Podcast: The economy is broken

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05 December ~ Position your portfolio for 2020

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Simon Shares

Third quarter GDP came in at -0.6% making the fourth negative GDP in the last seven quarters (since Jan 2018). Our economy is dying. Important the economy is not the market, but it is still dying.
Sygnia will not be charging you 0.34% to exit their Itrix ETFs. But man the communication around this was a horror show that a final tweet seems to suggest it only if you’re directly exiting via the ManCo. So moot for us ordinary investors.
Tongaat (JSE code: TON) report is out and it another horror show. They’re going after previous executives, including the previous CEO and CFO. But are refusing to release the full report.
Talking of reports, Steinhoff (JSE code: SNH) is being sued by the PIC for their full PWC report. They only released a short version of the +3,000 page report claiming it was confidential. But if shareholders are going to sue, and they are. Then this report is an important part of the case against Steinhoff and the former executives.
Purple Capital (JSE code: PPE) owners of Easy Equities results show much improvement in terms of number of clients, revenue and ultimately a reducing loss. Their path to break even seems easy enough now, likely two – three years. That said the share still has some large sellers now at 33c/34c, above the 30c they camped at for some eighteen months.
A thought on the trade wars which Trump is heating up rather than winning ‘easy’. We(the world)has always assumed that Trump was largely in control and could end them at any point. But I think that narrative may be totally wrong. Firstly China wants any phase one to include going back to zero tariffs and Trump is saying no. But I also think that frankly China may just did in their heels and wait out the next 1-5 years Trump is in power. They’re not happy with him signing the Hong Kong bill and they can manage the crisis way better than he can. A side note; bail out to farmers is now larger than the vehicle manufacturer bailout of 2008 and still farmer bankruptcies is up 24% this year.
SAA. I have flown SAA every flight I could for 20 years. But no more and it is frankly time to let the airline go to the wall. Rumours are that’s exactly what Moboweni wants, but Gordhan is digging in his heels, incorrectly at this point.
Lots of hysteria about the CompCom declaring mobile operators must reduce data fees by 30%-50%. Firstly read the actual report, this is a recommendation for ICASA to deal with if the telcos don’t respond within two months. Secondly, remember when ICASA enforced reduced interconnect rates? According to the telcos this was the end of the world. Funny how they still make massive profits. The short version is the telcos price gouge because they can and they won’t willing stop. Here’s an example;

“(MTNs) 2nd most expensive pricing is in Rwanda where a GB of MTN data costs almost half of what it costs in its home market”.

“Only in the DRC ($8) does Vodacom charge its customers more, on average, for a gigabyte of data than in South Africa ($7.83).”

Grand Parade (JSE code: GPL) cautioned they are in negotiations about the “disposal of a material interest in Burger King SA”. So after exiting Sun Slots what would they have left? And who is the potential buyer?

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