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<p>Tertia Jacobs, Treasury Economist at Investec Corporate and Institutional Banking discusses the reappointment of Lesetja Kganyago as SARB governor and what this means for Eskom bond holders.</p>


What Eskom bond holders urgently require

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<p>Energy and chemical company, Sasol, is reporting impressive numbers for its interim financial performance for the six months ended 31 December 2018. Headline earnings per share are up 32 per cent and mining productivity is also up at a rate of 8 per cent. Joining CNBC Africa for more is Stephen Cornell, Joint Chief Executive Officer at Sasol.</p>


Investec navigates Brexit, SA’s uncertainties

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<p>Mozambique&#8217;s Ex-Finance Minister, Manuel Chang, returns to court tomorrow to fight for his freedom. Chang has been in police custody in South Africa for almost three weeks following his arrest for alleged fraud. The charges related to one of the biggest scandals in Maputo that led the country into default and the economy into tailspin. CNBC Africa&#8217;s Fifi Peters filed this report.</p>


Tracking market reaction to Lesetja Kganyago’s decision to leave repo rate unchanged

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<p>August’s inflation print comes in at a lower than expected, 4.9 per cent y/y.  The decline in alcoholic beverage inflation and transport costs, recorded at 4.6 per cent, proved the main contributors to the dip in CPI. Joining CNBC Africa to unpack the number and what it means for the economy at large is Annabel Bishop, Chief Economist at Investec.</p>


August CPI inflation figure falls on the back of rand weakness

<p>On Wednesday Steinhoff’s former CEO Markus Jooste will give his side of the story as to what led to the demise of one of the world’s largest furniture retailers when he appears in front of parliament, see below. It will be the first time the man who has been described as a megalomaniac and was allegedly responsible for the accounting irregularities at the group will give public testimony since resigning on 5<sup>th</sup> December 2017. Events that precipitated <a href="http://cnbc.africa/insights/steinhoff/2017/12/22/steinhoff-scandal-knocks-12bn-off-value-blow-tycoon-wiese/">the wiping out of billions of dollars of Steinhoff’s market capitalisation</a>. Here are ten facts about Jooste you probably didn’t know revealed in <em>Steinhoff: Inside SA’s Biggest Corporate Crash</em> by James-Brent Styan, which was published this year:</p>
		
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<li>Jooste did not own Steinhoff shares in his own name when he resigned on the 5 December 2017. His wife Ingrid and son Michael, did.</li>
<li>The 68.9 million shares he owned in his name on the 30 September 2016 were transferred into other companies including Mayfair Speculators, his horse racing business, which is part of a holding company named Mayfair Holdings. The entities’ two directors are Jooste and his son-in-law, Stefan Potgieter. The holdings business is owned by Jooste’s personal trust.</li>
<li>In August 2017, just over three months before the collapse in Steinhoff’s share price, notes Brent Styan’s <em>Steinhoff: Inside SA’s Biggest Corporate Crash</em> Jooste and Potgieter declared a dividend in specie from Mayfair Speculators to Mayfair Holdings comprising houses, property developments, shares in other companies and about R200 million cash. The total value of the assets transferred was R1.5 billion.  After Jooste and Potgieter stripped Mayfair Speculators of the majority of its assets, mainly debt and Steinhoff shares remained in the company, that were practically worthless by December 2017. The debt was more than R1 billion and owed to various financial institutions including Investec, Absa and Sanlam Capital Markets. According to <em>Steinhoff: Inside SA’s Biggest Corporate Crash</em>, “At the end of November, just days before the Steinhoff collapse, Potgieter asked Investec for an increase in Mayfair Speculators’ credit facility. Investec extended an amount of R93.4 million and paid it to Mayfair Speculators in late November. This brought the total loan amount to R250 million. The collateral for the additional debt was Steinhoff shares”.</li>
<li>Jooste remains one of the major racehorse owners in the country through his stakes in Mayfair and the Klawervlei Stud farm.</li>
<li>Jooste is still a major shareholder in JSE-listed company, Phumelela. At the end of July 2017 he and Investec’s co-founder Bernard Kantor’s Kalamojo Trading &amp; Investments owned 9.19% of the horseracing company.</li>
<li>A consortium of which Jooste was part of purchased retail tycoon Christo Wiese’s historic farm Lanzerac in the Jonkershoek Valley.</li>
<li>For several years, Jooste worked for the South African Revenue Service specialising in taxation.</li>
<li>In 2011, Jooste received the Vice-Chancellor’s Gold Award from Stellenbosch University. According to <em>Steinhoff: Inside SA’s Biggest Corporate Crash</em>, the award is given to individuals or institutions who have donated more than R5 million to the university.” Only one other individual besides Jooste has been honoured with a Gold Award”, FirstRand’s co-founder GT Ferreira.</li>
<li>Jooste co-owned the farm formerly known as Bengale opposite PSG founder Jannie Mouton’s farm Klein Gustrouw in the Jonkershoek Valley.</li>
<li>Whilst studying at Stellenbosch University, Jooste stayed at the male residence Wilgenhof to which he later donated a black Jaguar.</li>
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Ten facts you probably didn’t know about Steinhoff’s former boss Markus Jooste

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<p>Just over an hour ago, Investec hosted an investor pre-close briefing to discuss what the improved outlook in both our key geographies means for the company.</p>


Koseff reveals discussions with SA FinMin Nene

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<p>CNBC Africa&#8217;s Bronwyn Nielsen and Investec CEO Stephen Koseff discussed how South Africa&#8217;s changing political and economic environment is being received by delegates at the 48 annual WEF meeting in Davos Switzerland.</p>


We need to capture the moment on SA’s positive sentiment – Investec CEO

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<p>Investec says its interim results benefited from a 14.7 per cent appreciation of the average Rand: Pound Sterling exchange rate over the period.</p>


SA, UK difficult for Investec but which is easier?

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<p>Investec says its interim results benefited from a 14.7 per cent appreciation of the average Rand: Pound Sterling exchange rate over the period.</p>


Investec boss worried about SA downgrade

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<p>Investec says its interim results benefited from a 14.7 per cent appreciation of the average Rand: Pound Sterling exchange rate over the period. The Asset Management and Wealth &#038; Investment businesses have benefited from higher funds under management supported by favourable equity markets and combined net inflows of GBP 3.6 billion. Investec CEO, Stephen Koseff joins CNBC Africa to discuss the numbers further.</p>


Investec sees value in Zimbabwe, if it gets its house in order

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<p>Investec Asset Management and RMB Ventures recently went fishing in Botswana. Their catch &#8211; Kamosa &#8211; a Botswana based retailer and consumers goods company. For more CNBC Africa is joined by Peter Baird, Head: African Private Equity, Investec.</p>


Investec, RMB acquire stake in Botswana-based retailer

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<p>There’s a simple way to get South Africa’s economy out of recession. It all boils down to the labour market, says Investec Chief Economist Brian Kantor who joins CNBC Africa for more.</p>


SA in recession: Here is how we can come out of it – Expert

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<p>As we edge closer to the inaugural SheEO SleepOut to take place at the Union Buildings on August 8 &#8211; a day before Women&#8217;s Day.</p>


Investec’s Peggy-Sue Khumalo speaks about SheEO SleepOut challenge

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<p>The ANC policy conference is currently taking place; CNBC Africa takes a look at some of the proposed policies and at how foreign investors view South Africa joined by Stephen Koseff, Chief Executive Officer of Investec.</p>


Investec CEO talks radical economic transformation, restoring investor confidence

<p>The SA economy is in recession – two quarters of consecutive declines in the real distributable pie. The only bright spots are agriculture, which is largely rainfall-dependent, and mining, which is largely commodity price-dependent. These two sectors cannot be directly helped by monetary policy, insofar as interest rates are concerned.</p>
<p>All three rating agencies have made it clear that they would view a weaker growth outlook very negatively.  If South Africa is serious about avoiding further downgrades, the key areas that need to be addressed are the growth outlook and the growing concerns about “institutional quality”. The Reserve Bank can also do little about long-term growth.  That is the job of the rest of government.  Currently the commitment of the broader cabinet to boosting South Africa’s structural growth rate is unclear.  For example, the revised Mining Charter released last Friday will stunt growth in the mining sector for years to come as the industry battles the government in court.</p>
<p>While confidence is lacking at present, the Reserve Bank does have an ability to influence growth in the shorter term, even if it is only cyclically and at the margin.  Given the weakness of growth, this is an important consideration to escape the negative spiral.</p>
<p>The SARB’s mandate is to target inflation.  This mandate has proven to be far more successful and transparent than any rule the SARB has followed historically.  Since 2001, the data shows that the Bank has targeted 5.75% &#8211; just below their 6% ceiling.   With inflation falling sharply, there is growing scope to cut interest rates as the year progresses.</p>
<p>The SARB appears averse to such action.  The Bank is concerned about the outlook for the rand.  The May MPC statement noted that “the risks to the inflation outlook, will be highly sensitive to unfolding domestic political uncertainty.”  As a result, the Bank is opting to remain hawkish.</p>
<p>Why would easier monetary policy, which is focused on getting the policy settings right in an economy be seen as negative? The combination of a strong currency and high real interest rates is clearly negatively impacting on growth.</p>
<blockquote><p>The May MPC statement went on to say that they believe “the current level of the repo rate is appropriate for now…..A reduction in rates would be possible should inflation continue to surprise on the downside.”</p></blockquote>
<p>The data for both growth and prices show that policy settings are too tight.   The result is hot money inflows chasing high interest rate differentials, a stronger rand and ultimately poor economic growth. Disinflation in the economy is undermining profits, hurting wage growth and curbing investments.</p>
<p>Lower interest rates will reduce the incentive for hot money to flow into the local markets. Is the Reserve Bank worrying too much on flows reversing? If SA gets downgraded by both Moody’s and S&amp;P, we expect ZAR120bn to flow out as South Africa is ejected from the WIGBI.  However, will it?  Barclays sold Absa shares worth R36bn at the beginning of June, and the currency didn’t flinch. Setting interest rates on a forecast of the rand(om) is questionable.</p>
<p>An economy that sees cash in the bank producing the best investment returns compared to other investments is indicative of an economy which has overly discouraged both investment and risk-taking entrepreneurial activity. Households have further been squeezed by too high interest rates at a time when tax rates are also rising, further reducing consumption expenditure.</p>
<blockquote><p>Many economies in the developed world are stagnant. They have no levers to pull to influence economic outcomes with interest rates at or below inflation. SA is not in this position.</p></blockquote>
<p>We see this as a time for the SARB to take the lead and make a bold, but correct step looking forward. Changes in policy impact the economy 18 months in the future. If inflation is at 4% by year end, why would short-term rates at 6% be incorrect? That is 100bp lower than today. 2% in real terms is still a lot tighter than most peers.  Given the current political uncertainty, 100bps is potentially wishful.  However, rate cuts of 25-50bps before December look very plausible.</p>
<p>It is important we highlight here that we are proposing rate cuts within the current mandate of the SA Reserve Bank.  We see no need to change the mandate or Section 224 of the Constitution, which governs the objectives of the Bank.  Rather the opportunity to cut interest rates is greatly premised on the strength of the Reserve Bank’s credibility.  The vehicle charting the trajectory to lower interest rates should not be hijacked by politics.</p>
<p>The SARB is internationally viewed as amongst the strongest institutions in South Africa, with the quality of financial sector regulation regarded as being viewed as world class.  The Public Protector’s proposed change would remove the need for the SARB to protect “the value of the currency in the interest of balanced and sustainable growth in the Republic.”  In addition, the Bank would be required to liaise with parliament to “achieve meaningful socio-economic transformation.”</p>
<p>The wording in the Constitution was carefully chosen.  It limits the SARB’s ability to monetise government debt by printing money.  Thus it protects the value of the currency in the Republic, protecting the purchasing power of the rand for the average wage earner.  It protects South Africa from a return to the inflation rates of the late 1980s.  Or from the many currency crises that Zimbabwe, Argentina and Italy (pre-euro) have faced.</p>
<p>With seemingly innocuous changes, Busisiwe Mkhwebane has raised concerns about the inviolability of the independence of the SARB.  Her ability to achieve the proposed changes is highly questionable – Does the Public Protector have the authority to direct parliament to make constitutional changes?  However, her actions may make MPC members more cautious about supporting rate cuts.  We think this would be a mistake.</p>
<p>Despite the unnecessary discussions the public protector has sparked, the palpable threat to the independence of the SARB is limited.  Therefore we would hope that the MPC is able to look beyond these machinations – and focus on their mandate.  Inflation is falling, growth is collapsing.  It is time to cut interest rates.</p>
<p>While the SARB may be tempted to be overly cautious at this time, we think that would be a mistake.  Rate cuts at this point will provide some much needed relief to the SA economy.  Keeping the SA economy out of stall speed is vital to prevent the threat of further populism down the line.</p>


‘With inflation falling and growth collapsing it is time to cut interest rates’

<p><span class="articleLocation">TJ Strydom | JOHANNESBURG</span></p>
<p>South Africa&#8217;s Investec reported a 17 percent rise in annual profit on Thursday buoyed by its asset management and specialist banking businesses.<span id="midArticle_byline"></span></p>
<p>Investec, which is also listed in London, said adjusted earnings per share (EPS) for the year to end-March rose to 48.3 pence from 41.3 pence a year earlier.</p>
<p>&#8220;The Asset Management and Wealth and Investment businesses have benefited from higher funds under management supported by rising market levels,&#8221; the company said in a statement.</p>
<p>It raised its full-year dividend to 23 pence per share from 21 pence a year earlier.</p>
<p>(Reporting by TJ Strydom; editing by Jason Neely)</p>
<p>&nbsp;</p>


Investec

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Tracking market reaction to Lesetja Kganyago’s decision to leave repo rate unchanged

August CPI inflation figure falls on the back of rand weakness

Ten facts you probably didn’t know about Steinhoff’s former boss Markus Jooste

Koseff reveals discussions with SA FinMin Nene

We need to capture the moment on SA’s positive sentiment – Investec CEO

SA, UK difficult for Investec but which is easier?

Investec boss worried about SA downgrade

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Investec, RMB acquire stake in Botswana-based retailer

SA in recession: Here is how we can come out of it – Expert

Investec’s Peggy-Sue Khumalo speaks about SheEO SleepOut challenge

Investec CEO talks radical economic transformation, restoring investor confidence

‘With inflation falling and growth collapsing it is time to cut interest rates’

South Africa’s Investec reports 17 percent full-year profit jump

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Investec

What Eskom bond holders urgently require

Investec navigates Brexit, SA’s uncertainties

Tracking market reaction to Lesetja Kganyago’s decision to leave repo rate unchanged

August CPI inflation figure falls on the back of rand weakness

Ten facts you probably didn’t know about Steinhoff’s former boss Markus Jooste

Koseff reveals discussions with SA FinMin Nene

We need to capture the moment on SA’s positive sentiment – Investec CEO

SA, UK difficult for Investec but which is easier?

Investec boss worried about SA downgrade

Investec sees value in Zimbabwe, if it gets its house in order

Investec, RMB acquire stake in Botswana-based retailer

SA in recession: Here is how we can come out of it – Expert

Investec’s Peggy-Sue Khumalo speaks about SheEO SleepOut challenge

Investec CEO talks radical economic transformation, restoring investor confidence

‘With inflation falling and growth collapsing it is time to cut interest rates’

South Africa’s Investec reports 17 percent full-year profit jump

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