Star 2024-02-23

THE RAND YESTERDAY failed to hold on to gains following the prudent Budget Speech after hopes of strengthening were dashed by the US monetary policymakers maintaining a cautious stance on the interest rate outlook. The domestic currency had strengthened to R18.77 to the dollar on the better-than-expected Budget, but then moved closer to R19/$1 by 1pm following the release of the US Federal Open Market Committee (FOMC) minutes on the back of strengthening the dollar as interest rate cuts were not imminent. The latest minutes of the FOMC meeting released yesterday revealed that the Federal Reserve (Fed) was not in a rush to cut rates, but wanted to see more evidence inflation was firmly on a path to its 2% target before lowering rates. The majority of officials at the…

Pick n Pay has approved a capital raise to stabilise the group’s balance sheet, and also strengthen its liquidity THE MARKET gave Pick n Pay the cold shoulder yesterday after it announced a capital raise and its intent of an initial public offering (IPO) of its discount supermarket stores Boxer. The move comes amid a growing debt burden, muted sales and the loss of market share. The shares closed the day 16% lower at R21.71. The move comes as recently appointed CEO of one of the country’s biggest retailers, Pick n Pay’s Sean Summers, has hit the ground running to turn around the retailer that has been losing market share amid muted sales. Pick n Pay said yesterday the capi-tal raise was intended…

POWER utility Eskom has hailed its Generation Operational Recovery Plan (Gorp) which it extols for improving the Energy Availability Factor (EAF) from 50% to 55% over the year to January this year. Eskom has countered that un- planned outages have also taken a posi- tive turn from 34% of the generation capacity in January 2023 to 30% in January 2024. This is because energy analysts maintain nothing barring a miracle will help it attain the 65% EAF by March 2024 and 70% by March 2025. In response to criticism that it was going backwards in its goals as the EAF, its core measure of performance that indicates the percentage of time the power station was available for use when it was needed, fell to a new low of…

THE ANGLO American board is fully behind the restructuring of its operations under Anglo American Platinum and Kumba Iron Ore, although the diversified resources miner was not inclined to separating the problematic South Africa companies from its other global units. As many as 490 employees will likely be laid off at Kumba Iron Ore, while an additional 3 700 could also be retrenched from Anglo Platinum as the South African operating companies battle electricity, port and rail bottlenecks as well as suppressed platinum group metals (PGM) prices. “Those South African announcements follow a number of months of planning (and) the need to simplify our portfolio in order to be able to allocate capital we have. “The board is fully behind all these medium-term and long-term imperatives,” Anglo American chairperson…

THE BUDGET speech was a fine balancing act between stabilising the country’s debt burden with fiscal discipline and social investments. The good news was that no major tax increases were announced, VAT was not raised and there were no fuel levy increases. Catherine Wijnberg, the CEO of Fetola, said yesterday: “We urgently need to encourage a culture of buying and contracting from local SMEs (small medium enterprises) and make it easier for these businesses to access finance so that they can scale up. “What the 2024 Budget clearly revealed is that the government has limited fiscal space to change the country’s economic trajectory, so it will be up to the private sector to find a way to pave a more sustainable future for the country.” Fetola is a company that…

SOUTH Africa’s gold and foreign exchange reserves account (GFECRA) contains the majority of South Africa’s Reserve Bank (SARB) assets and, con- sequently, has been eyed by some political factions calling for the natio- nalisation of the SA Reserve Bank (SARB). The GFECRA is a pool of funds, tallied at R500 billion, which does not earn any interest and is liquidity that the SARB is not able to use, accumulating as a result of currency movements, and in other countries is transferred to their national treasuries. Furthermore, the lost opportunity costs of the GFECRA makes it expensive to fund. That is, the money sits unused at the SARB, and essentially “belongs” to the National Treasury, who is already borrowing at very high interest rates above 10%. High debt costs This…