Pietermaritzburg Chamber of Business

IMPORTS LEAVE A BITTER TASTE WITH SUGAR INDUSTRY

About 2 000 members of the sugar industry are set to descend on the department of trade and industry’s campus in Tshwane today, in a bid to highlight the plight of an industry on the "brink of collapse" due to a flood of imports. This comes as the industry is appealing to the International Trade Administration Commission (Itac) to expedite its decision on the application by the South African Sugar Association (Sasa) for higher tariffs on imported sugar. Thirty busloads of small-scale farmers from KZN and Mpumalanga, as well as large commercial growers, are expected to participate in the march. Representatives from Sasa, the South African Sugar Millers Association, the South African Farmers Development Association (Safda) and the South African Cane Growers Association will also be participating in the march and making oral submissions to an Itac hearing on Sasa’s tariff application. In February, Sasa applied for an increase to about US$866 per tonne from the current dollar-based reference price of US$566 per tonne of sugar, which is the basis on which import tariffs are calculated. Sasa says this price is below the cost of production. The current applied duty was 55% compared to the maximum bound rate of 105%, which is allowed in terms of SA’s commitments to the World Trade Organisation. Itac said earlier that in 2016-17, imports of sugar increased 253% to reach a three-year high. Imports from Brazil and the United Arab Emirates accounted for about 49% and 25%, respectively, with duty-free sugar from Swaziland also representing a large share. (BDLive)

FOREIGNERS DUMP BONDS ON EMERGING MARKET SENTIMENT

Foreign investors’ holdings of South African bonds have dropped to the lowest level in more than a year following a record sell-off since the beginning of May, and a senior Treasury official says there could be worse to come. Non-residents held 38.9% of government debt as of June 22, down from as high of 42.8% in March, according to Bloomberg calculations based on Treasury data to April and JSE data for May and June. Foreigners piled into South African debt in Q1 2018 on optimism that new president Cyril Ramaphosa would undo the economic havoc wreaked by his predecessor, Jacob Zuma. But the flows started dwindling in April before turning into a flood of sales, reaching a net ZAR56.5 billion since the beginning of May, according to JSE data. The outflows occurred against the backdrop of a broad sell-off in emerging market assets sparked by a stronger dollar and rising US rates, which weakened the case for high-yielding investments. (Bloomberg)

MARKETS AT ODDS OVER INTEREST RATE HIKE

Markets are pricing in the possibility of an interest rate hike in 2018 as the Rand falls, despite economists saying it is unlikely as inflation expectations have not breached the upper end of the Reserve Bank’s target range. The Rand has slumped nearly 9% against the US Dollar year to date, hurt by global risk-off sentiment and poor domestic economic data. A Reuters poll showed last week that economists expect the Bank to keep its repo rate unchanged at 6.5% until 2020. The bank said in May it would maintain its vigilance to ensure inflation remained within the 3%-6% target range and would adjust the policy stance if necessary. The bank forecasts consumer price inflation to average 5.1% in Q4 2018 and 5.2% in the last quarters of 2019 and 2020. The next interest rate decision and inflation forecasts are due on July 19. The consumer price index slowed to 4.4% year on year in May as food price rises eased. (BDLive)

GORDHAN TO KICK OFF SARS STAFF EXODUS PROBE

The enormous exodus of senior staff at the South African Revenue Service (SARS) since 2014 will dominate the first leg of the Judge Robert Nugent public hearings into the administration of the tax agency that is set to start today. The highly anticipated inquiry into tax administration and governance at SARS will also have focus on restructuring at the agency during the term of suspended commissioner Tom Moyane. The restructuring is linked to the exodus of senior or experienced employees. The inquiry is also set to delve into allegations about a controversial ZAR70 million tax refund paid to the politically connected Gupta family. Former finance minister Pravin Gordhan is set to be the first to make submissions to the inquiry (BDLive)

JOINT TEAM TO STUDY SOE FUNDING NEEDS

A joint team of banking and government officials has been established to look into the immediate funding needs of the state-owned enterprises (SOEs) that are facing difficulty in meeting their obligations to pay staff and suppliers. A joint team will also look at new funding options of state-owned companies for the future, as well as their medium-to long-term structural issues. The initiatives come out of a meeting between public enterprises minister Pravin Gordhan, finance minister Nhlanhla Nene and CEOs of banks and asset managers in which the government appealed to the financial sector to assist SOEs in difficulty. The teams would look at both immediate liquidity issues and long-term funding arrangements, which would include looking at restructuring, Coovadia said yesterday. (BDLive)

GRADUATES PLUMB FOR GOVERNMENT AND PARASTATALS

Government and parastatals are among the top ranking employers of choice for university students and young professionals, according to research. Employer branding organisation Universum conducted research to determine the most attractive employers for South Africans in 2018 and interviewed over 45 000 university students and about 22 000 young professionals and considered key sectors including business and commerce, technology and engineering, and natural sciences. It provides insights on how talent evaluates employer brands. The research showed that government and parastatals featured prominently in categories and that having high brand awareness does not make a potential employer attractive to job seekers. (Fin24)

QUILTER’S RAND-HEDGE APPEAL FINDS FAVOUR WITH INVESTORS

The share price of Old Mutual’s former wealth management unit, Quilter, leapt as much as 6% on its JSE debut yesterday, as investors cheered the addition of another foreign currency earner to the exchange. The listing, which gives Quilter a market value of close to ZAR51 billion, marks the final stages of Old Mutual’s break-up. Quilter’s share price closed at ZAR26.80, 3.5% ahead of its placement price of ZAR25.88. Old Mutual Ltd, which holds Old Mutual Emerging Markets and the group’s majority stake in Nedbank, will list in Johannesburg and London today. The listings are a pivotal part of Old Mutual plc’s “managed separation process”, which began in March 2016. (BDLive)

NEW CEO IN A HURRY TO CURE ASCENDIS’ ILLS

Newly-appointed Ascendis CEO Thomas Thomsen has wasted little time in writing a new prescription to reinforce cash flows and restore the balance sheet at the ailing healthcare group. An investor update yesterday showed plans are well under way to dispose of two non-core and underperforming South African operations and a sizeable pharmaceutical production plant in Gauteng. Ascendis — which grew rapidly by making an array of local and offshore acquisitions over the past 10 years — has fallen out of market favour as investors increasingly fretted about expensive offshore acquisitions and growing debt levels. The share price peaked at R28 in September 2016 and has lost more than 50% in the past year. But Ascendis shares responded positively to Thomsen’s restructuring plans, recovering 3.7% to ZAR10.94, but still substantially below the ZAR20/share at which a ZAR750 million rights issue was pitched in 2017. (BDLive)

CRYPTOCURRENCY WITH A CONSCIENCE TO AID RHINO FIGHT

Rhino Coin, described by its founders Alexander Wilcocks and Jacques du Randt as a cryptocurrency "with a conscience", has been launched - with the aim of generating a new, untapped source of revenue to aid rhino conservation efforts. The key motivation behind the cryptocurrency is to save the rhino by trying to create a steady and sustainable source of revenue for rhino conservation, according to Wilcocks. Yesterday, the Rhino Horn was trading at ZAR119 per coin, a 25.26% price increase from the day of the launch, where it was trading at ZAR95 per coin. (Fin24)

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