TUESDAY, 1.30PM:
IN the face of rising panic over escalating interest rates, Reserve Bank governor Chris Stals and Finance Minister Trevor Manuel on Monday hastened to calm investors’ nerves by underlining their belief in South Africa’s economic fundamentals.
Speaking at a business forum in Hamburg, Germany, on Monday, Stals said he does not expect the repo rate to remain at such a high level for much longer. “I think the market is trying to find a new level … I do not think it is a good representation of where it should be,” he said.
Highlighting the price the economy can pay for membership of international financial markets, Stals said the Reserve Bank can do little more than “lean against the wind [of market forces]”. We just have to ride it out and do the best we possibly can to protect the South African economy, without stopping the process of being part of the global financial market.”
Responding to speculation that South Africa will consider establishing controls against short-term capital inflows, Stals said he will only consider such measures if they are recommendation by an international organisation. He said central banks remain sceptical about such measures, as they smack too much of intervention in an era of economic liberalisation.
Manuel, meanwhile, said at the same conference that he is confident the market turmoil will be short-lived, and that domestic fundamentals remain strong. Accordingly, the government has not revised its growth targets for the economy, he said.
BUSINESS BRIEFS
PUBLIC SERVICE TALKS POSTPONED AGAIN
PUBLIC service wage negotiations were postponed once more in the central bargaining chamber on Tuesday, because government representatives had no mandate to improve their original wage offer, a senior trade union negotiator said. The chamber will reconvene on June 29, when discussions on pay increases will resume.
WORLD BANK TO HOST AFRICAN BUSINESS
THE World Bank announced on Tuesday that it is to host major African entrepreneurs in a high-profile business forum in the United States capital Washington DC next October. The event, tagged Africa Day Business Forum, will be organised by the World Bank-IMF Africa Club under Bank President James Wolfensohn. It is hoped that the event will match 200 top African businesspeople with their US counterparts.
SIEMENS EXTENDS ZIM CELL CONTRACT
SOUTH Africa’s Siemens Mobile Networks announced on Tuesday that it has extended its contract with Zimbabwe’s only cellular network, state-owned NetOne. The $22-million contract will triple NetOne’s capacity from 20000 to 60000 subscribers and will extend the networks capacity. The extended capacity, the third phase of Siemens’ contract, will relieve growing congestion problems that affect the capital Harare, and Bulawayo.
MBOWENI BACK IN JOBS SUMMIT
LABOUR Minister Tito Mboweni on Monday rejected allegations that he is trying to abdicate responsibility for the planned presidential jobs summit. According to a ministerial spokesman, Mboweni will be firmly in command of the summit, and any suggestion that he is ducking his responsibility is misleading.
TAX RAIDS ON MANGOPE
THE South African Revenue Service raided at least 10 financial institutions last week, trying to find details on former Bophuthatswana president Lucas Mangope’s earnings. Two of the institutions raided were HBSC Simpson McKie and portfolio manager Dolfin Financial Services. All institutions raided are believed to have acted on behalf of share trading companies owned by Mangope. Mangope’s business premises in Mmbatho were also investigated last week. Business Day reports that Mangope on Monday night said that as president he was exempt from paying tax, and he has asked his accountant to assess the tax he owes since stepping down in 1994.
SAA TO HIRE FOREIGN EXECS
CONTROVERSIAL new South African Airways CE Coleman Andrews on Monday announced that he will look internationally when appointing a number of senior executives, bucking SAA parent company Transnet’s stated affirmative action policy. “The positions will be filled with the best-qualified people, regardless of their nationality,” he said. Despite his decision flying in the face of affirmative action policy, both the Transnet board and government have given Andrews their approval.
SBDC’S PROFITS RISE
THE Small Business Development Corporation’s headline earnings rose 28% to 43c a share in the year to March, the corporation announced on Monday. The SBDC approved 896 projects valued at R304,6-million, which substantially boosted earnings. Earnings per share rose 25,6% to 41,8c from 33,3c, while net profit after a R39,1-billion tax bill came in at R74,9-million — an increase of 7,3%.
SBDC
TML PROFIT UP 11%
MEDIA group Times Media Limited on Monday reported a 9% rise in earnings per share to 300c, from 275c, for the year to March. Turnover increased 18% to R647,9-million from R548,9-million, while operating profit was 11% up at R79,9-million, from R72,1-million.
ITALIAN FIRM DEL MONTE FAVOURITE
CIRIO, an Italian-based multinational food group controlled by Sergio Cragnotti, has emerged as the most likely bidder for Anglo American’s controlling stake in struggling food group Del Monte. Anglo announced last week that it is to sell its stake in Del Monte at a 40% discount, for $120-million. In announcing the sale, Anglo stressed that rival Italian food group Parmalat “is not the purchaser”, fueling speculation in the Italian media that Cirio is the most likely candidate. On Monday, both Cirio and Del Monte chief executive Vivian Immerman refused to confirm Cirio’s status as likely bidder, remaining tight-lipped pending approval from regulatory authorities in Italy, Ireland and Germany.
OFFSHORE INVESTS R775m IN JSE
FOREIGN investors were net buyers of R775,1-million of South African stock on the Johannesburg Stock Exchange last week, the JSE announced on Monday. Broken down, the figure represents R1,62-billion of equity sales, against purchases of R2,39-billion. Net purchases for the year are currently R25,87-billion.
MALAYSIA STICKS TO ARMSCOR DEAL
STATE-owned arms procurement agency Armscor is forging ahead with a deal to sell Malaysia Rooivalk attack helicopters and G5 artillery systems, despite the current uncertainty in the Malaysian economy. Armscor chairman Ron Haywood said the Malaysian government has confirmed that the deal will be concluded within two years.