The rand fell to a three-month low on Thursday but is slowly recovering against the dollar. Picture: iStock
The rand tumbled to its weakest in three months on Thursday, as emerging market currencies were hit by a wave of risk aversion as fears about global growth intensified.
 
At 9am the rand was 0.6 percent weaker at R14.55 to the dollar, recovering slightly after sliding to R14.89 in the overnight session, its weakest since October 9.
 
The rand was on the backfoot following weak factory data from China on Wednesday and saw losses deepen in tandem with a majority of global currencies after Apple said sales in China and other emerging markets fell last quarter.
 
Apple’s share price fell after chief executive Tim Cook warned shareholders that iPhone sales were slowing faster than expected. Cook said that the company did not foresee the magnitude of the “economic deceleration”, especially in China.
 
The news helped trigger a “flash crash” in currency markets, stoking nervousness about global growth already dampened by the ongoing trade wrangle between the United States and China.
 
Despite this early trade low, the rand gained momentum to trade 0.3% weaker against the dollar by midday. It sat at R14.50 to the dollar at the time.
 
The JSE All Share index, which suffered along with European and Asian stocks on Wednesday amid concerns around a possible slowdown in China, was up 0.8% by midday, with all major indices in positive territory.
 
The rand opened on Thursday at R14.46 to the dollar.
 
 
Source: City Express
South Africa’s Competition Commission said on Thursday it had charged retailer Shoprite and its subsidiary Computicket with anti-competitive behaviour, and recommended a fine.
 
The commission said Shoprite and the event ticket seller had signed exclusive agreements that gave Computicket the ability to discriminate between large and small customers on prices.
 
The commission said the discrimination had forced third parties to engage with Computicket, excluding its competitors.
 
“The Commission has asked the Tribunal to impose an administrative penalty of 10 per cent of Computicket and Shoprite Checkers annual turnover,” the commission said in a statement in Johannesburg.
 
Shoprite was not immediately available to comment.
 
As a result, shares in the country’s biggest supermarket chain fell more than 4 per cent after the announcement, but had recovered to 183 rand, a decline of 1.84 per cent in early trading.
 
The case marks the second time the commission has referred Computicket to the Competition Tribunal, with a decision on similar charges.
 
This is the first time that Shoprite has been added as a respondent to the charges.
 
 
Source: PmNews
In truth, the currency started from a very low base: the Nenegate crisis in 2015.
Its performance this year has not been stellar, but most experts expect it to remain below R15/$ in 2019.
Over the past three years, the rand has been the world's strongest major currency against the dollar.
 
The rand has strengthened by almost 6.3% against the dollar since mid-December 2015, according to data compiled by the independent analyst Johann Biermann. By comparison, the Mexican peso weakened by more than 16% and the Turkish lira lost an almighty 79% of its value. The UK pound fell almost 20% over the past three years as Brexit fears wreaked havoc.
 
Only the Russian rouble, which gained by 6% over this time,  the euro (+3%) and the yen (+6.2%) could keep up with the rand.
 
It is of course worth noting that three years ago the rand was in a very bad state amid the Nenegate crisis.
 
On December 9th 2015, former president Jacob Zuma fired then finance minister Nhlanhla Nene, replacing him with back-bencher Des van Rooyen. 
 
"After all is said and done, the rand has been one of the strongest currencies over the last three years - obviously benefiting from the low base created by Nenegate," Biermann said this week. "Still, not many would've predicted that the rand would outperform these majors in years to come."
 
Unfortunately, 2018 has been tough on the local currency: the rand has lost a painful 14.5% of its value against the dollar - on par with the rouble (-15%) and the Brazilian real (-17%). Even traditionally stable currencies - including the Australian dollar (-8%) and the euro (-6%) - took a hit.
 
The rand/dollar rate over the past five years. (So
The dollar/rand rate over the past five years. (Source: XE)
But most currency experts are not expecting the rand to take a massive hit in 2019.
 
The currency is expected to end 2019 between R12 to R15 a dollar, according to almost 70% of the 160 South African-based bankers, CEOs, CFOs, corporate treasurers as well as foreign exchange and hedge fund executives polled at the Bloomberg Foreign Exchange Summit last week. 
 
The rand will probably trade near R13.40 to the dollar by the end of next year, Standard Bank economist Elna Moolman said, according to a press report.
 
"The expectation is partly based on a dollar story, but also on the assumption that we will see political and policy improvements to support a stronger currency."  
 
Moolman said the next big local events that could influence the rand are the Budget in February, the response from Moody’s (the only agency that has not yet rated South Africa as "junk") and then the natonal elections, expected in May 2019.
 
If the US economy weakens and/or the equity markets fall apart, which means that the Fed won’t hike interest rates by as much as expected, the rand may benefit, according to Biermann.
 
“Also, sentiment towards emerging markets has been very negative in 2018. If it starts to turn, the rand will get a boost."
 
But there are risks – chief among them, Eskom’s R100 billion debt burden.
 
“If government took over the debt, our credit rating will be further downgraded – which will be negative for the rand.”
 
Ratings agencies have also been clear that further slippage in terms of property rights could prompt downgrades, Biermann said. 
 
 
Source: Bloomberg news 
Marlboro cigarette maker Altria's $1.8 billion investment in the cannabis producer Cronos is a win-win, according to an analyst. 
 
"Cronos provides Altria a unique entry into cannabis and we do not think Altria is taking on outsized risk while entering a new high-growth category," Vivien Azer, an analyst at Cowen, said in a note out on Monday.
 
Cronos has a relatively smaller cultivation capacity than most of the other major Canadian cannabis producers, but a higher efficient operating line, Azer says. While Cronos's revenue over the last 12 months - $12 million sales  - ranked only the sixth among major Canadian marijuana producers, its gross margin ranked second.
 
"Cronos has been judicious with capital, and has embraced an asset light model that does not prioritise cultivation (consistent with tobacco)," Azer noted. "Their business model is less capital focused and more reliant on sourcing cannabis from local farmers, similar to tobacco companies."
 
Moreover, Cronos' focus on rare cannabinoids is a point of differentiation for Altria, Azer said.
 
"While the potential uses of cannabinoids are vast, Cronos believes the key to successfully bringing cannabinoid-based products to market is in creating reliable, consistent and scalable production of a full spectrum of the ~100 cannabinoids, not just THC and CBD," which are the two primary cannabinoids that occur naturally in the Cannabis, she added.
 
Azer believes Cronos can leverage Altria's expertise to create value-added form factors while focusing on ingredient composition without reliance on a massive cultivation infrastructure.
 
Azer has an "outperform" rating and a $74 price target for Altria - a 40% premium to where shares are trading on Monday.
 
Altria was down 24% this year.
 
 
Source: Business linking
Several South African liquor outlets are apparently running out of Castle Lager beer, as a shortage of bottles affected production.
 
Refilwe Masemola, South African Breweries director of external communications, said a shortage of reusable bottles has slowed the production process. There have been delays in returning these bottles to SAB, Masemola said, without giving more details.
 
“Our production teams are [however] hard at work to ensure that those outlets that may be affected are well stocked over the coming days,” Masemola told Business Insider South Africa. 
 
“We are in fact ahead of our production schedule, which should bring some comfort to our customers.” 
 
Castle Lager is one of South Africa’s most consumed beers and was for the first time named the 25th most valuable beer brand in the world in 2018. 
 
South Africa is, on average, one of the world’s highest liquor consumers, and consumption tends to increase considerably over the festive season.
 
 
Source: Business Insider
Local licence holder for Starbucks in South Africa, Taste Holdings, has halted any plans to open more outlets of the US coffee chain as it struggles to make ends meet.
 
Taste, which also owns the jeweller Arthur Kaplan and Domino's Pizza, suffered operating losses of R87 million in the six months to end-August, with sales down 3%.
 
The group said that while the store network of twelve Starbucks outlets is profitable at a sales level, it's not producing the required return on its investment.
 
Setting up a new Starbucks store in South Africa costs between R5 million to R8 million, the group previously said. This is very expensive, says Simon Brown, founder and director of investment website JustOneLap.com. Brown estimates that the actual cost could now be higher than previously stated - perhaps even reaching R20 million. 
 
Hitesh Patel, director of new business at Starbucks competitor Vida e Caffè, says the average cost of setting up one of its stores is only around R1.5 million.
 
That is is less than a third of the minimum cost of a new Starbucks outlet.
 
Taste has a 25-year licence deal to operate Starbucks stores in SA - and have to pay royalties to the US brand, which are proving to be costly, says Michael Treherne, retail analyst at the fund manager Vestact. 
 
Due to the royalties and expensive store set-up costs, Treherne says Starbucks South Africa has had to resort to premium pricing - which is not at all good during a recession. 
 
The difference between food prices is more pronounced. We could find a muffin at a Vida e Caffe outlet in Johannesburg for under R20, while the cheapest muffin at a Starbucks was R32.
 
 
Source: News24
JOHANNESBURG - The rand rose for a fourth straight session on Friday to end the week nearly 3% firmer, benefiting from political chaos in Britain and a revival of risk appetite linked to a thawing of United States (US)-Sino trade tensions.
 
Stocks ended slightly lower, with British American Tobacco taking the most off the benchmark index after the United States announced sweeping restrictions on flavoured tobacco products.
 
At 1530 GMT, the rand was 1.09% firmer at 14.0300.
 
Most of the gains were posted after the dollar wobbled as two Federal Reserve officials cautioned in separate television interviews about slowing global economic growth, raising doubts about the number of future US rate increases.
 
The rally followed Thursday’s strong gains, particularly against the pound, as Prime Minister Theresa May battled to salvage a draft Brexit deal.
 
Growing bets that the South African Reserve Bank (Sarb) may raise rates at its policy meeting on Thursday supported the already attractive carry yield offered by the rand.
 
It outpaced most other emerging currencies against the dollar on the day.
 
In a Reuters poll taken this week, 16 of 26 economists said the SARB would keep its repo rate at 6.50% while the rest forecast a 25 basis-point hike.
 
Bonds also rose, with the yield on the benchmark 2026 paper down 4.5 basis points at 9.115%.
 
On the bourse, the benchmark Top-40 index was down 0.17% at 45,851 and the broader All-share index lost 0.1% to 52,095.
 
BAT slumped 6% to R495.67, tracking falls in its London-listed shares. On Thursday the US Food and Drug Administration announced restrictions on flavoured tobacco products, including electronic cigarettes, in an effort to prevent a new generation of nicotine addicts.
 
Investment house Reinet Investment was also under pressure, falling 6.7% to R215.58 after the company reported a drop in net asset value, a key profitability measure for investment companies.
 
 
Source: The Routers

Thousands of Cadbury chocolates have been sold to the public despite being past their best.

The chocolate, some of it months beyond its best-before date, was sold at a major KwaZulu-Natal South Coast wholesaler, which supplies spaza shops and trading stores, including in rural Eastern Cape areas.

And tens of thousands of rands worth of short-dated chocolate was dispatched to wholesaler clients hidden among newer stock.

These claims were made in the labour court in Durban last week.

 

It was alleged that ambitious sales targets led to massive overstocking in wholesalers.

Most resulted in multimillion-rand returns across KwaZulu-Natal of popular Cadbury brands, including Dairy Milk slabs and Lunch Bars.

A food health expert emphasised there was no risk in eating chocolate past its best-by date.

But a legal expert questioned the ethics of selling such products without clearly informing consumers.

The matter came to light when a sacked sales representative, Hans van Tonder, took his former employer, Diplomat Distributors, to court, claiming he had been victimised and that his dismissal was “automatically unfair”.

Mondelez SA, owners of Cadbury, contracts Diplomat, a logistics company, to distribute its products to wholesalers.

Diplomat fired Van Tonder in April 2016 for gross dereliction of duty after a company hearing found an instance where he failed to timeously report that chocolate at a Port Shepstone client was nearing its best-by date.

But Van Tonder produced emails that show Diplomat had been told by the client that it had been receiving stock with “mixed expiry dates”, which he argued was outside his control.

“It is a major concern as the inner stock on the pallet is short-dated,” wrote a buyer for the wholesaler, who asked what would be done to eradicate the problem.

Van Tonder, who had represented Cadbury products for 16 years, produced a dossier in court, including national stock return figures, emails and other documents which allegedly pointed to widespread problems with overstocking and short-dated stock.

Van Tonder was fired over a R21 835 loss to Diplomat at the Port Shepstone wholesaler.

This was the value of chocolate that had to be removed from the wholesaler in early 2016 after it had past its best-by dates, as well as money spent discounting and promoting the chocolate in a late bid to sell it.

A witness for Van Tonder told the court the R21 835 was “like chalk and cheese” compared with returns of hundreds of thousands of rands of Cadbury chocolate from many other wholesalers across the country.

Shadrach Chinniah, who resigned as a Diplomat rep in October 2016, said: “I thought it was absolutely ludicrous he was dismissed for R21 000 and my store had [old stock worth] R310 000 … why didn’t they dismiss me?”

He told the court a Diplomat manager “cleared” the R310 000 in minibars from a major Durban wholesaler “after it expired”.

The court heard the minibars failed in the marketplace nationally and the line was discontinued.

Chinniah alleged there were:

. Cover-ups by management;

. A lack of support for markdowns to move short-dated stock; and that

. Short-dated stock was hidden among newer stock before delivery, making it hard for merchandisers and reps to keep tabs on best-by dates.

Placed before the court were photographs that were said to show pallet loads of chocolates, all of which were beyond their best-by dates, “being sold on special” at the same Port Shepstone wholesaler, months after Van Tonder’s dismissal.

The pictures, apparently taken in June, show marked-down PS chocolates that had expired on May 25 2016 and Lunch Bars that had expired on April 25 2016.

However, these claims were not examined.

Early on the second day of the hearing, Bongani Khanyile, attorney for Diplomat, applied for the matter to be sent to the Commission for Conciliation, Mediation and Arbitration (CCMA).

He argued Van Tonder was seeking relief for an “automatically unfair” dismissal but had not made a case for this.

Judge Benita Whitcher agreed it was an “ordinary unfair dismissal case” rather than one that involved arbitrary discrimination and ruled her court would not sit on the matter.

An emotional Van Tonder stormed out of the courtroom.

“Three years of this,” he shouted. “They have been lying. I am going to go outside and break down.”

Whitcher later gave a written order directing the CCMA to expedite the matter.

No order was made for costs.

Yinon Ben Anat, chief executive of Diplomat SA said: “Diplomat’s policy is clear in that we do not purchase or sell expired stock [beyond its best-by date].”

He did not comment on claims of overstocking and declined to give details on Diplomat’s contractual relationship with Mondalez.

City Press sent Mondalez a list of questions on overstocking and its policy on the sale of best-by goods. The company declined to comment, saying the matter was before the courts.

“Mondelez SA abides by local legislation and we are focused on bringing the highest-quality products to our consumers,” it said.

 

Source: CityExpress

South African Airways could sell shares to the public as the state-owned carrier seeks ways to end years of losses and reduce the need for bailouts, according to people familiar with the matter.
 
The move would enable the government to cut its stake in much the same way as it did with former phone monopoly Telkom SA, almost two decades ago, said the people, who asked not to be named as the information is not public. However, the carrier would first need to make progress with a turnaround plan designed to reach break-even in three years, they said.
 
While the sale of a stake to an equity partner has been aired repeatedly over the years, this is the first time it’s been suggested that SAA should list on a stock-exchange. Pretoria-based Telkom’s initial public offering in 2003 raised almost $500m and the government’s shareholding is now just under 40%.
 
SAA declined to comment
 
The airline’s Chief Executive Officer Vuyani Jarana is facing renewed pressure from his bosses in government, which last month put aside R5bn to help SAA repay debt.
 
Last week, Finance Minster Tito Mboweni said it was his preference to shut down the carrier rather than continue to stretch state finances, while his counterpart at the department of public enterprises, Pravin Gordhan, warned on Monday that “radical things need to be done” for the airline to survive.
 
Nigeria flights
 
More immediate plans than the share sale include holding discussions with potential commercial joint-venture partners including Air Mauritius, one of the people said. That could lead to cost savings on routes to the Asian-Pacific market as the airlines would share operating costs.
 
SAA will also consider a resumption of flights to Abuja, the Nigerian capital, which it abandoned in 2017, the person said. The carrier would apply for a local license - or find a partner - to help Nigerians travel to the U.S.
 
Jarana, 48, a former executive at South African mobile-phone market leader Vodacom, was hired a year ago, in part for his experience in the private sector. He also has no connection with previous management, which has been embroiled in the corruption scandals that plagued state-owned companies during ex-President Jacob Zuma’s almost nine years in charge.
 
SAA has had an equity partner before. The government sold 20% of the carrier in 1999 to Swissair, which pioneered the concept of an alliance anchored via minority stakes, only to buy the shares back in 2002 when the European carrier went bankrupt.
 
 
Source: Blomberg News
There are still opportunities for South Africans to start businesses despite the recession, says  Siphethe Dumeko, chief financial officer at start-up lender Business Partners.
 
South Africa's economy shrank by 2,2% in the first quarter, and 0,7% in the second quarter of 2018, landing the country in a recession.
 
Dumeko said that entrepreneurs starting companies will, however, face an uphill battle.
 
“Procuring capital to start a new venture is predicted to become increasingly difficult, as the majority of funding institutions are expected to adopt an increasingly risk-averse stance,” Dumeko said.
 
Still, Dumeko believes three sectors could prove recession-proof for entrepreneurs. 
 
Security:
“In spite of the continued underperformance of the country’s economy in recent years, private security has become an R45 billion industry with a growth rate of 15 percent per annum,” Dumeko said. He said this is because, during a time of economic recession and uncertainty, individuals tend to be more risk-averse.
 
Death-care services:
Dumeko said, as morbid as it might sound, that businesses offering services related to death, including funerals, cremation, burial, and memorials, are usually some of the most recession-proof operations. “Deathcare services usually have a steady stream of business, regardless of the economic climate,” he said. South Africa’s funeral industry is estimated to be valued between R7.5 billion and R10 billion.
 
Education:
Despite economic pressures, the underperforming public education sector has fuelled demand for alternatives, Dumeko said. It is also reported, he said, that South Africa is experiencing skills shortages in almost all of its sectors, emphasising the need service providers that offer more effective, affordable and accessible adult education. “Businesses that offer accredited online training platforms have especially seen increasing interest in South Africa, as well as on the rest of the African continent.”

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