THURSDAY, 11.30AM:
DESPITE a slight increase in new vehicle sales from April, May sales fell sharply compared to the corresponding period in 1997, reflecting the overall sluggishness in the economy and uncertainty in international markets.
The National Association of Automobile Manufacturers of South Africa now expects that an anticipated recovery in the vehicle sales market in the second half of the year could be delayed by the increasingly gloomy economic outlook and the waning business confidence as volatile international markets continue to depress local business confidence.
According to Naamsa’s latest monthly report, volumes of new vehicles sold in May fell 13,6% from the volume sold in May 1997. New car sales, at 17227 units reflected a fall of 2155 units, 11% down from the corresponding period last year. The May figure, however, showed a marginal 4,6% increase on the volume of new cars sold in April. Sales of light commercial vehicles — including bakkies and minibuses, fell a significant 18,7% from the 10240 units sold in April. Compared with the corresponding period last year, the sale figures in this category reflect a marginal improvement of 2,9%.
Vehicle sales in the medium and heavy truck category for May — at 411 and 579 units respectively — fell both month-on-month, and compared with the corresponding period in May 1997. The medium truck sales fell 95 units, or 18,8% from April, while the heavy category — including trucks and buses — reflected a more modest slide of 28 units, 4,6% month on month.
In contrast to the dismal month car manufacturers had in the domestic market, a higher volume of new vehicles, cars in particular, were sold in the export market. New car exports rose to 5986 to April, compared to 2287 in the corresponding period in 1997. The total units of car, light commercial vehicles and medium and heavy trucks rose from 5123 to 8524 over the same period.
BUSINESS BRIEFS
‘GIVE RAND TIME’ SAYS STALS
RESERVE Bank governor Chris Stals on Wednesday evening firmly denied rumours that the central bank will sanction an increase in commercial banks’ prime lending rates, after leaving a short-notice meeting with bank chief executives. Stals, in contrast, asked executives to “be a little more patient” before increasing their lending rates in line with a surge in the repo rate. The Reserve Bank’s intervention in the foreign exchange market on Wednesday saw it meet the money markets’ entire cash requirements of R13-billion, in a temporarily successful bid to stabilise the rand.
CAPE GETS TOP RATING
THE Cape metropolitan council was awarded the highest domestic short- and long-term credit risk ratings by international credit rating firm Duff & Phelps on Wednesday. The council received a D.1+ rating for its short-term credit risk, while its ability to repay long-term debts earned it a AA rating. Both ratings indicate a high credit quality, with strong protection based on the council’s outstanding local registered stock of R13-million. The council has net cash reserves of over R730-million, and a stable revenue flow.
IBM REAFFIRMS OFFER
COMPUTER manufacturer IBM on Wednesday stood by its R10 per share offer to acquire a 46% stake in IBMSA, despite considerable dissatisfaction with the offer from shareholders. IBM made the offer to acquire the minority shareholders’ interests in IBMSA by means of a scheme arrangement two weeks ago. Rand Merchant Bank, who is advising on the offer, is expected to make a comprehensive announcement on the offer details within the month.
NUMSA MARCH ON HEARING
THOUSANDS of National Union of Metalworkers of South Africa (Numsa) members marched to the Randburg Towers on Wednesday during a bargaining council second dispute hearing. Numsa is protesting an attempt by the South African Motor Industry Employers’ Association, to draw it into a discussion on a wage dispute that is overseen by a facilitator. Numsa is bitterly opposed to a facilitator’s involvement, saying it will only cause delays and complicate the discussions.
MPUMA CASINOS JACKPOT
MPUMALANGA’S three casino have exceeded all expectations in their earnings, currently pumping 55% more than anticipated in gaming taxes into the provinces needy coffers. Global Resorts Graceland casino in Secunda, Tsongo Sun’s Champions casino in Witbank and its other casino in Nelspruit, are operating above estimated revenue and projected patronage. Global Resorts South Africa CE Ernie Joubert said that, assuming South Africa’s casino businesses are optimally run, total gaming spend is likely to be R5,8-billion by 2000. Mpumalanga’s share is estimated to be R389-million, he said.
DE BEERS JOINT VENTURE
TORONTO-based mining group, SouthernEra, on Wednesday announced that it is probable that the disputed diamond pipe on Marsfontein farm in Northern Province will be jointly mined by SouthernEra and De Beers. President Chris Jennings said the output will be marketed through the South African diamond board. Attempting to rally investor morale after rumours that SouthernEra has ceded some 60% of the Marsfontein stock to De Beers, Jennings said he will “fiercely resist” any attempt by De Beers to control the Klipspringer property on which Marsfontein is located. SouthernEra, and local partner Randgold, were due to start mining in January, when the 29 heirs to the property intervened, claiming the rights which they had given De Beers an option on.
DE BEERS, NUM DEADLOCK
WAGE negotiations between the National Union of Mineworkers and De Beers ended in a deadlock on Wednesday after De Beers failed to move higher than its offer of a 3% wage increase. NUM deputy secretary Archie Palane said De Beers expected the union to lower its 12% demand in light of the current inflation rate of 5%.
KAGISO EYES STATIONS
The black-controlled media group Kagiso Media is well positioned for growth and may add Classic FM and KFM to its stable, business analysts predicted on Wednesday. Kagiso bought out Naledi Jacaranda Investment Holdings, which includes 42% of Radio Jacaranda, for R138-million last month. Kagiso also owns 76% of East Coast Radio and 75% of Radio Oranje.
NEW LIFE FOR NORWICH
The future of life group Norwich has been shored up with the news that financial services company Fedsure has bought the 28% stake held by the Board of Executors (BoE) for R1,05-billion. The deal raises Fedsure’s stake from 32% to 60%. BoE said only last month that it intended to take a contolling stake in Norwich. However, it was subsequently felt that Fedsure’s “unsolicited” offer offered Norwich good long-term prospects.