Monday 7 June 2021
Good morning Voornaam,
Extremism is usually a problem in any context. In markets as in life, it's possible to have too much of a good thing.
The news has been awash with stories on the rand, which seems to be continuing its incredible run against the dollar. A USD/ZAR rate of R13.50 feels unbelievable after the path we have walked as a country in recent years.
Many are talking about the rattler (as our currency is known) getting into the R12s. Some are talking about R11s! It's worth remembering that when we were at R19, there were people claiming we might get to R30. All currency forecasts should be taken with more than a pinch of salt.
Yet, there's no denying that we are now below R13.50. Does this mean we should be celebrating?
I'm certainly no expert in economics, which is why I partner with Mohammed Nalla (who is an expert) on the Magic Markets podcast. However, I do believe that the most important growth industries in this country are tourism, agriculture and mining.
In each of these industries, we have abundant resources and skills at our disposal to be competitive by global standards. They have something else in common that we need to consider too: an overly-strong rand doesn't help their cause.
My point is that the market is full of checks and balances.
Commodity prices are flying but the impact for SA is muted to some extent by a stronger currency. Even if we were allowed to welcome international tourists at the moment, our country isn't as affordable for foreign travellers as it used to be, although we have strengthened against the dollar far more than European and Asian currencies.
Visitors from London would be at our finest wine farms while Americans may only afford Burger King. If that happened, at least Grand Parade Investments (JSE:GPI) would have a better chance of selling Burger King South Africa again, after the Competition Commission poured water on a perfectly sensible deal for GPI.
Moving on, I'm giving it another day for the dust to settle around Adapt IT before writing on the bidding war for the company. However, shareholders need to be aware that Canadian group Volaris has now raised its cash offer from R6.50 per share to R7.00 per share. Huge Group has offered R9.09 per share in a share-swap deal. Adapt IT's closing price on Friday was R6.84 per share.
If you read the article this morning on the takeover of Tower Property Fund, you'll understand why the share price trades below the offer price in deals like these. However, as a nod to its exceptional share price performance, the lead article this morning is on Jubilee Metals Group, which has investors wagging their tailings with excitement as the company goes from strength to strength.
I've also touched on Prosus' acquisition of Stack Overflow for $1.8bn, which was announced last week, as well as Mondi's latest debt raise. It's an interesting debt structure because the rate on the debt varies based on Mondi achieving certain sustainability goals.
Finally, Chris Gilmour weighs in with his article on the week ahead and key information for investors to watch out for.
Let's get stuck into a new week!
The Finance Ghost
Local and Offshore Market News
Jubilee investors wagging their tailings
Jubilee Metals has been highly rewarding for shareholders, but it took a long time to happen. The company has announced an acquisition of more PGM tailings. Read More
Takeover at Tower
Coronation has bought more shares in Tower despite the company being under offer. What practical lessons can we learn from this deal? Read More
Prosus invests 1% of market cap in Stack Overflow
Stack Overflow is one of the 50 most-visited websites in the world. Combined with high levels of user engagement, that was enough to catch the eye... Read More
Mondi raises ESG-linked debt
Mondi has signed a €750 million revolving credit facility, with the cost of debt varying based on achievement of certain sustainability targets. Read More
The Week Ahead with Chris Gilmour
The G7 agrees on a minimum tax for global tech giants. Read More

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