Finweek English Edition – August 15, 2019

DOUBLE TAKE BY RICO

@finweek finweek finweekmagazine finweek^ 15 August 2019^9

Credit rating agency Fitch downgraded

the outlook on SA’s foreign currency

denominated debt from stable to

negative, citing in a statement fiscal

pressures including increased support

for struggling state firms such as the

power utility Eskom. The agency,

however, kept the said rating at BB+

(sub-investment grade). Moody’s

Investors Service, the only major rating

company that still has SA at investment

grade, warned that a recent decision to

more than double state financial support

for Eskom to R59bn, is “credit negative,”

reported Bloomberg.

THE

BAD

Cape Town has recorded 4 588 different

animal and plant species, making it the

world’s most biologically diverse city,

according to the City Nature Challenge,

a competition between cities around

the world to see which city can make

the most observations of nature and

find the most species. Business Insider

reported that Cape Town had 53 763

observations by 1 141 people. The

Mother City’s closest competition, La

Paz in Bolivia, had 46 931 observations

and 3 006 species recorded.

THE

GOOD

$5bn

Facebook was hit with a record-breaking $5bn (about R74bn) fine for privacy violations by the Federal

Trade Commission (FTC), reported The LA Times. The fine is part of a resolution from a government

inquiry that was sparked by allegations that the social media giant violated a 2012 consent decree

by inappropriately sharing the information of about 87m users with Cambridge Analytica, a political

consulting firm that harvested the personal data of millions of Facebook profiles without consent and

used it for targeted political advertising purposes. Although it is the largest fine in FTC history, the size

of the penalty has received some public disapproval as it represents about a month’s worth of revenue

for Facebook.

FACEBOOK FINED

13-YEAR LOW FOR MASSMART

Massmart’s share price plunged 27% to a

13-year low of R42.99 after warning the market

that it expects to make an operating loss of

R30m in the first half of the year as a result of

softer-than-expected sales, margin weakness

and higher expenses, reported Reuters. “The

lesson here is that while we rightly critique local

companies who rush offshore in an attempt to

boost earnings, only to get it totally wrong, we

equally see large global companies rushing into

emerging markets trying to boost profits, also

getting it very wrong,” commented investment

expert Simon Brown. He cautioned that the

new CEO from majority shareholder Walmart

has a tough job as the share trades at a decade

low. Walmart paid $2.3bn for its 52% stake in

Massmart in 2010, which is now worth $370m

and loss-making.

Heineken SA is currently expanding production

capacity at its Sedibeng Brewery in Gauteng

in order to keep pace with increased demand.

The expansion, which should be complete in Q

2020, comes at an estimated cost of €60m,

according to Heineken SA’s managing director,

Gerrit van Loo, and will grow capacity from the

current 6m hectolitres to 7.5m hectolitres. There

are also plans to build a €40m maltery going

forward. Heineken SA is the second-biggest

player in South Africa’s beer market (after

AB InBev), with 18% market share. Currently,

around 15% of Heineken’s local consumption

is imported, but, ultimately, Van Loo would like

to see all of this produced locally. South Africa

is one of Heineken’s top-five fastest-growing

markets and contributes approximately 2.7%

towards Heineken’s global production.

€60m (^) 27%
EXPANDING CAPACITY
Pho
to:^
Shu
tte
rsto
ck
South Africa’s unemployment rate
increased by 1.4 percentage points
from 27.6% in Q1 2019 to 29% in Q
2019, according to Stats SA’s recent
Quarterly Labour Force Survey. The
29% unemployment rate is the highest
since Q1 2008. The survey also points
out that the number of unemployed
persons increased by 455 000 to 6.7m
in Q2 2019. When computing the broad
unemployment rate, which takes into
account South Africans who are no
longer looking for work, the rate increased
from 38% to 38.5% in the same period.
The unemployment rate for people aged
25-34 (35.6%) is more than double that
of the 45-54 year-olds (17.2%), according
to the stats, pointing to a huge youth
unemployment rate and problem.
THE
UGLY