Star 2021-05-24

FITCH Ratings Agency on Friday warned that the Covid-19 pandemic would continue to pose risks for South Africa’s economy well into 2022 as vaccine roll-out was proceeding slowly. Fitch said South Africa’s medium-term growth would remain low at less than 2 percent, a key rating constraint, complicating fiscal consolidation as reforms remained limited in scale and slow in implementation. It said this would also limit the government's ability to contain the debt-to-GDP ratio. “The government has secured enough doses to inoculate the adult population, but most will arrive only in the second half of 2021,” Fitch said. “We assume that the economic fall-out of any new waves will be more limited than last year, but it could still weigh on public finances.” Fitch and S&P Global on Friday both…

Sandile Mchunu sandile.mchunu@inl.co.za DIS-CHEM Pharmacies group raised its annual dividend on Friday, while it said amid Covid-19 it had opened more stores to meet increased customer demand and had seen its online sales surge by 260.7 percent. However, the group said that it suffered direct Covid-19 costs of R56.6 million in the year to end February even though the retail pharmacy continued to keep its doors open as an essential services provider during the hard lockdown. The costs mainly related to providing personal protection equipment, screening costs, and staff Covid-19 testing, with the largest cost related to vouchers valued at R23.5m that the group distributed to staff as a gratuity for their commitment to the front-line fight against the pandemic. The group still managed to report an 11.8…

Aishah Cassiem aishah.cassiem@inl.co.za AS BLACK-OWNED businesses continue their struggle to secure financial assistance from banks, while others endure the abrupt termination of their bank accounts without valid reasons, the banking ombudsman stressed that they are there as a last resort and as a form of recourse to investigate any possibility of unfair treatment. The banking sector has since the start of the pandemic been accused of discrimination, seeing the collapse of several black businesses, but the Banking Ombudsman Services of SA (OBS SA) has argued that if banks are found guilty of any misconduct, including discrimination, then the “OBS has the power to put things right”. OBS communications manager Kwanda Vabaza said that there are always possibilities for companies to seek recourse and that OBS has jurisdiction to handle…

Banele Ginindza banele.ginindza@inl.co.za A DEAL by South Africa's banking conglomerate Absa to offload its Asset Management Unit to Sanlam hinted at this week could create a R900 billion mammoth to chafe the heels of the Public Investment Corporation. There were no confirmations of the deal by either parties this week but analysis pondered whether the offering would also include the lucrative Money Market Fund. Absa had by the end of last year about R270 billion under the management of its Asset Management wing. Absa is reported to be mulling the decision, citing risk to its business due to clients’ belief its investments “held the same degree of safety of safety as cash in a savings account”. Pundits said this week Absa was in talks with both Sanlam and partner…

INVESTEC is looking to build on the momentum it achieved in the second half of its 2021 financial year, after it was hurt by the Covid-19-related disruption in the first half in the year to the end of March. The financial services group reported a 14.7 percent decline in adjusted earnings per share from continuing operations to 28.9 pence (R5.69) a share, with second-half earnings outperforming the first half by 58.1 percent. The group said it expected adjusted earnings per share in the 2022 financial year to improve from 28.9p to between 36p and 41p. Chief executive Fani Titi said the 2021 financial year was a tale of two halves. “The first-half performance was characterised by difficult and volatile market and economic conditions attributable primarily to Covid-19.…

THE US equity market has all the makings of a “grey rhino” – a term coined by Michele Wucker and defined as “not random surprises, but occur after a series of warnings and visible evidence”. According to the Organisation for Economic Co-operation and Development, consumer confidence provides an indication of future developments of households’ consumption and saving, based upon answers regarding their expected financial situation, their sentiment about the general economic situation, unemployment and capability of savings. Yes, their confidence about the future economic situation. It is therefore no coincidence that there is an almost perfect correlation between US consumer confidence and the US stock market rating as measured by Robert Shiller’s cyclically adjusted price-to-earnings ratio (PE10) for the S&P Composite Index based on average inflation-adjusted earnings from the previous…