OPINION: Will 2020 be the tipping point year for South Africa?
Nuclear companies are not ordinary businesses.
The untold damage an unexpected nuclear accident can have on the society it serves, the complexity of the technology, and the possibility of using nuclear capacity to make weapons of mass destruction, mean it is one industry that is closely monitored and inspected by global oversight institutions, and these companies are supposed to operate in highly regulated environments.
According to a source I spoke to last week, all this meant zip to the predatory political leadership at the time who ran Necsa into the ground through ineptitude and greed.
Unfortunately, this type of story has become common for our state-owned institutions. Think of the unprecedented grounding of flights by SAA, the downgrading to junk status of the Land Bank’s credit rating by Moody’s, the continuing issues at power utility Eskom - and all of that was only last week.
The common denominator is ANC cadre deployment, which has allowed opportunists, both financial and political, to ascend to positions that should normally be occupied by skilled highly professionals or life-long, well trained bureaucrats.
I mention this only to put some of last week’s good news in perspective.
Not only did the government make some proper new appointments to the Necsa board, but President Cyril Ramaphosa said loud and clear that ANC political deployment in the public services could no longer be at the expense of critical skills that might be required.
The President also emerged unscathed from an ANC lekgotla, despite earlier fears that the party might be split apart from a faction of the radical left.
The ANC has spoken about changing its cadre deployment policies before, but this time there does seem to be some thought, and indeed, some initial action, behind the words.
Many commentators have described 2020 as a tipping point year for South Africa, in terms of getting its economy back on track, and its declining fiscal situation in order. The first few weeks have been promising - long may it continue!
On the JSE, the weak economic outlook means that businesses that generate most of their income from within the borders will likely face another tough year.
However, political and policy reforms remain on track, albeit a little slowly, and this should increasingly drive business and consumer confidence this year.
The share prices of many locally-facing stocks are low, but should start offering opportunities for value-focused investors. Shoprite might be one share to consider.
Its share price increased 1.52 percent to R121.93 on Friday morning, trading on a price:earnings (* :e) ratio of 15.6, only marginally up on the JSE as a whole. In the UK, grocery market leader Tesco trades a * :e ratio of 19, and in the US, Costco’s * :e ratio is at 37.9.
Clicks’ share price was up 0.11 percent to R253.04, but on a * :e ratio of more than 37 one wonders how much more value can be extracted from the share price. Consider this: its share price has risen steadily from only R24.63 10 years ago,
Leading automotive group Motus Holdings’ share price was down 0.26 percent to R84.02 on Friday morning, trading on a lowly * :e ratio of 8.3. The share is also trading at a slight premium to net asset value per share of around 62 cents.
The National Association of Automobile Manufacturers of South Africa predicts car sales to rise 2 percent this year - but it is early in the year.
Attacq, best known for its Waterfall City development in Midrand, traded 1.33 percent higher at R11.40 on Friday morning, well below net asset value per share of R22.14. Listed property was out of favour on the JSE last year and the year before, but valuations will improve once the economy grows.
Also likely to get a lift from improved consumer and business confidence is banking market leader by size, Standard Bank.
Its share price increased 0.81percent to R163.61 on Friday morning, and was trading at a * :e ratio of 9. Its share price has fallen in line with other banks since May last year, when Standard traded as high as R202 per share. Its 12-month high sits at R210.22.