5 minute read
In brief
– Lungisa Fuzile, Standard Bank South Africa’s chief executive, announced interim debt repayment measures to help segments of its customer base navigate their financial commitments as the government stepped up efforts to contain the spread of Covid-19. The bank offers small business customers with an annual turnover of less than R20m a payment holiday from 1 April to 30 June if they are in good standing with the bank. Those customers with a student loan will also be exempted from repaying debt over the three-month period and in addition, they will not be charged any fees or interest. Nedbank said in a statement it will support clients, including deferring payments (or part thereof) for a suitable period, extending existing loan periods or extending additional credit to manage short-term cash flow shortfalls. FNB said it remains open for business to assist SMEs that qualify for credit to stabilise their cash flow and consumers who may want to cover unexpected expenses.
– Sol Kerzner, SA hospitality magnate, died on 21 March aged 84 at his home in the Kerzner Estate at Leeukoppie near Cape Town, surrounded by his family, said the Southern Sun Group. Kerzner founded Southern Sun and Sun International. Some of his projects included The Beverly Hills Hotel in Umhlanga Rocks (the first five-star hotel in SA), the creation of Sun City, The Atlantis resorts across the world and launches of the One&Only Resorts, which operate various hotels in the Bahamas, Mexico, Mauritius, Maldives and Dubai.
THE GOOD
MTN agreed to cut the cost of data bundles by up to 50% after SA’s competition watchdog warned in December that telecoms operators faced prosecution if they did not do so. Godfrey Motsa, CEO of MTN SA, said a 1GB monthly data bundle will fall from R149 to R99, while Vodacom CEO Shameel Joosub said the network will reduce its mobile data prices across the board by as much as 40%. Meanwhile, hotel operator Tsogo Sun Hotels said it closed 36 hotels after travel bans imposed by various countries to contain Covid-19 had caused a “total collapse of demand”, in a statement on the JSE. Tsogo added it is “endeavouring to assist” the public and private healthcare sectors with the provision of quarantine facilities to try and contain the spread of the virus using its deactivated hotels.
THE BAD
Stock markets continued their slump as measures to curb the Covid-19 outbreak, and alleviate its economic consequences, were ramped up. Share trading came to a halt at one point on the New York Stock Exchange after steep plunges triggered an automatic circuit breaker. Wall Street stocks had their worst day since 1987 on 16 March. The Dow Jones Industrial Average plunged 12.9%, or nearly 3 000 points, to 20 188.52. The S&P 500 shed 12%, while the tech-rich Nasdaq Composite Index slid 12.3% to 6 904.59, reported AFP. The S&P 500 effectively shed all the gains it made in 2019 and is down 32% from its February peak, according to The Wall Street Journal (WSJ).
THE UGLY
Carbon emissions from energy and chemical company Sasol’s Secunda plant exceed the individual totals of more than 100 countries, reported Bloomberg. Sasol’s Secunda plant is the world’s biggest single-site emitter at 56.5m tonnes of greenhouse gases a year, exceeding the individual totals of more than 100 countries, including Norway and Portugal. A 2019 study by Palo Alto-based Gray Sky Solutions estimates that the plant may account for as many as 72 deaths a year. As oil prices fell due to the impact of Covid-19, Sasol became one of the JSE’s biggest decliners, tanking to a low of R29 on 11 March, compared to closing at R420 on the same day a year ago.
HAPPY SPENDING
The SA Reserve Bank (SARB) followed other central banks across the world and cut its main lending rate by 100 basis points to 5.25% in mid- March. The Monetary Policy Committee’s (MPC’s), decision was unanimous, citing a dire local and global economic outlook due to the deepening impact of the global Covid-19 outbreak. The bank’s governor, Lesetja Kganyago, said “with the downward revision to the forecast, the overall risks to the inflation outlook at this time appear to be balanced”, at the rates announcement. “The bank now expects the economy to contract by 0.2% in 2020. GDP growth is expected to rise to 1.0% in 2021 and to 1.6% in 2022,” he said.
LESS ROSY IN THE US
Goldman Sachs cut its US economic growth forecast, saying in a note that it now expects GDP to decline by 24% in the second quarter of 2020 due to the Covid-19 pandemic. In addition to a larger hit to services consumption, the bank gave two other reasons for downgrading the growth forecast. Firstly, manufacturing activity now appears likely to contract more sharply than had previously been expected and secondly, weakness in high-frequency housing data in Asian countries, which were hit earlier by the virus, reports of nationwide cancellations of open houses, and the shutdown of construction projects in some parts of the US suggest a large hit to the real estate and construction sector.
START OF THE RESCUE PLANS
The US Senate plans to pass a $2tr stimulus package as the Covid-19 pandemic all but shuts down the US economy. The Trump administration wants to issue $1 000 (R17 590) cheques to all Americans, reported The Wall Street Journal. However, Senate Democrats blocked it after a dispute with Republicans over some provisions of the package. Confirmed US cases of Covid-19 had surpassed 33 000 at the time of negotiations (a 10-fold increase from a week earlier). UK Prime Minister Boris Johnson said a temporary roll-out of universal basic income was under consideration, reported WSJ, while Japan was reportedly weighing handouts of at least ¥12 000 (R1 905) per person.
