 18 basis points in March to 7.8 percent, adding to a 50 basis point rise the previous month. Yields could rise to as high as 8.2 percent in the “near term”, according to Nedbank Group Ltd.
Forward-rate agreements predict 33 basis points of rate increases in July, with another 31 basis points by the central bank’s final policy meeting of the year in November. That may be too hawkish, according to Kim Silberman, an economist at Standard Bank Group Ltd., the nation’s biggest lender by assets.
“We maintain our view that rates will remain unchanged in 2015,” Silberman said in a report on March 27. “This is based on our expectation that inflation slows through 2016, from a temporary breach of the target in the first quarter and a peak in February” to average 5.9 percent for the year, in line with the central bank’s forecast, she said.
The central bank predicts the consumer inflation rate will average 4.8 percent this year. Consumer prices rose 3.9 percent in February from a year earlier, remaining inside the bank’s target band for a sixth month.
The rand will probably trade in a range with a mid-point of 12.10 per dollar in the second quarter, Standard Bank said on March 24, compared with a previous mid-point forecast of 11.60. The second-quarter mid-point will probably be 12.35, compared with a previous forecast of 11.70.
With the possibility of the dollar reaching parity with the euro, there is a risk of the rand breaching 13.84 per dollar, the record low from 2001, according to Investec Bank Ltd. Speculation that the Fed will start raising rates in the second half is drawing funds to the dollar and away from higher- yielding assets including rand bonds.
“The domestic currency is at risk of further weakness,” Annabel Bishop, an economist at Investec, said in a client note on March 30. “The ending of quantitative easing in the US has contributed to the domestic currency running substantially weaker to its fair value.”
British Prime Minister David Cameron wants to keep George Osborne as finance minister if the Conservatives win the election.]]> |||
London - George Osborne will remain Britain's finance minister if the Conservative Party wins a closely-contested national election on May 7, Prime Minister David Cameron said on Wednesday.
Osborne has overseen Britain's economic policy since 2010, when he launched an austerity programme, fiercely criticised by some, designed to eliminate the country's deficit. He missed his fiscal targets, but Britain's $2.8 trillion economy has returned to growth ahead of the vote.
When asked in an interview with The Sun newspaper whether Osborne, who is sometimes talked about as a possible successor to Cameron, would remain in his role if the Conservatives won the election, Conservative leader Cameron said: “Absolutely - the team is the team.”
“You don't want to change the person who has driven our economic performance, and has been at the helm of it,” he said.
Osborne has set out a post-election fiscal plan to convert Britain's large budget deficit into a surplus in 2018/19 without increasing taxes, by cutting spending by government departments, and by slashing the welfare bill. His political opponents favour less stringent spending cuts and have looser fiscal targets.
Nedbank Group Ltd has increased Chief Executive Officer Mike Brown’s pay by 7.7 percent.]]> |||
Johannesburg - Nedbank Group Ltd, the South African lender that beat analysts’ profit expectations for a second year, increased Chief Executive Officer Mike Brown’s pay by 7.7 percent to R35.05 million ($2.9 million).
Brown, 48, received a guaranteed package of R7.05 million, short-term incentives of R15 million and long-term share-based awards valued at R13 million, according to the Johannesburg-based lender’s annual report published on Tuesday. Brown was paid R32.5 million in 2013 and R28.7 million the year before that.
Nedbank, which is controlled by Old Mutual PLC, said February 23 full-year profit gained 14 percent to R9.8 billion and earnings per share excluding one-time items climbed 13 percent to R21.27, beating the median estimate of 14 analysts surveyed by Bloomberg. Brown also oversaw Nedbank’s acquisition in 2014 of a 20-percent stake in Lome, Togo-based Ecobank Transnational, Africa’s most geographically diverse lender.
“The 2014 increases to guaranteed packages were informed by an extensive role evaluation and multiple remuneration benchmarking exercises,” Nedbank, South Africa’s fourth-biggest bank, said in the report. “There is also appropriate consideration of calls for restraint in regard to remuneration.”
Nedbank was unchanged at R237.78 a share as of 10.34am in Johannesburg trading, valuing the lender at about R118 billion.
Eskom doesn’t have a permanent CEO, a chairman or enough money to keep the lights on. So now what?]]> |||
Johannesburg - South Africa has a problem in its engine room. Eskom Holdings SOC Ltd supplies about 95 percent of the country’s power and hasn’t got a permanent chief executive officer, a chairman or enough money to keep the lights on.
Eskom said chairman Zola Tsotsi will leave the company on Tuesday. Less than three weeks earlier, he suspended four executives, including CEO Tshediso Matona, and started an audit of the utility. The squabbles come amid delays to new power plants that’s forced Africa’s most-industrialised economy to ration electricity.
Four months of intermittent rolling blackouts have curbed economic output, brought gridlock to city roads and could scare investors already roiled by a weak currency and labour disruptions, according to money managers including Abri du Plessis, who helps oversee the equivalent of about $330 million at Gryphon Asset Management.
“It’s one of our worst nightmares in South Africa from an economic perspective,” Du Plessis said by phone from Cape Town. “It can kill the economy. It’s one of the biggest challenges we’ve had (since the end of white minority rule in 1994),” he said.
South Africa, which through Eskom has the capacity to generate 10 times more power than the continent’s largest economy Nigeria, depends on electricity to run mines that provide its biggest source of foreign exchange. Power is needed to winch workers kilometres underground to dig and to fire smelters that produce chrome and aluminum.
Strikes at platinum mines and in manufacturing for six months last year cut economic growth to 1.5 percent, the slowest pace since a recession in 2009, and prompted Standard & Poor’s and Moody’s Investors Service to downgrade the country’s debt. A quarter of regular blackouts may reduce economic expansion by 1 percentage point this year, according to Bank of America Merrill Lynch.
The rand has weakened 14 percent against the dollar since the start of last year. It hit its lowest level since 2002 on March 13, the day after Eskom suspended its executives to allow for a probe into under-performing power generation, high costs and cash-flow problems.
The yield on the company’s dollar bonds due in January 2021 jumped to a record 6.76 percent on March 13 and S&P cut Eskom’s rating to junk 10 days later.
After not building any major power plants since the 1980s, Johannesburg-based Eskom is now battling strikes and technical set-backs to bringing new facilities online. The 4 764-megawatt Medupi plant is three years behind schedule.
The government plans to sell some state-owned assets to help Eskom meet a R225 billion ($18.4 billion) funding gap. The company has R418 billion in debt and interest due, according to data compiled by Bloomberg. Efforts to limit blackouts are adding to operating costs as turbines normally only used during peak hours are burning R1 billion more in diesel every month. The government announced on Tuesday it will withhold payments to 60 municipalities that owe Eskom about R9 billion.
The wrangling between the board and executives mimic those in other state-owned companies, including the national airline and state broadcaster.
A leadership tussle at South African Airways, which has been put under the supervision of the National Treasury, led to CEO Monwabisi Kalawe being suspended in October. The South African Post Office is also under Treasury administration, while infighting at the state broadcaster, SABC, has resulted in board members being fired.
The divisions in Eskom also revealed disagreements at the top of the ruling African National Congress, which faces municipal elections next year.
While President Jacob Zuma backed the investigation into Eskom and Matona’s suspension, according to the Johannesburg-based Business Day newspaper, senior ANC members were against it, according to two people familiar with the situation. The Presidency said in a statement on Monday it didn’t give any directive to the chairman on Eskom.
“The ANC has become more politicised under the Zuma administration and it’s also become more factionalised and that factionalism is now playing out in Eskom,” Mark Rosenberg, Africa director at Eurasia Group in New York, said Monday.
Zuma’s spokesman Mac Maharaj referred questions to Public Enterprises Minister Lynne Brown, whose spokesman Lionel Adendorf wasn’t immediately available to comment.
Brown on March 25 said she requested an investigation into Eskom’s business, but that the law prevents any political interference in matters dealt with by the Eskom board.
While Eskom doesn’t have any permanent leadership at the moment, groups of ministers and industry experts are trying to fix it.
A “war room” of ministers and officials, led by Deputy President Cyril Ramaphosa, is seeking to deal with the energy crisis. It’s being advised by industry specialists. An independent inquiry will do an audit of the business. Brown is part of a separate inter-ministerial committee dealing with the electricity shortage. And, Eskom’s board of directors remains in place.
“You meet with government officials and they kind of know what the problems are, but there’s never any action to fix it,” Max Wolman, who helps manage $13.5 billion in emerging-market debt at Aberdeen Asset Management PLC, said by phone from London Monday. “We’re not positive on the general outlook of South Africa.”
Apartheid, not the ANC, is to blame for the energy crisis, Zuma told a Cape Town stadium audience at the party’s 103rd anniversary in January. “We are, in fact, solving the apartheid problem, that must be very clear,” he said.
One of Zuma’s predecessors, Thabo Mbeki, in 2007 apologised to the nation because the ANC government had delayed decisions on the building of new power plants, saying that advice from Eskom had been disregarded.
It’s unclear just how bad the situation could be, BNP Paribas Cadiz Securities economist Jeffrey Schultz said by phone from Johannesburg on Tuesday.
“Eskom are scrambling to get this back on the right track,” he said. “Unfortunately, with leadership issues it’s all the more challenging.”
Miner Evraz and transportation group FirstGroup led the rebound on Wednesday after their trading updates.]]> |||
London - UK shares made a positive start to the second quarter on Wednesday, with miner Evraz and transportation group FirstGroup leading the rebound after their trading updates.
Britain's FTSE 100 was up 0.5 percent at 6,808.77 points at 08h36 GMT after a 1.7 percent fall the previous day that trimmed the index's first quarter gains to 3.2 percent. The broader FTSE 350 was up 0.4 percent.
Bank and tobacco stocks, which were among the top fallers on Tuesday, gained sharply. Barclays was the top FTSE riser as it added 2.8 percent, while Imperial Tobacco rose 1.4 percent.
European equities have been supported by a global economic recovery and monetary stimulus by the European Central Bank, a trend that many traders expected to continue in the second quarter of the year.
“The volatility we saw in the last few days was down to the end of the first quarter and repositioning going on in portfolios,” Manoj Ladwa, head of trading at TJM Partners, said.
“Now that we've got that out of the way, it's presenting an opportunity for investors to buy again.”
The index was unchanged after data showing Britain's manufacturing sector grew at the fastest rate in eight months in March.
Shares in FirstGroup, which had hit an all-time low on Tuesday, rose 4.9 percent as analysts and traders were relieved to hear trading was in line with management expectations.
“Following the recent share price weakness we upgrade our recommendation from Hold to Buy, reflecting the attractive underlying value of the company's businesses,” analysts at Panmure Gorfon said in a note.
Russia's Evraz one of the country's largest steelmakers, rose 6.2 percent after saying it would return up to $375 million to its shareholders as part of a tender offer, it said on Wednesday, after its 2014 core earnings rose on a weaker rouble.
On the flipside, oil and gas producer Amerisus fell as much as 26.6 percent, hitting its lowest level in two-and-a-half years, after announcing a fall in proven and probable reserves.
The South African Post Office has dismissed six workers who violated a court order during the 2014 postal strike.]]> |||
Pretoria - Six workers who violated a court order during the 2014 strike that crippled the country’s postal operations were dismissed on Wednesday, the South African Post Office (Sapo) said in a statement.
Sapo said the dismissals followed disciplinary hearings.
In November 2014, the workers were found guilty of violating a Labour Court order prohibiting them from gathering in front of the Tswana Mail centre.
“Under the stewardship of the Administrator, Dr Simo Lushaba, we are committed to constructive engagement based on processes that comply with the laws of our land. We encourage our employees to help avoid similar outcomes at all times by upholding the laws of our country in all their activities,” said Sapo’s acting group chief executive officer, Mlu Mathonsi.
“A key part of this journey is to ensure adherence to legal means of resolving disputes. Whilst noting that there are more cases that await finalisation, we hope not to see any more dismissals. It doesn’t please us to see such outcomes,” said Mathonsi
Sapo said it remained committed to ongoing discussions with unions to achieve a “sustainable labour solution”.