Corporate kowtowing

Chinese companies kneel to the government.
Treading very carefully. Image: Qilai Shen, Bloomberg

It’s hard to imagine what the Competition Commission would have done if any of the market-dominating companies it fined – ArcelorMittal, SAA, bread companies, construction companies, Telkom – had turned around and thanked it.

That’s what Alibaba did recently after the Chinese regulator imposed a record fine on it. The global tech group thanked the regulator and went on to say: “Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development.”

The group’s CEO Daniel Zhang made additional conciliatory remarks designed to assure the Chinese government that it knew who was in control.

Where is Jack Ma?

There was no sign of Alibaba founder Jack Ma amidst all of this kowtowing. Ma has only been seen once since last October when he rather famously, and remarkably foolishly, told the world the Chinese banking system operated like pawnshops.

Over at Tencent the much more circumspect Pony Ma is reported to be treading very carefully with expansion and acquisition plans in order not to incur the wrath or even attention of the regulators.

Regulators in China are remarkably more robust than their counterparts not just in South Africa but anywhere in the world. Earlier this year the head of one of the country’s largest asset management companies – and one that had grown aggressively in recent years – was convicted of corruption and promptly executed.

The big question for international investors is what happens when Tencent and the other major tech companies in China are prevented from maintaining their spectacular growth momentum? Is it a bit like an elephant on a bicycle? If it’s not moving extremely fast, will it fall over?

Glencore shareholders a docile bunch

No doubt Glencore executives are very glad the group has nothing as forceful or effective as the Chinese government on its list of shareholders. There are rumblings of discontent about the commodity group’s new remuneration policy, which could see recently appointed CEO Gary Nagle being paid as much as $10.4 million (around R149 million) a year. Proxy advisors are urging shareholders to vote down the proposed remuneration plan.

Unlike the Chinese government it does seem Glencore shareholders are a fairly docile bunch. How else could you explain the company’s plan to operate its second ‘Covid AGM’ as a closed affair? Last week Glencore reminded shareholders that although they would not be able to attend the AGM, they would have an opportunity for “engagement” ahead of the meeting by way of a live video webcast to which they could submit questions beforehand.

Presumably, the board realises none of the shareholders will make a fuss about not being given the opportunity to attend – even virtually – the single most important event on the shareholder calendar.

The group describes itself as “one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 60 responsibly-sourced commodities that advance everyday life”.

You have to wonder how it’s possible that a company of that stature cannot manage to arrange an interactive Zoom AGM? Could it be dozy shareholders?

Tense times 

The share price of print and packaging group Novus closed almost 10% weaker on Friday but the R1.65 marked a significant advance on the R1 at which it was trading 10 days earlier.

It was a busy week for the former Naspers subsidiary with two investors emerging as the buyers of the 17.48% stake that had been sold earlier in the week by Media24, a current Naspers subsidiary.

The disposal by Media24 brings to an end what had become a tense relationship between two former close allies. Novus, previously Paarl Media Group, had enjoyed a very profitable (for Novus) printing arrangement with Media24 for decades.

An attempt to buy out the founding CEO of Novus was dragged into the Competition Commission thanks to competitor Caxton, and ended up with a forced decision to list the company.

In March 2015 Novus commenced trading on the JSE at R13.25. Things have pretty much gone downhill since then with pressures on traditional printing business combining with ill-conceived acquisitions to eat away at the group’s profits and asset value.

The buyers are Adrian Zetler’s A2 Investment Partners, which took up 10.18%, and Peresec, which bought the remaining 7.3%.

The two other significant shareholders in Novus are Value Capital Partners with 10% and Caxton with 8%. Hopefully, they will all be able to work together and nudge Novus’s fortunes in a different direction.


Meanwhile, the decision by Adcock Ingram to repurchase a chunk of its shares will result in Bidvest tightening its control position on the pharmaceutical group a little.

Last week’s announcement that Adcock had repurchased 5.3 million shares with a total value of R238.4 million contained the interesting note that the annual interest charge on that sum would be R9.1 million.

That annual interest charge is equivalent to R1.71 per share repurchased, which is a little less than the R180c a share dividend that Adcock paid out last year.



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