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Finweek - English

Finweek - English 06 February 2020

Finweek is South Africa’s leading financial weekly magazine focusing on investment. With its brisk, creative and authoritative analysis of business and investment issues, it’s an essential business tool in the daily battle for competitive advantage. Today's business decision-makers have to cope with increased pressure on their time and are expected, more than ever before, to succeed in the face of stiffer competition. Finweek provides relevant information in quick bytes, along with award-winning investment advice.

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2 min.
from the editor

a head of the World Economic Forum at Davos, the IMF revised its global growth rate from 3.4% to 3.3% for 2020, while earlier in January the World Bank set its growth rate forecast at 2.5%. Given this sluggish global environment, it’s hardly surprising that PwC’s 23rd Annual Global CEO Survey showed that CEOs the world over have moved from record optimism regarding economic growth two years ago, to record pessimism this year. While the economic environment was already unfavourable in 2019, those in the top jobs were confident about their organisations’ abilities to grow revenue. This isn’t the case today, explained PwC Africa CEO Dion Shango at a media briefing where the latest survey results were presented. So how does a business look for growth in such a challenging environment? One of the…

4 min.
economic growth: what we know and don’t know

the idea of economic growth is under attack. As the planet heats up, Australia burns and drought in many parts of South Africa continues, many are wondering whether the economic model of the twentieth century is the right one for the twenty-first. Some suggest we pivot our expectations to a zero-growth scenario: Stop producing more and more goods and instead focus on living sustainably. Others are even more extreme: They want de-growth, a world where we all become progressively poorer. Apart from its paternalistic attitude – you should stay poor because the world cannot afford that everyone be as rich as us – the view that economic growth is the scapegoat rather than the solution is just, well, wrong. Economic growth, measured by growth in the gross domestic product (GDP), calculates the value…

4 min.
clean energy should fill the eskom void

the domestic electricity supply has experienced unendurable volatility in recent years, adversely affecting economic performance. This has stimulated the discourse about energy security and electricity-generation technologies. On the whole, the energy policy framework should be underpinned by these five considerations: electricity demand outlook, low carbon emissions, sufficient reserve margin, investments and job creation. The department of energy’s integrated resource plan provides guidelines on the character of the energy sector in the years ahead. To a great degree, government subscribes to the fidelities of clean energy. South Africa is one of the top emitters of carbon dioxide in the world due to Eskom’s coal-fired power stations and Sasol’s coal-to-liquid plants, located in Mpumalanga. These two companies account for more than 50% of the country’s carbon emissions. The 2015 Paris Agreement’s central effort is to…

4 min.
in brief

“WE HAVE PUT OUR BEST FOOT FORWARD.” – Finance minister Tito Mboweni, who led South Africa’s delegation to the World Economic Forum meeting in Davos, Switzerland, said most attendees questioned them about SA’s electricity issues and government’s fiscal sustainability. “We will be destroyed by climate change, not the planet.” – António Guterres, secretary general of the United Nations, speaking at the recent World Economic Forum meeting in Davos. Climate change and the impact it has on humans was clearly at the centre of discussions. Greta Thunberg, the Swedish youth activist mobilising young people across the planet to take their governments to task about the issue, also attended the meeting. “I HAVE NOT CONSIDERED RESIGNING AND I WON’T RESIGN.” – Public Protector Busisiwe Mkhwebane hit back after Parliament indicated in late January that it had approved…

5 min.
tax boost to government as mineral prices soar

rocketing platinum group metal (PGM) prices, especially palladium, is good news for the government as well as for shareholders of the companies that produce them. The government is not often mentioned in the same breath in a discussion about shareholder returns, but it benefits significantly from a strong financial performance by the sector – if only government officials would recognise it more when it came to policy. Rand-based prices for several South African-mined metals and minerals were significantly higher in 2019: up 38% year-on-year for the PGM basket, which includes platinum, palladium and rhodium; 20% higher for gold; and iron ore was 46% higher. The only downside was for thermal coal, where export coal prices fell 22% but have started to record an interesting bounce this year. This has been reflected in the…

2 min.
looking beyond platinum group metals

The share prices of companies producing platinum group metals (PGMs) have clearly been on the rise. Impala Platinum (Implats) is one of the best examples, having recorded the lowest-ever levels in mid-2018 at a time when Sibanye-Stillwater considered a takeover of the firm, only for the company’s shares to hit their best levels in over six years in January on the back of PGM price improvements. One share that seems to have missed the PGM rise – with investors just starting to clock on to its potential – is African Rainbow Minerals (ARM), the company chaired by Patrice Motsepe and which is also exposed to the iron ore, manganese, and gold markets. At the time of writing, shares in the company had begun to respond to this year’s improvement in palladium by…