To market, to market to buy a fat pig. The situation in the Ukraine moved so quickly that is was pretty difficult to keep up. I should care, after all my family lineage is from around there, a little further east into Russia, and who knows what Putin's next steps are likely to be. For the Europeans and the North Americans, this is a good outcome, because the Russians might well lose their stranglehold over the Ukrainians. But the size of a possible bailout, being prepared as we speak by the Europeans is not likely to be huge, but very likely to be unpalatable for many Europeans. It could in reality translate to higher gas prices for both Ukrainians and northern Europeans, and that is not good for a population that has had to downscale for the better half of 6-7 years now.
Make no mistake, this muscling by both the "West" and Russia might be small monetary wise, but it is big geopolitically. And the reason why I say small, the Ukraine may only need somewhere in the region of 4-6 billion Dollars (think how small that is in comparison to the Facebook acquisition of WhatsApp, thanks for that comparison Michael), but if the country fails to get the necessary funding they will default. Standard & Poors have basically downgraded the rating of Ukraine sovereign debt to CCC. And it was downgraded one notch, from CCC+. The difference is sublet, from substantial risks to extremely speculative.
To even be considered investment grade, the Ukraine debt rating would have to move up 8 notches and even that would be "lower medium grade". We watch, for the time being the ex-president is gone, perhaps he is in Russia. His life was full of, well, opulence. For what it is worth, people of the Ukraine, had little idea of the living quarters of the ex-president. If you draw any parallels here in South Africa, the media bats for the tax payer. And politicians might not be as accountable as we may want (the chattering classes), but at least there is major exposure of irregularities, to word it mildly.
Friday locally we reached record highs, a weakening Rand had something to do with of course. Again, the inflationary concerns no doubt will manifest themselves into reality in the coming months and for the rest of the year. The best case scenario for the SARB is that globally there is less concern about emerging markets and we start to attract the flows again. For the time being, even though they are marginal at best as investment destinations, the Ukraine and Venezuela (watch carefully) are no doubt likely to attract negative headlines and as such deter the inflows. Hopefully not though.
Oh dear, Koos Bekker is stepping down at Naspers, that was announced on Saturday. The official .pdf is available for download: NASPERS ANNOUNCES CEO AND CHAIRMAN'S SUCCESSORS. Bekker is only 61, but I guess after an interrupted 17 years at the helm of Naspers, the timing is probably right. The appointment of Bob van Dijk, who is currently head of ecommerce tells you the direction that Naspers are heading in. You will recall that Koos Bekker made remarks about satellite TV being a business in decline (notwithstanding the additional subscribers across the continent time after time), and saying that ecommerce was going to be the next big thing. There are of course many working examples today, Amazon.com of course the one that strikes you as the leader in ecommerce.
But do not fear, Bekker will return after travelling the world again for a year, gathering information, visiting both the developed world as well as "oddball spots". And as the release puts it, Bekker will again be searching for the next "big thing": "Koos intends to travel widely and research where the group's next spurt of growth may come from, once ecommerce has reached maturity." Amazing, he and the company are already looking beyond the current businesses that they have. No wonder the man is so highly regarded. The release also identifies four technology spurts that Naspers has undertaken with Koos Bekker at the helm, digital satellite TV in 1985 (M-Net leading to DSTv), MTN and mobile communication in 1991, the internet businesses in 1997 and most recently ecommerce in 2008. And now, in search of something new for himself as a shareholder of Naspers, Bekker once again travels the world.
When Bekker returns (his last day as CEO is the last day of March this year) in a years time, he assumes the role of chairman. Current chairman, Ton Vosloo, who has been at the business since they were in this "spurt" phase, steps down 1 April 2015. But who is Bob van Dijk? Well, van Dijk is from the Netherlands, is six foot three and a long suffering football fan "only" 41 years old, and as per the release is married to Tina (a finance exec) with whom he has two daughters. More importantly for the shareholders (it is nice of course that he has a stable family life) is that van Dijk is formally the head of eBay Germany, the second biggest market for that company outside of the US. He also speaks five languages, English, Dutch and German no doubt, the other two, not so sure, but as a guess I would think French would be another one. The last one, well, we can only speculate.
Bekker is not going away. He is also human and recognises the time to pass the baton on to someone young, who looks more than capable of running what is now a global business. In our eyes the company still remains cheap, there are several concerns about the valuations of TenCent, but that business continues to grow really quickly and we are not worried. Chinese consumers are still on the cusp of something special, in terms of a change of patterns and behaviour. I expect that there will be sympathy selling, but once the shareholders realise that this is the right thing to do, and their "wealth creator" is going hunting (in the business sense) and will return fresh and invigorated, full of fresh ideas for the company, they will be happy. We continue to add to the stock on the basis that it is cheap in a sum of the parts valuation.
Home again, home again, jiggety-jog. We are mixed to begin with here, resources are lower here. The Rand had firmed up, that had a lot to do with it! Good results from Nedbank are giving the stock a lift, up three percent plus!
Sasha Naryshkine, Byron Lotter and Michael Treherne Email us Follow Sasha, Byron and Michael on Twitter 011 022 5440
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