News in South Africa 21st May:

Coronavirus claims youngest life

1. Coronavirus claims youngest life:

The death toll for coronavirus has hit 339, the health department says. The department has recorded the first neonatal mortality related to Covid-19 – a 2-day-old baby that was born prematurely and therefore had lung difficulties.

The latest number of confirmed cases as of 21st May is 18 003.

According to the latest update, 339 deaths have been recorded in the country.

There have been 8 950 recoveries.

So far, almost 507 000 tests have been conducted, with more than 18 250 new tests.

2. Repo rate cut expected today:

The monetary policy committee is expected to cut the repo rate by at least 50 basis points today. The rate is currently at 4.25%, the lowest interest rate since 1973.

The South Africa Reserve Bank slashed its key repo rate by another 100 bps to 4.25% at an emergency meeting on April 14th 2020, after cutting it by 100 bps in the March meeting, to support the economy weakened by a 35-day nationwide lockdown aiming at curbing the spread of Covid-19. The Reserve Bank also said that further easing was likely ahead. Policymakers added that recovery after the coronavirus peaks is uncertain and forecast a 6.1% contraction in 2020 (previously -0.2%), 2.2% growth in 2021 (previously 1%) and 2.7% expansion in 2022 (previously 1.6%). Current prediction also point to 3.6% inflation in 2020 (vs prior 3.8%), 4.5% in 2021 (vs prior 4.6%) and 4.4% in 2022 (unrevised).

3. Rand strengthens:

Despite the prospect of lower rates, the rand rocketed to its best level in five weeks yesterday, breaking through the R18/$ level. Investors are gaining confidence about a global economic recovery, which has improved global risk appetite.

4. Mr Price raises capital:

Retailer Mr Price Group has announced a proposed capital raise of up to 10% of the company’s ordinary issued shares, as the country’s lockdown takes a bite out of revenue.

The nationwide lockdown, which was instituted in late March and allowed only essential goods to be sold throughout April – meant that the group was unable to generate revenue during the period.  

In an update to shareholders on Wednesday, Mr Price said its financial position remains “sound”, and the proposed capital raise is in the interests of continued growth.

Internal market research has identified attractive growth areas and a capital raise will enable the company to pursue and accelerate these growth opportunities, whether they are organic or acquisitive in nature.

Mr Price shares closed at R119.00 on Wednesday, compared to R192.10 a year ago, and a 52-week high of R213.13.

It was unclear what the shareholder response might be, Vianello said. Given that there is no guarantee that financing will be readily available from banks in the foreseeable future, it makes sense to try to ensure that “firepower” is available, he noted.

5. Edcon could be saved:

Administrators in charge of South Africa’s Edcon believe there is a reasonable chance of saving the retailer after it filed for a form of bankruptcy protection in April.

Edcon, which owns department store chain Edgars and budget clothing retailer Jet, entered “business rescue” proceedings after losing an estimated 2 billion rand ($111 million) of sales since the coronavirus pandemic reached South Africa in March.

That hit, coupled with a decline in payments from customers who had bought on credit, meant the company was unable to pay suppliers and creditors in March and April.

The administrators told creditors that Edcon could be saved because it had “valuable brands and market position that can possibly be preserved through business rescue”.

“The retail footprint is well established with significant interest being expressed by various parties to acquire or take over various parts of the business.”

The business rescue practitioners, Piers Marsden and Lance Schapiro of Matuson Associates, added they believed the rescue process would “achieve a better outcome for all stakeholders than a liquidation.”

They will publish a business rescue plan on June 8.

All information sourced from articles posted by: Business Insider, Health24, Fin24 and Reuters.

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