NewsWrap Ep5 – By-elections, Tshwane, Free speech, Mashatile, Sasol, AI and more

A bumper episode features a spread of news on the political economy and business, seeded with developments on AI and the free speech debate – plus a cameo with a windswept mayor of the best municipality in the Western Cape. This weekly show is  produced by the BizNews team, and hosted by editor Alec Hogg.

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In this episode of NewsWrap……..Why the voting results from 29 changes everything for South African politics; A spotlight on Shivambu and Mashatile; Sara Gon of the IRR on free speech; our partners at The Economist who argue why, despite their a 40% discount, European stocks are still best avoided; why you should consider Sasol as an investment; Internet Solutions founder David Frankel on AI; a fascinating discourse from the FT on how money is flooding into AI coding, the first ‘killer app’ of the Artificial Intelligence era; and we close off with the Best Municipality in the Western Cape. 

First up, though, let’s recap on the latest news headlines…….…. 

In the news headlines

• South African voters went to the polls in 14 by-elections yesterday, delivering the first national indication of sentiment after the May 29 election and subsequent formation of the Government of National Unity. The ANC lost two Wards – in Rustenburg to Jacob Zuma’s MK and in the Cederberg to the DA – while the DA lost its seat to an independent candidate in Ethekwini’s Ward 34. Overall, though, SA’s two biggest political parties will be well pleased with some sizeable increases in their vote share. In Johannesburg’s Ward 89 voters raised their support of the DA 27 percentage points to a landslide 96.3%; while in Cape Town’s Ward 58 the share went from 84% to a nigh impossible 98.3%. The DA’s candidate in Stellenbosch’s Ward 17 rose over 20 percentage point from 75% to 96%. In a reverse from pre-Election’24 trends, the ANC increased its vote share in all six of the Wards it retained. The obvious takeaway is that on the ground, voters of the two parties are happy they are working together.    

• Brian Joffe founded Bidcorp, delivered a 15.5% improvement in headline earnings per share, and raised its dividend by 16% to 565c. The group reported a strong performance in Europe but mixed results elsewhere. Its investment in infrastructure and AI continues, with inflation-beating growth targeted for the next financial year. The company, South Africa’s most valuable industrial conglomerate with a market value of R150bn, enjoyed a warm reception to these results from investors, the share price gaining over 3%.  

• Impala Platinum, which released its yearend results today, followed the Sasol example and passed its dividend after a reverse in its fortunes during the year to end June. Although production rose 13% to 3.65m ounces of platinum group metals, revenue fell 34% due to a sharp fall in rhodium and palladium prices. A basic loss of  R17.3bn was reported. The share price eased slightly on the news, taking the past week’s drop to 4%. The share price of this R76bn business has lost 18% in the past year.  

• Santam, South Africa’s largest insurer, today reported an 8.1% rise in Gross Written Premium in the half year to the end of June. It delivered a 33.6% return on capital, and a 34% increase in net income. CEO Tavaziva Madzinga said the company had been raising premiums to reflect what he called frequent and severe weather-related claims in recent years.  Results were expected with the share price easing slightly on the news. Santam has a market cap of R40bn, ranking it among the country’s Top 30 companies. 

• Nvidia shares dropped from the pre-results closing price of $125 to $116 in after-hours trading as growth forecasts in the June quarterlies fell short of bullish expectations despite revenue doubling to $30.04bn. Analysts said the drop was due to a smaller-than-expected beat amid soaring AI chip demand, with growth concerns overshadowing strong performance. Asian stocks fell because of a lack of what traders called “the wow factor” in the numbers.

• Warren Buffett-chaired Berkshire Hathaway hit the thirteen-digit mark, hitting a market cap of $1 trillion this week, the first non-tech U.S. company to do so. Shares are up 30% in 2024, driven by strong insurance results and economic optimism, outpacing the S&P 500’s 17% gain. Berkshire joins the elite ranks alongside tech giants like Alphabet and Nvidia.

• Investors in the UK are taking fright at yesterday’s report that the new Labour Party government could raise taxes on British banks. NatWest and Barclays were among the biggest fallers in the FTSE 100, with their shares down 3.4 per cent and 2.7 per cent, respectively.

• And finally, for this week’s headlines, Telegram CEO Pavel Durov has been charged by French authorities over illegal activity on the app, including unmoderated distribution of child abuse images. Detained in France after landing there in his private jet, billionaire Durov, who left his native Russia ten years ago, was released from custody but has been barred from leaving the country. Telegram denies responsibility amid the ongoing investigation.

Not surprisingly, South Africa’s longest-serving Member of Parliament, Freedom Front Plus Cape Leader Corne´ Mulder, is an astute observer of the country’s changing political landscape. In an insightful interview earlier today, he took us through implications of this week’s by-election results – and other recent developments………   

The University of the Free State was in the news this week announcing Elon Musk’s mother, Maye, will sponsor the fees of two students studying the course she took at her alma mater. Also featured was Dr Ina Gouws, a political science lecturer at the uni who spoke to my colleague Chris Steyn about the intentions of two controversial members of the body politics……Floyd Shivambu and Paul Mashatile….  

Here’s the perfect follow up on UIM leader Neil de Beer drawn from his very popular Sunday afternoon chat on all things politic with our BizNews colleague Chris Steyn…..

The arrest of Telegram’s founder and CEO by the French authorities brought freedom of speech back into the spotlight this week. Young billionaire Pavel Durov is being charged with enabling criminals by not moderating his platform tightly enough. Locally, the appointment of outspoken libertarian Roman Cabanac to a senior political post evoked criticism on social media. Here’s a clip from a fascinating interview on the subject with the director of the Free Speech Union of SA, Sara Gon……    

Investment professionals pride themselves on spotting value missed by others. Right now some are publicly punting the appeal of European stocks which, after a mini-run earlier this year, are still trading at a hefty discount to their American cousins. Here’s the perspective from our partners at The Economist…the full story is accessible to Premium members on BizNews.com…. 

One stock that should be back on your radar is Sasol, largely because of the message delivered by new CEO Simon Baloyi, who delivered his first set of financial results in the past week. Part of the appeal is the return to basics after decades of misallocating capital into adventures outside South Africa, including the notorious money-gobbling Lake Charles plant in Louisiana, referred to internally as LCCP. But the other is the resilience of the 30,000 staff, even when the share price plunged after pundits forecasted Sasol’s end…. 

In a splendid interview that seemed to get lost in the strong news flow of the past week, Bronwyn Nielsen spoke to one of South Africa’s top business exports, Internet Solutions founder and now US-based private equity heavyweight David Frankel. Here’s his perspective on the big business story of the moment…..   

Now for that story on Artificial Intelligence – and how coders may be acting like turkeys voting for Christmas. Not actually, but listening to this piece from our partners at the Financial Times does provide some very useful insights into the future. Here’s the FT News Briefing host Kasia Broussalian with AI Editor Madhumita Murgia……  

We close off with an example of how committed politicians can make a difference – and are rewarded accordingly. My new hometown of Hermanus was buffeted by winds gusting up to more than 100km earlier this week. Among the consequences was Mother Nature’s demolition of the same Eskom pylon that caused a three-day electricity blackout last year. Once again, executive mayor Annelie Rabie stepped up to the plate – communicating endlessly including from the site of the disaster, despite the obvious havoc it played with her hairstyle. In between dealing with this, Dr Rabie was subjected to a Motion of No Confidence by the 4 ANC councillors in the 27 member Overstrand Council. The motion was crushed – with only the ANC voting in favour. The DA-run council received its 11^th successive clean audit this week, ranking it among just 5% of South African municipalities with clean audits for the past three years or longer. Overstand was also awarded “The Best Municipality in the Western Cape” last year. Voters also showed their appreciation. In the May 29 election, the DA was supported by 65.5% of those who cast their ballot.              

That 65 and a half percent of Overstand voters, more than three times the DA’s national average, shows why the party is so keen to use area where it does govern to position itself as the party that delivers.  

Until next week. I’m Alec Hogg of BizNews.com.

Read also:

• NewsWrap Ep 4 – Khumalo, Johnson, De Beer on MK chaos, Shivambu; SA’s swimming superstar; McPherson; US tipping turmoil.
• NewsWrap Ep 3 – Inside track on ructions at Comrades, Joburg, Tongaat; and why Buffett sold Apple.
• NewsWrap Ep 2 – DA divorcing FF+; Namibia’s boom; Chinese companies’ Africa surge; RIP Robbie Venter