SIKI MGABADELI: Good evening and welcome to the SAfm Market Update with Moneyweb. My name is Siki Mgabadeli.
Picking up on the electricity story [in the news] we are talking business confidence in South Africa, which registered its slowest start to the year in nearly two decades as the economy grapples with global and local headwinds, including electricity shortages. SACCI says business confidence edged up just to 89.3 in January from 88.3 in December. We chat to them this evening.
Then we speak to ABB Southern Africa and they are reporting that they are on a strong growth path and they expect a surge in orders to meet growing demand despite their South African revenue falling to just under R5bn in the year to 2014. Global revenue also was down.
As you are aware, the Competition Commission is undertaking a market inquiry into competition in the private healthcare market. They posted submissions to the Commission today on their website from stakeholders. There is a long process still to come – public hearings and so on – but we are going to get a sense of where things stand at the moment.
David Shapiro of Sasfin has been watching the markets for us today. But first, Tumisang has your business news headlines.
TUMISANG NDLOVU: Thanks, Siki. Good evening.
Business confidence rose by a percentage point from 88.3 to 89.3 in December, according to the South African Chamber of Commerce & Industry. This is the slowest start over the past 18 years. The Chamber says the latest developments don’t project an improved state of affairs and has attributed this to Eskom’s power-supply challenges.
Still on Eskom, questions have been raised over the extent of the power utility’s electricity supply and financial woes. Eskom implemented a third consecutive day of load-shedding earlier. That has now been escalated from Stage 2 to 3. The power utility, which has been hit by several technical problems amid rigorous maintenance of its ageing infrastructure, rolled out load-shedding last week again over three consecutive days. CEO of the South African National Energy Development Institute, Kadri Nassiep, shares his views on the matter.
KADRI NASSIEP: That slowing down of the economy – it actually is important for us to be able to see what it is that Eskom needs to deliver to be able to actually keep up with the expected demand. So what you’ve seen is slow economic growth, but the reality in fact should be that we needed to have provided far more capacity to keep up with expected demand.
TUMISANG NDLOVU: Sanral has acknowledged that it is unlikely to raise its targeted R600m in future bond auctions. The roads agency fell R200m short of raising the desired target at its first bond auction in Pretoria yesterday. The latest developments have been attributed to uncertainty regarding the recent change in outlook by international rating agency Moody’s from stable to negative. The funding is needed to repay and service Sanral’s debt emanating from the multi-billion rand e-toll project. The agency says if it’s unable to service its debt it will not be able to fund its operations, including the maintenance and improvement of roads.
And the rand continues to hold steady above R11.40/dollar. This while government bonds gained after declining oil prices and doubt about the global economy after the European Central Bank’s decision not accept to accept Greek bonds.
Financial indicators this hour: the rand is trading at R11.29/dollar, R17.25/pound and R13.02/euro. Gold is trading at $1 262.36/oz, platinum at $1 238.50/oz and Brent crude oil at $56.71/barrel.
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