Financial News in South Africa 5th November:

1. South Africa’s second Investment Conference starts today:

President Cyril Ramaphosa’s second South Africa Investment Conference starts today in Sandton. Yesterday, he appointed former ministers Jeff Radebe and Derek Hanekom new envoys to help with his drive to attract $100bn in new investment.

Former Energy Minister Jeff Radebe has been appointed to drive investment in the oil and gas industry, the Presidency said in a statement on Monday.

Derek Hanekom, former minister of tourism, will have a similar remit in the tourism industry, alongside Elizabeth Thabethe, the current deputy tourism minister. South Africa is scheduled to hold an investment conference in Johannesburg from November 5 to 7.

2. Rand continues to strengthen:

The rand continued to strengthen after the Moody’s reprieve on Friday. It strengthened to around R14.77/$ – but it’s still almost 5% lower than in June.

The yield on bonds due December 2026 declined 15 basis points to 8.41% and the rate on benchmark 2028 dollar securities dell 11 basis points to 4.69%. The FTSE/JSE Africa All Share Index climbed 0.5%, with banking stocks among the biggest contributors to the move.

3. Redefine sees reductions in rent and renewals:

Redefine, one of the largest property owners in the country, has seen lower rents for renewed leases.

The group saw an average rental decrease of 2% for its renewed leases over the past year, from an average rent hike of 1.5% the previous year. Its vacancy rate increased to 5.1% from 4.5%, while net arrears amounted to R87 million – or almost 11% –  of gross monthly rentals. Revenue rose 4.1% to R8.8bn, while headline earnings fell by almost 43% for the year to end-August.

Redefine blamed the weak economy and uncertainty about everything from “contentious reforms, including land expropriation without compensation, the national health insurance, prescribed assets and the sale of ill-functioning state entities” for an “an environment of costly capital and a leasing environment reshaped by low levels of confidence”.

4. Shoprite reports growth and rise in sales:

Shoprite’s share price jumped by 6% in opening trading on Monday after the group reported turnover growth of more than 7% in the three months to September. But by later afternoon, its share price was down almost a percent.

In South Africa, the Shoprite group’s turnover rose by 10.3%, with prices at its shops rising by 3.0% over the period.

“Whilst all three of our supermarket brands traded well, our hard discounter format Usave led the growth,” the company said in a statement on Monday.

But turnover from African countries outside of South African fell by 4.9%, with its Nigerian business taking a hit due to retaliation attacks on its stores following xenophobic violence in South Africa.

5. De Beers cuts diamond prices:

De Beers is taking more drastic steps to stem the crisis in the diamond industry by cutting prices across the board for the first time in years.

The company, the world’s biggest diamond producer, lowered prices by about 5% at its November sale.

The move is aimed at helping improve profits for the middlemen of the diamond industry, a group of traders and polishers that buy rough gems from De Beers. Many of these customers, which includes family-run traders in Belgium, Israel and India, as well as the subsidiaries of Tiffany & Co. and Graff Diamonds, are running on wafer-thin profit margins because of low prices and an oversupply of polished gems.

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