News in South Africa 13th May:
1. Risk appetite sees Rand strengthen:
The rand strengthened to below R18.20/$ yesterday as risk appetite increased in international markets.
The dollar fell on Tuesday as investor risk appetite rose, boosted by continued U.S. Federal Reserve action to battle economic devastation caused by the pandemic as well as potential treatments that the World Health Organization said seemed to be limiting the severity of the COVID-19 respiratory disease.
Even a small hint of positive coronavirus news limits the dollar’s appeal as a safe-haven currency, though declines were kept in check by growing fears of a second wave of infections.
Risk appetite also improved after WHO said some treatments appear to be limiting the severity or length of the COVID-19 disease and that it was focusing on learning more about four or five of the most promising ones. That said, analysts said risk-taking has been limited by persistent concerns about the current global health crisis.
Traders will be looking for Fed Chairman Jerome Powell’s speech on current economic issues on Wednesday, when his views on the future of the monetary policy will be scrutinised closely.
2. Dr. Clarence Mini passes away:
The chairperson of the Council for Medical Schemes (CMS) Dr Clarence Mini has died from Covid-19 complications, the council body confirmed on Tuesday.
“He had been in hospital for the past six weeks,” said a distraught Grace Khoza, general manager for stakeholder relations at the CMS.
In a subsequent statement, Khoza said: “Dr Mini contracted coronavirus (Covid-19) and was hospitalised for more than a month, and all of us were hoping that he would pull through.
“This wonderful, compassionate and likeable individual leaves a legacy of having served this country and industry in many capacities with great distinction. Dr Mini leaves behind his beloved children Yandi and Nomhle, but above all his soul mate and best friend Mrs Nancy Mini. He shall be sorely missed by his family, colleagues and all industry stakeholders.”
The CMS is the body that makes sure all medical aids in the country are run properly, and he was appointed by the minister of health to chair the council.
3. Tongaat Hulett shares slump:
Shares in sugar producer Tongaat Hulett fell by nearly 17% on Tuesday morning following the announcement that the sale of its starch business to a subsidiary of Barloworld had hit a snag.
Tongaat had announced in February that it would be selling its starch business to the KLL Group for R5.35 billion.
The transaction hinged on the undertaking that no “material adverse changes” should occur after the signing of the agreement that could affect the business.
In a statement on Tuesday, the country’s largest sugar producer said the KLL Group felt that the effects of Covid-19 were likely to negatively impact the business and result in material adverse changes.
According to Tongaat, KLL believes the earnings of the starch business for the financial year ending March 2021 would be 82.5% or less compared to the 2020 financial period, in what would diminish value for the transaction.
According to Patrick Mathidi, Head of Equities at Aluwani Capital, a lot of deals which were negotiated before the Covid-19 pandemic are likely to be reviewed as buyers are likely to feel that they might no longer yield the expected financial returns.
4. Lesotho’s Prime Minister to resign:
Lesotho’s embattled prime minister has told AFP he intends to hand in his resignation on Wednesday, a move that could help resolve a long-running political crisis in the tiny kingdom.
Thomas Thabane, 80, who faces possible prosecution over the killing of his ex-wife, told AFP in a telephone interview on Tuesday that he is retiring because of old age.
Thabane and his then wife Lipolelo Thabane, 58, were going through a bitter divorce when she was shot and killed outside her home two days before her husband’s 2017 inauguration.
Police have since found Thabane’s mobile number in communications records from the crime scene – prompting rivals within his party to demand his immediate resignation.
He briefly appeared in court in February accused of acting in “common purpose” in the killing, but he was not formally charged and the issue is yet to be decided.
5. More price gouging uncovered:
The Competition Commission has referred two face mask suppliers to the Competition Tribunal for allegedly charging “astronomically” high prices on face masks.
The suppliers, Sicuro Safety and Hennox Supplies, allegedly charged more than 969.07% and 956% respectively, for face masks, an investigation by the Commission found. “The firms have not furnished the Commission with any reasonable explanation for such excessive price increases,” the Commission said in a statement on Monday.
“The Commission contends that Sicuro’s and Hennox’s pricing was a direct reaction to the Covid-19 pandemic and its unprecedented impact on the world in general and South Africa in particular.”
The Commission has referred the matter to the Tribunal to impose penalties and to prohibit thee suppliers from charging excessive prices.
It previously investigated Babelegi Workwear and Industrial Suppliers as well as Dis-Chem Pharmacies for excessive pricing of price masks.