In today's headlines: SA is staring down a recession, says Bloomberg. South Africa’s economy contracted for a second quarter this year economy hasn’t expanded at more than 2% annually since 2013. SAA is on the brink of collapse. Its bosses are trying to buy more time by asking all the big lenders to help it with a cash crunch, while unions representing staff members are threatening to take action to push the airline into business rescue, a form of bankruptcy protection. Zimbabwe is deep into a vicious cycle of sky-rocketing malnutrition, the World Food Programme has warned. It plans to double the number of people it’s providing with emergency food aid in Zimbabwe, where half of the 14-million population is facing severe hunger, says Bloomberg. South Africa’s Public Investment Corp., the continent’s biggest fund manager, said it’s preparing court papers to try and force Steinhoff International to release PwC’s full report on what led to the retailer’s accounting scandal, reports Bloomberg. 

Biznews Radio

SA recession risk rises; SAA close to collapse; Zimbabwe starvation crisis; PIC demands Steinhoff reports

Back in 2014, independent money manager Chris Logan spoke out publicly against the strategy being followed by KZN's leading company, Tongaat Hulett. He urged the board and executives to drop their approach of selling off prime commercial real estate to pump the cash into the sugar sector - an area Logan reckoned was the worst commodity to bet on. In this episode of Rational Radio he describes what happened as a tragedy; had those controlling the purse strings pursued a different strategy, Tongaat would still be a flourishing business. Logan has similar misgivings about Hulamin and Nampak, companies that he reckons are also guilty of massive mis-allocation of capital. - Alec Hogg

Chris Logan: Where Tongaat has gone, Hulamin, Nampak are following.

In the latest episode of Rational Radio, South Africa's favourite market commentator David Shapiro unpacked the massive (and complex) put and call options entered into this week by Discovery founder and CEO Adrian Gore. The trades reported on the Stock Exchange News Service relate to Gore's decision to borrow money to contribute his share of Discovery's R5bn right issue that was conducted in 2015. The biggest individual shareholder with ownership of over 7% in the R73bn business, to retain this share of the business Gore put up his shares as security for the loan to follow his 2015 rights. As David Shapiro explains, the options are in place to protect the bank which lent him the cash. Also in this interview, David shares his perspectives on SA Airways and the similarities between Tongaat and Steinhoff. - Alec Hogg

David Shapiro: Making sense of Adrian Gore's R1.4bn share transaction

In the headlines today: President Cyril Ramaphosa has warned that South Africa faces a grave water crisis. In his weekly letter to citizens, he says: “Unless we take drastic measures to conserve water sources and promote efficient use, water insecurity will become the biggest developmental and economic challenge facing this country. Our current energy challenges will seem small by comparison. South Africa’s two biggest mobile-phone companies have been ordered to step up efforts to lower data prices within the next two months or face prosecution by the country’s antitrust regulator, reports Bloomberg. Vodacom and MTN have the potential to reduce tariffs by 30% to 50%, Tembinkosi Bonakele, the head of the country’s Competition Commission, said in Pretoria on Monday. Sentiment in South Africa’s manufacturing industry slipped in November, signalling contraction in the industry for a fourth straight month, reports Reuters. Absa’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, fell to 47.7 from 48.1 in October, the Johannesburg-based lender said in an emailed statement on Monday. Offshore investors sold a net R9.84bn ($669m) of South African stocks last week and R3.46bn of bonds, data from the Johannesburg Stock Exchange showed on Monday, says Reuters. 

MTN, Vodacom ordered to slash data prices; Worse than Eskom: SA water crisis looms; manufacturing slumps

A bit like a multinational Stokvel, the Washington-based International Monetary Fund acts as the banker of last resort for member countries which get themselves into difficulties. To prepare itself, the IMF has a regular programme of sending surveillance teams to assess its potential exposure - and where it finds problems, to encourage members to act before it's too late. The surveillance team, which visits South Africa twice a year, spent the fortnight to November 21 in the country, meeting with stakeholders from across the social and economic spectrum. On Rational Radio this week Economterix chief economist Azar Jammine explained why the IMF's warnings need to be heeded and how the Ramaphosa Administration is running out of time to convince its political allies to come on side - or reap some rather awful consequences. Because of the tough conditions it always applies, nobody likes having to approach the banker of last resort. Much better to make the changes before having to enter the last chance saloon.    

Azar Jammine: IMF's shout out to Ramaphosa - bring Alliance onside. Quick.

In today's business headlines: Companies are starting to lose faith that South African Airways can and will be saved.  Sanlam Travel Insurance Consultants said it would exclude SAA from its insolvency cover and Flight Centre has stopped selling SAA tickets. An investigation into alleged wrongdoing at Tongaat Hulett found that a group of at least 10 senior executives at the sugar maker used accounting methods that led to profits and certain assets being overstated. Former Chief Executive Officer Peter Staude, who headed the company for 16 years, was among those identified. Emerging Markets may need more than a surprise recovery in Chinese manufacturing to exorcise the pain of November. Bloomberg reports that there are too many risks for Emerging Markets to get a lift from data out of China. Former President Jacob Zuma’s long-awaited trial on corruption charges over a $2bn arms deal is set to go ahead in February next year after the Pietermaritzburg High Court dismissed an appeal that sought to prevent his prosecution on corruption charges. Zuma has the option to approach the Supreme Court in his push to dodge trial, but legal experts say his prospects of success are slim and Twitter Boss Jack Dorsey has announced that he will live in Africa for several months in 2020. 

Companies losing faith in SAA; Inflated Tongaat Hulett profits; Zuma’s date with justice; tweeting for Africa

There's no business on earth which doesn't carry risk, says Orbvest chairman and co-founder Hennie Bezuidenhoudt. But after scouring the global property landscape for suitable offshore investment opportunities, Bezuidenhoudt and his Orbvest colleagues specialised in the US medical property market for good reason. In this insightful interview he explains why - and steps he takes to reduce the risk of an unexpected broadside in this ever changing world. - Alec Hogg

Hennie Bezuidenhoudt: How Orbvest hedges risk when investing in US medical properties

In today's business headlines:  Eskom has posted a surprising R1.3 billion rand profit in the six months through September, which is almost double that of the previous year thanks to higher tariffs.  The Reserve Bank says there is a high likelihood that the South African government’s finances would deteriorate further posing a risk to the stability of the country’s financial system.   President Cyril Ramaphosa withdrew from the Chairman’s Conversation, a signature annual event hosted by Power FM radio station, because of allegations the station’s owner, Given Mkhari, assaulted his wife.  KPMG says it is winning back customers and no longer bleeding staff as the auditing firm tries to rebuild an image tarnished by a series of scandals. The firm secured a number of new mandates in industries such as telecommunicat Steinhoff shares surged by 25% yesterday   The company announced earlier this week that it had closed the sale of Unitrans, its automative operation to CFAO, a subsidiary of Toyota.    

Eskom’s profit surprise; Govt finances will worsen; Ramaphosa pulls Chairman's convo plug; KPMG, Steinhoff

Piet Viljoen, top money manager and founder of RECM, linked up with old pal Alec Hogg in this week's episode of Rational Radio to talk about his alma maters Allan Gray and the recently renamed Ninety One (Investec Asset Management). He offers some scathing opinions on Tiger Brands - a company whose shares he has avoided for years - and puts it down to the way corporations are "gaming" the oversight-implications of indexation of investing. Fascinating insights as ever from the forthright value investor who also provides some insights into what might be the real reasons for the massive unbundling of FirstRand shares.

Piet Viljoen: Investors AWOL so many managers run companies for themselves

In today's business headlines: South African business confidence improved in the fourth quarter for the first time in almost two years owing to a recovery in residential activity and expectations of a good Christmas shopping season. The Rand Merchant Bank business confidence Index rose to 26 for the fourth quarter from a decade low of 21 in the previous quarter. South African Airways says the strike at the airline led to a sudden deterioration in its financial position. In a statement issued by the Department of Public Enterprises yesterday afternoon, SAA says the strike has rocked the finances to the point where the company can no longer continue to operate “as is.” Reserve Bank Deputy Governor Kuben Naidoo said if Moody’s Investors Service cuts the country’s credit rating to junk there could be a sell-off of between $5 and $8bn of its bonds. Two media houses, the Financial Mail and amaBunghane have launched an application in the Gauteng High Court for access to former President Jacob Zuma’s tax records. Brait SE, the owner of struggling UK apparel chain New Look has launched a sweeping overhaul as leading shareholder Christo Wiese seeks to salvage his investment after seeing his other retail assets plunge in value. 

Business confidence uptick; SAA sends red flare; Junk could see $8bn bond sell-off; Zuma tax returns; Brait overhauls New Look

In today's headlines: How many wealthy people are there in South Africa? A new report suggests that there are just over 2,000 individuals with net assets of $10m (R150m) and more and just under 40,000 South Africans with net assets of about $1m (R15m) or more. In his weekly newsletter to citizens President Cyril Ramaphosa lambasted business for failing to hire enough senior black executives, but when it comes to improving female board representation, South Africa is right up there with countries that have performed best. Zimbabwe’s mining industry has appealed to the government for help, saying output is declining as fast as the state-owned power company fails to honour electricity-supply contracts, reports Bloomberg. Where do dogs come from? What is their relationship to wolves? Where do Homo sapiens come from? What is our relationship to other human species such as Neanderthals, Denisovans and Homo erectus? The secret is Survival of the Friendliest. 

SA wealth report; SA female board representation up; survival secrets of dogs, humans; JSE, Rand

21 year old Aphelele Mvamva lives with her sister in the Kayamandi township just outside Stellenbosch. It means “nice place” in iXhosa but the hostel that she lives in, is anything but. As a little girl, she was shuttled between the Eastern Cape and Stellenbosch where her mother Nokalothi was a vineyard worker. This lifestyle meant she was forced to adapt to many different places and schools. She landed in the Red Cross Children’s Hospital after she contracted TB and was suffering from malnutrition. In her teens she went through a terrible bout of depression but poetry in her mother tongue, isiXhosa helped her to reflect on her feelings and she eventually took part in provincial and national competitions in which she excelled. Aphelele is determined not to be defined by poverty and this hunger to succeed has landed her a fast-track career in wine when she was selected as the first Drostdy Hof Graduate for a year-long mentoring programme. It is an achievement she earned after graduating from the Pinotage Youth Development Academy (PYDA). She stood out among her peers for her combination of academic performance, strong interpersonal skills and a burning desire to succeed. During the year, she will be guided among others by Distell head wine-maker, Andrew Freeborough and has the chance to meet leaders in the wine trade and be exposed to wine-growing and cellar practices. - Linda van Tilburg

Determined Kayamandi student Aphelele Mvamva scoops fast track wine career opportunity

Absa, one of South Africa's biggest banks, turned a blind eye to money laundering. That's abundantly clear from the evidence Forensics for Justice founder Paul O'Sullivan has pieced together. Absa is hiding behind technicalities to avoid explaining its role in state capture and corruption at Eskom, which is the state entity that is the most troublesome for South Africa and the one which is arguably the biggest obstacle to improving economic growth. Absa has been relatively unaffected by state capture, with its annual profits looking robust. In this interview with BizNews founder Alec Hogg, O'Sullivan explains how a senior Eskom figure withdrew an average of R2m a month and on some days several millions in cash from Absa. And the bank turned a blind eye. O'Sullivan has a reputation for nailing major crooks, including ensuring that  former police chief Jackie Selebi was put behind bars. So far, Absa has shrugged off the scandal and has not bothered to provide a detailed response. - Jackie Cameron

The astonishing tale of how Absa helped Eskom man steal R66m: Paul O'Sullivan joins the dots

Fireworks are likely when two of South Africa's top companies host shareholders at their annual general meetings this week. Tracey Davies, an environmental lawyer turned shareholder activist (LLB at UCT, LLM at NYU), intends peppering questions at the directors of Sasol (Wednesday) and FirstRand (Thursday). In the latest episode of Rational Radio the executive director of JustShare explains what she'll be asking the companies about, and why their responses thus far have been inadequate. Particularly Sasol, where the company's promise to cut 10% off pollution emitted at its Secunda plant is deemed unacceptably modest. - Alec Hogg

Shareholder activist Tracey Davies targets this week's Sasol, FirstRand AGMs

After getting a blast last week over his Sasol comments from an environmental activist, David Shapiro spent time investigating the hot new trend among investors called ESG - Environmental, Social, Governance. He concludes that the business of business is no longer just business. This has significant implications for investible assets as Shapiro explains in this fascinating contribution to the latest episode of Rational Radio. - Alec Hogg

David Shapiro: Why ESG is hot - and managers need to pay attention

Welcome to BizNews Radio where we interview top thought leaders and businesspeople from South Africa and across the globe.