We’re still seeing a lot of results from JSE-listed companies, but they’re for the periods ending February or March so there’s no real indication of the hit from the lockdown as yet.
However, with South Africa already in recession by the end of 2019, results have been muted and updates for the lockdown period continue to be very bleak with even large retailers only able to sell about 80% of their products under level 4 lockdown.
The South Africa Reserve Bank cut its repo rate by 0.5% on Thursday, with three members voting for that cut while three preferred a more modest 0.25% cut. There was no talk of another 1% reduction. The prime rate is now down some 40% so far in 2020 and, at 7.25%, it’s at its lowest levels since the 1950s.
Richemont sits on over €2 billion of cash and has suggested a warrant rather than a cash dividend. Yet it raised another €2 billon of debt during the week as it sore up an already-strong balance sheet. This as last week’s results showed collapsing sales during lockdown periods in their different markets, making the company even more cautious than usual.
Lastly, a Liberty 2 Degrees trading update at its AGM gave us great insights into mall activity under lockdown. It reported May foot traffic is at about 60% of pre-lockdown levels and stores open are averaging 60% to 70% of lettable area. Rentals are however the problem, with only 38.2% paid in April 2020 – but this improved as up to May 18 collections were 43%.
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