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Ten worst SA performers tell tale of battling economy

Companies are battling crippling unemployment levels, plummeting business confidence, instances of corporate malfeasance and a lifeless economy.

It’s not even the end of the first quarter and already there’s a plethora of once-significant South African companies that have either collapsed or had their share prices hit the wall.

The likes of sugar producer Tongaat Hulett, tech provider EOH, Blue Label Telecoms and Aspen Pharmacare have lost billions in value, sending tremors through a South African market that was still reeling from the shock of retailer Steinhoff International’s more than 90% plunge since December 2017. The latest in the sorry line-up was construction company Group Five, which went into administration on Tuesday after running out of funding.

While property and construction have suffered some of the worst declines this year, the malaise isn’t limited to those industries. From technology to telecommunications, retailers, consumer goods, agriculture, education and financial services, South African companies are battling with crippling unemployment levels, plummeting business confidence, instances of corporate malfeasance and a lifeless economy that expanded just 0.8% last year.

And it’s not just about economic indicators. The property firms? There’s deep uncertainty about land rights in South Africa as President Cyril Ramaphosa moves toward changing the law to clarify when the state can expropriate land without compensation. For construction companies? Years of mismanagement, corruption and under-spending on state infrastructure have left builders without enough things to build. In the background, of course, there are consumers who are shopping less and straining under increased taxes.

South Africa’s economy is forecast to expand 1.7% this year, according to the central bank and National Treasury, but that figure was produced before higher-than-estimated tariff increases were announced for cash-strapped power utility Eskom. 

One ray of hope is the soaring palladium price. That’s caused the shares of companies such as Impala Platinum, Lonmin and Anglo American Platinum to outperform most stocks on the 165-member FTSE/JSE Africa All Share Index this year. It’s just a shame that the mining industry in South Africa, once the world’s biggest gold producer, makes up less than 10% of the country’s gross domestic product these days.

While the mining counters have helped the Johannesburg bourse climb more than 5% this year, that’s less than the gains by exchanges from New York to London, Tokyo and Hong Kong. There’s an adage in Afrikaans, one of South Africa’s languages, that says “local is lekker,” meaning home is great, but so far this year, local isn’t very lekker at all.

© 2019 Bloomberg L.P

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Steinhoff’s (Jooste and his cronies fraud) collapse has clearly caused huge losses right across the complete spectrum of the economy of South Africa.

This, together with the PWC Report which names Jooste and his cronies, there has been ZERO arrests to date.

What is quite startling is the fact that Steinhoff (The Company) has neither laid a criminal charge nor issued a civil claim against any of those persons named in the PWC Report. Why not?

What is Steinhoff’s current execs so frightened of?

I enquired about the Investor Protection Levy with my broker.If you dont know every trade on the JSE gets charged this. My broker told me the JSE can tell me how those funds have been used to investigate fraud etc on the JSE. I contact the JSE and get a long answer but no answer to my question on what is the status of steinhoff investigation. I get then referred to the FSCA and send them an email and get no answer so far. Note on R20billion trade on JSE per day its about R80 000 collected per day. I still dont know if the JSE takes that money or the FSCA.

Thu 2019/04/04 1:37 PM
Good day
Ref:65761
Thank you for your email.
Your query has been escalated to the relevant department for attention.
Kindly follow up with FAIS Compliance Department on:
Mahlomola Mataboge: 012 367 7218 or mahlomola.mataboge@fsca.co.za
Also note that the FAIS Compliance Department works on a first come first serve basis with a turnaround time of 7 days.
I trust that this information is to your satisfaction.
Regards
Molelekwane Salamina Mokgoshi

Tel: 012 422 2910

Fax: 012 3465616 Email: molelekwane.mokgoshi@fsca.co.za
Website: http://www.fsca.co.za

“The average value of JSE trading is closer to R20bn per day than R6bn and the levy is charged on both the purchase and the sale leg of a transaction. The levy is 0,0002% per trade leg so that equates to approx. R80 000 per day on an average day.
I hope this clarifies the matter further.
Regards
Shaun Davies
Director: Market Regulation JSE”

It took the ANC 25 years to turn the “powerhouse of Africa” into a manifestation of the Freedom Charter. Our economy reflects a situation where “the land belongs to those who work it”. The implosion of our economy, this financial crisis, is the success of the Freedom Charter. This mission statement of the ANC is an implicitly guarantee for financial ruin.

This is the “wonderful legacy” of the stalwarts, brought to you by the criminal cadres.

Sensei, you always give the reader an impressive mix of words!

(…soon MoneyWeb readers will ask when you publish your first book? 😉

If I may…add a word or two of my own:
“…the final upper-cut to SA’s economic confidence, came from famous boxer ZUMA and his capture sponsors. To date, Zuma’s ring opponent (the SA economy) is suffering permanent concussion.”

Sensei

This is what always confuses me. In the JSE these are the worse performing companies. Non of us as investor are checking the number of salary increase that the big shot got.

Yes the government has given this guys a challenging work environment. The government never asked ASPEN directors to borrow thru the roof. In the case of ASPEN the get a lot of preference from the government. Why are they not making money then.

Investors need to start asking the right question and pressing for accountability.

Companies get severely punished for their mistakes. The shareholders are the owners, “the buck stops with them”. Therefore, the mistakes made by private institutions and businesses are not our biggest problem. The unresolved problem is the elephant in the room. Government spending on the public wage bill, social grants and guarantees to failing SOE’s and municipalities is unsustainable. The ineffective socialist redistribution actions(BEE)of the government have redistributed the owner’s equity in local companies. Now it is only the debt that remains.

The SA tale of battling economy is the culmination of 25 years of ANC corruption and mismanagement.

You know what’s really scary? In 10 years time, those who are still here will look back on 2019 and regard these days as halcyon days. As Ernest Hemingway said: “You go go bankrupt slowly, slowly, slowly, then very fast”. We’re on the last slowly and the next step CANNOT be prevented. IMF, get used to those 3 letters. Even worse, I suspect the UN will be here as peacekeepers and food providers in the next 20 years when the various tribal groups start slaughtering each other

Dont forget that the rest of Africa are also going to come South to try and get a piece of the pie or even the crumbs left over thus more slaughter as is already going on.

The amount of Zimbabweans in Johannesburg alone is staggering.

In a generation or two they will be as South African as magwinya and biltong, no matter how much we jump up and down about it.

As a country we need to face the reality that Tendai and Takunda will be common South African names before we know it. Already, at this point, Shona might as well be an official language.

I’m kinda okay with this, because by and large Zimbabweans are hard working people. I’m just not sure our indigenous tribes are ever going to accept this new reality fully.

Side note: My domestic worker is an Ndebele from Zimbabwe. Her children do Afrikaans as a second language at school. I asked her recently what she thought of that, and she looked at me like I was crazy for asking the question. Although she can’t speak the language, she’s happy for her children to be able to speak it. No complaints from her side.

Looks like I am going to retire poor. At least I will not be poor alone. All of us will be poor together!

And having totally screwed the economy, what does treasury do? They up the tax collection targets.

And the municipalities? Into their 10th year of 2X inflation increases.

Got to raise the cash to refurb cabinet ministers houses, no doubt

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