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08
AUG
2pm

Global food prices cool from record levels but remain elevated – UN Food and Agriculture Organization

Global food prices fell for the fourth consecutive month in July, the UN’s Food and Agriculture Organization (FAO) said on 5 August. That is a rare piece of good news on the inflation front. But prices remain at elevated levels and, in South Africa, food inflation has continued to accelerate.
The FAO’s Food Price Index (FPI) measures a basket composed of the most globally traded commodities that wind up on your table. It scaled a record high in March of 159.3 points in the immediate wake of Russia’s invasion of Ukraine, a major grain producer.
Since then, the index has been in decline each month and reached an average of 140.9 points in July, down 13.3 points or 8.6% from June. This was its steepest monthly fall since October 2008. The recent UN-brokered deal on Ukrainian grain exports was cited as a key contributing factor.
That is a good sign – well, some farmers and traders might disagree – but food prices remain elevated. In July, the FPI was still 16.4 points or 13.1% over what obtained in the same month last year.
“The decline in food commodity prices from very high levels is welcome, especially when seen from a food access viewpoint,” Maximo Torero, the FAO’s chief economist, was quoted as saying by the UN news service.
“However, many uncertainties remain, including high fertiliser prices that can impact future production prospects and farmers’ livelihoods, a bleak global economic outlook, and currency movements, all of which pose serious strains for global food security.”
Meanwhile, in South Africa, food inflation is still heating up.
Food inflation for consumers in South Africa was running at 9% in June compared with 7.8% in May, according to the latest Consumer Price Index releases from Stats SA. In April, it was 6.3%.
Domestic food prices are a key driver of domestic inflation, which raced to a 13-year high of 7.4% in June, uncomfortably outside the 3% to 6% range targeted by the South African Reserve Bank (Sarb). This in turn explains why Sarb has been aggressively raising interest rates.
But if global food prices have turned a corner, one would expect domestic food inflation to also start slowing down eventually. Indeed, food prices might even be higher in South Africa currently, were it not for the decline tracked by the FAO’s FPI.
Millions of South Africans are going hungry and food inflation worsens their plight. Hopefully, South Africa will also start turning the corner soon. ...
08
AUG
2pm

Enforcement Committee beefs up powers of Information Regulator

The committee comprises 14 experts in information security, education, finance accounting, auditing, actuarial science, forensics and criminal investigations. They’ll be able to make recommendations for criminal action and the only recourse is through the courts.
A year after the Information Regulator’s enforcement powers came into effect on 1 July 2021, it has finally established an enforcement committee to take on matters related to the Protection of Personal Information Act (Popia) and the Promotion of Access to Information Act (Paia).
That’s bad news for private and public entities accused of being sloppy with personal information or that have failed to comply with Paia applications.
Based on the global data privacy standard, the European Union’s General Data Protection Regulation, Popia protects the right to privacy, as set out in Section 14 of the Constitution by holding every company, public entity and organisation accountable for how they collect, store, process and use data.
Paia upholds the Constitutionally guaranteed right to access information. Section 32(1) of the Bill of Rights provides for the right of access to information held by the state; and any information held by another person that is required for the exercise or protection of any rights.
Popia requires every responsible party (i.e. the person accountable for the processing of personal information within a public body or organisation, ultimately the CEO, municipal manager or director-general) to appoint and register an information officer with the Information Regulator.
Paia, meanwhile, holds those information officers responsible for providing access to personal information, while Popia obliges them to comply with data processing. The latter also requires information officers to ensure compliance with Popia and to assist the regulator with investigations.
The two pieces of legislation, therefore, balance the right to privacy with the right to access to information.
The Enforcement Committee, which will be chaired by advocate Helen Fourie SC, with Simonè Margadie as the alternative chairperson, comprises 14 independent members with expertise in law, information security, education, finance accounting, auditing, actuarial science, forensics and criminal investigations.
It will make findings on Paia and Popia complaints and make recommendations to the Regulator.
Visit Daily Maverick’s home page for more news, analysis and investigations
During the induction of the committee on 22 July 2022, Information Regulator advocate Pansy Tlakula hailed the inauguration as a “historic moment” for the body because, for the first time since its establishment in 2016, it can now enforce its powers and “provide an effective remedy to the complainants whose right to privacy ...
08
AUG
2pm

Is it the end of the runway for Mango Airlines?

The Air Services Licensing Council has suspended licences that give Mango the right to fly, because the state-owned airline has been grounded for more than 12 months. Without licences, investors that have lined up to rescue Mango might walk away, hastening its demise.
The ongoing attempted rescue of Mango Airlines is on shaky ground as its valuable assets, which would help the state-owned airline to receive much-need capital from investors, have been taken away.
The Air Services Licensing Council (ASLC), which is part of the Department of Transport and is responsible for awarding or revoking traffic rights to airlines, has suspended two air services licences belonging to Mango because the airline hasn’t flown in over 12 months. The suspension is for two years.
Mango hasn’t flown since the end of July 2021 because it submitted itself to business rescue proceedings, which are aimed at rehabilitating the airline’s financial situation which worsened due to Covid lockdowns that floored South Africa’s aviation industry.
The Air Services Licencing Act, which governs the country’s aviation licensing regime, requires that flight operations of airlines not be interrupted or grounded for more than 12 months if they want to keep their licences.
Mango has exceeded the 12-month grace period and its business rescue practitioner, Sipho Sono, has to now hand over the airline’s licences to the ASLC.
Mango, a subsidiary of state-owned SAA, has to essentially relinquish its right to fly. Without air services licences, efforts to rescue Mango and revive its flight operations will be futile.
The process to find investors jeopardised
Mango’s rescue plan is premised on finding strategic equity partners or investors who would buy the airline from the government and recapitalise it.
The Department of Public Enterprises – the custodian of state-owned entities (including airlines) – wants Mango to be hived off from SAA’s operations and completely sold to private sector players. Sono has already identified a preferred group of investors interested in buying Mango. The investors, who are part of a consortium, haven’t been named.
The investors had already signed an agreement with Sono to buy shares in Mango and the final step was for the group to assemble funding for the purchase by 10 August 2022. But this deal hangs in the balance now that Mango’s right to fly has been taken away.
Investors would typically want Mango to have valid air services licences so that the airline can restart its operations, work to regain its market share in the domestic ...
08
AUG
2pm

Transnet’s plans to revive Carlton Centre and Adderley Street Precinct could revive city centres

The state-owned company Transnet wants to spruce up Johannesburg’s iconic Carlton Centre. And another redevelopment is on the cards in Cape Town. Transnet now sees itself as a major real estate investor.
When Maria Ramos was Transnet’s CEO in the early 2000s, she launched an initiative to review properties owned by the logistics company with a view to selling some of them to raise capital.
After all, it doesn’t make sense for a company like Transnet – whose main operations involve running freight rail networks and ports – to also manage a portfolio of properties in the retail, office and residential markets.
By 2007, Ramos’ review pointed to a need for Transnet to sell several properties, including the Carlton Centre, an iconic property in downtown Johannesburg that stands 223m high and has dominated the city’s skyline for around 50 years.
Transnet considered the Carlton Centre, which it bought from Anglo American in 1999 for R33-million to use as its headquarters, as non-core to its operations – thus starting a process in 2007 to engage potential buyers.
A year before this process started, Transnet successfully sold the V&A Waterfront in Cape Town for R7-billion to several investors, including London and Regional Properties (a private equity investor), the Emirati investment firm Dubai World, and several South African black economic empowerment investors. (Today, the V&A Waterfront is owned by the Public Investment Corporation and Growthpoint Properties.)
As Ramos was engaging potential Carlton Centre buyers in 2007, the global financial crisis struck, forcing many investors to put their purchase decisions on hold. By 2008, Transnet put the sale of the Carlton Centre on ice until economic conditions in South Africa improved.
Economic conditions have fluctuated since then, and Transnet is still the owner of the Carlton Centre – without a demonstrable plan to sell the property.
Fixing up the Carlton Centre
Transnet is instead engaging private sector property developers that it can partner with to refurbish the Carlton Centre. The building comprises 68,000m² in office space, a 53,000m² shopping centre, a 663-room hotel known as the Carlton Hotel, and another small hotel (63 rooms).
The Carlton Centre needs to be spruced up. The area in which the building is located is a hotbed of crime and refuse can often be seen strewn on pavements. The Carlton Hotel closed its doors in 1998 and is suffering from neglect, and the busy shopping mall inside the Carlton Centre could use a fresh lick of paint.
Visit Daily ...
08
AUG
2pm

The contribution of koala bears to the SA paper industry

The name Cecil John Rhodes is so intrinsically linked to the diamond industry that it’s a little known fact that by the time Rhodes actually got to Kimberly in 1871, there were already around 50,000 people there. How did he, out of those 50,000 people, emerge to be the chairman of De Beers, still the world’s largest diamond company?
The short answer is, it didn’t happen overnight; he was deft and creative and an extraordinary mover and shaker. He was also helped by his ice machine. He and his partner Charles Rudd bought an ice machine in London, brought it to Kimberly and sold ice to the miners. They did a roaring trade because Kimberly is searingly hot at the best of times.
How much of a difference the ice machine made in Rhodes’ ability to buy up all the rival claims at Kimberly is not clear, but it falls into the category of the “picks and shovels” theory of business.
This theory is that the big money seldom derives from the most obvious source, in this case, diamonds. At the original gold diggings in the US, for example, the people who made the most money were not the gold miners, but those who sold picks and shovels to the gold miners.
What happens is that competition drives down margins in the main business, particularly if it’s very visible and obvious. Yet, precisely because it’s so visible – and often there is an investment mania surrounding the main business – the businesses that supply the main business is where you want to be.
So, about paper.
SA’s two paper producers, Sappi and Mondi, just released their quarterly and half-yearly results respectively, and they are both absolute blow-outs.
Mondi’s earnings were up 28% off a pretty high base, and Sappi’s doubled compared to last year. Because Sappi and Mondi are both SA paper companies, and their names both end with an “i”, I suspect lots of people think they do more or less the same thing: make paper.
But actually, they are in completely different markets, and paper doesn’t have a lot to do with it anymore, with Mondi focused on packaging and Sappi in a range of paper products, but increasingly in clothes. Yes, clothes. More on that a bit later.
The “picks and shovels” analogy really applies to Mondi, because packaging is to the internet delivery market what shovels were to the gold industry. Of course, the paper ...
08
AUG
1pm

Women are defying the gender pay gap and saving more for retirement than men – report

Women are more worried about their savings than men, and they plan ahead better than men do.
Every August, as the country observes Women’s Month, we hear the same old rhetoric about gender pay gaps and how women need to save more. While both remain true, South African women claim to have saved more on average than their male counterparts by almost half a million rand.
According to the 2022 Retirement Insights research report from retirement income specialist Just SA, women are also putting more thought into retirement planning than men are.
The study surveyed South Africans older than 50, in retirement or approaching it. About a quarter of female respondents have thought extensively about their potential cognitive decline and have made proper plans to protect their financial future, compared with just 16% of men.
According to the Human Sciences Research Council and the South African Institute of Race Relations, more than 40% of South African mothers are single parents.
The Just SA research report shows that women are less likely to take risks with their money compared with men.
About half of the men surveyed said they were confident they had enough money to cover their expenses in retirement, but only 38% of women felt the same way.
Heather Bell, business development manager at Just SA, says it is positive to see women taking strides in improving their financial literacy and independence, and being able to provide better for retirement.
“However, the results of Just Retirement Insights 2022 also reflect an overriding feeling of uncertainty from female respondents regarding their retirement future,” she says.
“For example, a quarter of female respondents confirmed that they cannot afford to lose any money in a market crash.”
According to Bell, women typically face additional gender-related pressures as they head into retirement, such as less income to save and a longer life expectancy.
Women underestimate life span
Just SA’s statistics show life expectancy for a 65-year-old in South Africa to be 87 for women as opposed to 82 for men, with 25% of women aged 65 likely to reach 94 and a further 10% living to celebrate their 100th birthday. Bell notes that increased longevity makes women more susceptible to degenerative diseases while increasing their chances of becoming a financial burden on children in their late stages of life.
Saleem Sonday, head of group savings and investments at Allan Gray, says important conversations and urgent action are now more necessary than ever to level the playing ...
08
AUG
11am

Axios Media to Be Bought by Cox Enterprises for $525 Million

The online news company Axios Media Inc. agreed to be bought by Cox Enterprises Inc., the latest in a recent flurry of digital deals by traditional media companies.
The deal valued the company at $525 million, Axios said Monday. The company’s three founders will continue to hold substantial stakes and will lead editorial and day-to-day business decisions.The Washington, D.C.-area news site, which was launched by former Politico staffers in 2017, brought Cox in as an investor in November. Axios has been expanding its coverage increasingly beyond the Beltway, including the launch of local newsletters in more than a dozen cities.
Last August, German media giant Axel Springer SE agreed to buy Politico in a deal said to be valued at more than $1 billion. Around the same time, Nexstar Media Group Inc. acquired The Hill, which focuses on political news, for $130 million.
Axios Chief Executive Officer Jim VandeHei told the New York Times the founders opted to sell now because Cox offered a fair price, allowing early investors like NBCUniversal and Emerson Collective to get a substantial return.
The company’s 2022 revenue is projected to be more than $100 million, a person familiar with the deal told the Times.
08
AUG
11am

Consumers’ US Inflation Expectations Drop Across All Time Horizons

Consumer expectations for US inflation over the coming years declined sharply in the latest survey by the Federal Reserve Bank of New York, a finding that may ease the Fed’s concern about ever-rising prices getting baked-in to household behavior.
Expectations for US inflation three years ahead fell to 3.2% in July, from 3.6% the previous month, according to the New York Fed’s Survey of Consumer Expectations. It was the second straight monthly drop. The outlook for inflation in the coming year fell to 6.2% from 6.8%.
US inflation has surged to four-decade highs in the past year, driven by pandemic-related supply shortfalls and soaring commodity prices, as well as strong consumer demand bolstered by fiscal stimulus and low interest rates.
The Fed, which is seeking to rein in prices via higher rates without tipping the economy into recession, says there’s a risk that rising prices will lead American households to anticipate more of the same in the future — an expectation that could prove self-fulfilling.
Relief at the Pump
The drop in gasoline prices over recent weeks played a big part in easing household concerns. The New York Fed survey found that consumers now expect gasoline to rise by just 1.5% over the coming year, down more than eight percentage points from March. There was also a sharp drop in expectations for food-price inflation.
Relief at the pumps will likely contribute to a lower headline rate of inflation for July when the Labor Department releases the data on Wednesday. Economists expect the overall consumer-price index to rise just 0.2% from a month earlier, compared with 1.3% in June, while the annual rate declines.
Still, almost all inflation measures are running well above the Fed’s 2% target, even if there were some signs of a slowdown last month.
Expectations for rental-price increases in the coming year dipped below 10% for the first time since January, according to the New York Fed. A separate survey by Fannie Mae, also released Monday, estimates that rents will rise 7.6% over the period, while home prices are expected to increase 3.5%.
The current bout of high inflation is also likely to keep biting into household budgets, according to the New York Fed’s survey.
It found that the median year-ahead expectation for spending growth — without adjusting for inflation — dropped to 6.9% in July, from a series high of 9% in May. The decline was broad-based across age, education and income groups.
The Fed’s online poll ...
08
AUG
11am

Bed Bath & Beyond Jump Brings Some Meme Frenzy to Broad Rally

Retail traders who lurk in forums like Reddit’s WallStreetBets are back to betting against Wall Street pros and the Federal Reserve as rallies for meme stocks like Bed Bath & Beyond Inc. and AMC Entertainment Holdings Inc. show shades of last year’s mania.
The home-good retailer has nearly tripled over a nine-day winning streak while the movie-theater firm is riding a more than 75% rally of its own as speculative pockets of the stock market surge. The pair have powered a basket of 37 meme stocks tracked by Bloomberg higher by 12% over the past week while the most-hated stocks tracked by a Goldman Sachs Group Inc. basket is up nearly 20% over the same period.
The resurgence of more speculative areas of the market is likely fueled in part by individual traders willingness to jump on riskier trades and bet against hedge funds. A rally in tech shares and other growth stocks has helped push the Nasdaq 100 Index on Monday up 20% from a June low despite alarms from some on Wall Street that the Federal Reserve is dead-set on fighting inflation regardless of the pain for the stock market.
The “smart guys” are “confused, baffled and fighting short positions from a position of weakness in terms of momentum and firepower,” said Mark Taylor, a sales trader at Mirabaud Securities. “The lack of real understanding of why a sudden resurrection of the meme-entum bid could lead to some nefarious speculation about things being manipulated but what would be as much sour grapes speculation as anything real.”
Bed Bath & Beyond’s taking of the meme stock baton, rising 63% at one point on Monday as the stock became the most bought asset on Fidelity’s platform. AMC Entertainment saw the second most purchases while both company tickers were the most mentioned on Reddit’s WallStreetBets platform.
Read more: Stocks Rally Sends Nasdaq 100, Nasdaq Composite Up 20% From Lows
A basket of meme stocks tracked by Bloomberg rose 5.4%, extending a six-day rally of its own. The top performers behind Bed Bath & Beyond and AMC Entertainment were GameStop Corp. and Express Inc. Newly-public Magic Empire Global Ltd., a little-known Hong Kong-based financial services firm, extended a 5,476% two-day surge since going public, attracting some retail attention.
Read more: Tiny IPO Spikes 2,325% During US Debut in Wake of AMTD Digital
“These meme stock rallies that are emerging will only last if US stocks broadly continue to head higher,” ...
08
AUG
9am

More member states may mean little more than a few extra BRICS in the wall

Expanding BRICS to create an alternative power bloc is enticing for many countries, but faces several practical limitations.
Recent speculation that the BRICS group (Brazil, Russia, India, China and South Africa) plans to expand its membership has set tongues wagging in the diplomatic world. Rumours that Argentina could be the newest country to join have triggered questions around the viability and power of an expanded collective, and what it means for global geopolitics.
Cynics believe it’s simply a backdoor strategy by China to expand its sphere of influence. For advocates, it’s a long overdue initiative that will present a credible economic and political counterweight to Western dominance.
Could an expanded BRICS really emerge as an alternate power bloc? There’s long been a clamour among its members for larger power centres that offer alternatives to Western-dominated constructs.
Collectively BRICS is home to 26% of the world’s geographic area and about 42% of the world’s population. Moreover, the group is under-represented in the global financial system. The five nations combined hold less than 15% voting rights in both the World Bank and the International Monetary Fund (IMF), yet their collective economies are predicted to surpass the G7 economies in size by 2032.
The rationale behind the push for a fairer, more representative economic architecture is understandable and resonates with many in the global south who believe their interests aren’t adequately represented at existing fora.
Argentina especially is intriguing, given its tumultuous relationship with the IMF and historical dependency on Western institutions to navigate sovereign debt crises. Between seeking new financing options from China (Belt and Road Initiative) and sourcing its vaccines from Russia, there’s clear strategic intent to reset its geopolitical and geoeconomic relations. Several other dissatisfied countries from the global south have expressed a similar desire to join BRICS, which they believe will better serve the interests of developing nations.
Esteban Actis, a Researcher at Argentina’s National University of Rosario, says Russia’s invasion of Ukraine could also lead to a fragmentation of global governance, with less weight given to forums like the G20. Given this, China appears keen to expand BRICS to make the bloc more robust and add new countries to promote their development.
Beijing, which holds the rotating presidency of BRICS this year, is therefore mounting a charm offensive. Recent reports suggest China intends to argue for the inclusion of Argentina, Egypt, Indonesia, Kazakhstan, Saudi Arabia, United Arab Emirates, Nigeria, Senegal and Thailand. Insiders believe Beijing’s motive ...
08
AUG
7am

Karpowership fails to overturn ruling against its plans to power up South Africa

(Bloomberg) --Karpowership, the Turkish company seeking to supply more than 1,200 megawatts of power to South Africa, said its appeal to overturn an environmental ruling against its plans has failed.
The company, which supplies ship-mounted gas-fired power plants, will be allowed to correct “perceived gaps” in its application, it said in a statement sent to Bloomberg on Sunday.
Karpowership last year won more than 60% of an emergency power tender to secure 2,000 megawatts of electricity to ease power shortages that have plagued the South Africa since 2008. While the companies were originally meant to commence supply this month, projects worth only 150 megawatts have concluded their financial arrangements and are more than a year away from commissioning.
Barbara Creecy, South Africa’s environment minister, last year dismissed Karpowership’s initial application after environmental activists lodged complaints about its impact on fishing, local ecosystems and potential greenhouse gas emissions.
“We respect Minister Creecy’s exercise of her powers, but we are very disappointed with the outlook especially given the time it took to make a decision,” Karpowership said in the statement. The company will refile its submission and hopes “that the process will be much timelier than it has been to date,” it said.
Read in Daily Maverick here:
Energy regulator to oppose court application by ecogroup to review Karpowership licences
South Africa’s Department of Forestry, Fisheries and the Environment will comment in a statement later, a spokesman said.
Last month South African President Cyril Ramaphosa announced changes to the country’s power legislation in a bid to encourage private developers to supply the electricity that state utility Eskom Holdings SOC Ltd. has failed to. The country is on course for its worst year of power cuts to date.
“South Africa needs dispatchable power now,” Karpowership said. “ We remain committed to being part of South Africa’s energy security solution and are ready to deploy our Powerships immediately.”
The amount of power Karpowership plans to supply could meet the needs of more than 800,000 homes. DM/Bloomberg
By Antony Sguazzin © 2022 Bloomberg L.P.
08
AUG
12am

Senate passes Democrats’ landmark tax, climate, drugs bill

The US Senate passed a landmark tax, climate and health-care bill, speeding a slimmed-down version of President Joe Biden’s domestic agenda on a path to becoming law after a year of Democratic infighting that the White House was unable to control.
The vote on the bill was 51 Democrats in favour to 50 Republicans against, with Vice President Kamala Harris casting the tie-breaking vote after an overnight marathon of votes on amendments. It now goes to the House, where the Democratic majority is expected to pass it on Friday.
Democrats called the bill the largest investment in fighting climate change ever made in the US, and it’s projected to help cut greenhouse gas emissions by about 40% from 2005 levels by the end of the decade. They applauded and hugged during the vote on the final passage.
“I told my caucus all along, including the most pro environmental people, that we’re going to have to swallow some bad stuff to get good stuff,” Senate Majority Leader Chuck Schumer said after the vote. “But my north star was always 40% reduction in the amount of carbon going into the atmosphere.”
The legislation also aims to prevent large corporations from exploiting tax breaks to pay little if any tax, and it would allow Medicare to negotiate drug prices for the first time. It’s forecast to make the first substantial cut to budget deficits in more than 10 years.
Biden applauded Senate Democrats for pushing it through to passage.
“It required many compromises. Doing important things almost always does,” Biden said in a statement hailing the vote.
Republicans, united in opposition, argued it wouldn’t stop the historic levels of inflation and would impose taxes that could tip the US economy into recession.
Senate GOP leader Mitch McConnell argued that “hundreds of billions of dollars in tax hikes during a recession will kill jobs”.
The Senate vote was the culmination of a year and half of intra-party squabbling among Democrats about the scope of the bill, which Biden had once hoped would be so sweeping as to rival Franklin Delano Roosevelt’s New Deal. In the end it came down to two holdout moderate Democrats, Senators Joe Manchin and Kyrsten Sinema, whose votes were essential in the 50-50 Senate and who baulked at both larger tax increases and more spending.
The deal that revived the bill was primarily hammered out on Capitol Hill, mainly between Schumer and Manchin, while an administration official Sunday said the ...

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