"Shoprite and Famous Brands have teamed up to announce rolling out Debonairs Pizza outlets at Shoprites in Angola. Shoprite will be the master franchisee. The first one will be rolled out in the city of Benguela, a city with around 130 odd thousand folks. It is a coastal city that has a port that will no doubt become more important over time. Shoprite have been in Angola since 2003, operating 14 Usave stores, 7 Shoprite stores, 7 Hungry Lion stores and 5 OK furniture stores, as well as 3 Shoprite MediRite stores."
To market, to market to buy a fat pig. A pretty broad based rally in Jozi, even if it was only around half a percent, there seemed to be an element of normality to it. We closed out the day not too far from 50 thousand points on the Jozi all share. After a brief recovery the oil price slid some more, I saw a pop up on my smart phone, a Bloomberg alert that suggested that the Saudi oil ministry thought that the oil price would settle around 60 Dollars a barrel. I have seen the Russians and Venezuelans make noises about cutting production, financially I am not too sure that they could even afford that. Once the production is out, it is out.
The Venezuelan president (the media never call him a bus driver) has suggested that the government is not going to waste a good crisis and slash unnecessary spend, and has indicted Maria Corina Machado, one of the main opposition leaders and orchestrators of the uprisings, charging her with plans to assassinate him. For the record, she is NOT a bus driver and is an engineer. Maduro is slashing spend by up to 20 percent and setting the country up for further devaluation of the currency. Inflation is at 60 percent, the economy is contracting at a rapid rate, the difference between black market currency rates and official rates are so far apart, 157 bolivars to the Dollar on the black market, 6.3 bolivars on the one Dollar peg. When I say one, there are several exchange rates, depending on for what. Government controls in markets of any sorts ends up with the citizens being the biggest losers. The Venezuelans are undeterred, heading to China, Russia and Iran in search of funding. Good luck with that.
The Dollar continues to gain momentum against all of the major currencies, the Japanese Yen this morning flirted with the 120 Yen to the Greenback mark, the worst level for the Japanese currency since 2007. Remember then? It was when the first iPhone was being released. Over in Europe a fair amount of poor looking economic data once again led to a two year low for the Euro relative to the Dollar. A PMI number, above 50 for the zone, less than anticipated saw to the slide. With lower energy prices the chances of deflation are heightened, the ECB methinks is standing by for action, with or without the political will.
Markets over the seas and far away (from us) saw the OK'ish economic data and a beige book release that drove equity markets higher again on the day, the Dow Jones and the S&P 500 clicking new intraday highs. The ADP employment report, the precursor to the nonfarm payrolls tomorrow was slightly light, but reinforced the 200 plus outlook for Friday, which would mean that the year, in terms of employment, would be the best in at least 15. And who would have thought that technological advances to make us more productive would lead to heightened employment. Wages are not quite rising enough, with unemployment coming lower and lower, eventually that trend reverses. You have to start paying people more, they are getting more productive, at least in a US context. I have very little insight into the local labour market (any labour market for that matter), all I can say is that skills are more, and as such more labour intensive jobs are at risk in time.
Is it better to have an opinion than none at all? I am not too sure about you, I would rather listen to somebody with a vested interest when talking about a specific subject, wouldn't you? Say for instance someone was talking about a specific company, or writing about a specific investment, would it not be more "real" if the view were a subjective one, provided that the person told you that this was the case? Very often I prefer the analysis coming from people who have ownership, they may be overly positive or negative (depending on whether they bought or sold), I am sure that you could pick up the bias and sift that away from the points. Let me know how you feel about that!
Company corner snippets
How much is 2,147,483,647? Well, you can count, so you know that it is over 2 billion. Why is that number important? Google's YouTube never expected any single view to exceed that number of views. PSY's Gangnam Style would have broke the YouTube counter, the company noticed and they have now reset that number to 9,223,372,036,854,775,808 or 9 quintillion. Not likely to be broken any time soon, it feeds well into the piece we chatted about yesterday, the internet of things.
Two South African companies working together across the rest of the continent, starting in Angola. Shoprite and Famous Brands have teamed up to announce rolling out Debonairs Pizza outlets at Shoprites in Angola. Shoprite will be the master franchisee. The first one will be rolled out in the city of Benguela, a city with around 130 odd thousand folks. It is a coastal city that has a port that will no doubt become more important over time. Shoprite have been in Angola since 2003, operating 14 Usave stores, 7 Shoprite stores, 7 Hungry Lion stores and 5 OK furniture stores, as well as 3 Shoprite MediRite stores. A total of 36 stores out of 1581 store compliment are in Angola, not big, but an interesting place to start. Famous Brands have 30 outlets in next door Zambia, which is the biggest market outside of South Africa (in terms of stores) for Shoprite too. That is my best guess as to where next for both businesses and this alliance, Hungry Lion and their chicken offering alongside a pizza spot, why not.
Sanlam released a trading update for ten months, following hot on the heels of Santam the other day. The market definitely were expecting better, the stock was sent lower by nearly four and a half percent, dragging financials lower in the process. The business is huge, 146 billion Rand market cap, and as a result of their huge reach in the South African market, when they demutualised, many people got shares. According to a presentation that they had in May this year, the number of shareholders are around 494 thousand. Whilst they, Sanlam, have some exciting businesses across the continent, and indeed in India and beyond, 74 percent (as per their annual report) of operating profits come from South Africa, 10 percent of that their entry level markets. So we should see that change even more, with two thirds of their profits from their old business a decade on from being their only business. It makes sense to note that whilst the local environment is stodgy (and an average decision with regards to timing of markets), the growth markets are where it is at for these types of businesses.
Home again, home again, jiggety-jog. Stocks are mixed here in Jozi, the ECB are going to let us perhaps know what they can and cannot do with monetary policy. LTRO (long-term refinancing operation) this and asset purchases that, I love seeing Mario Draghi, he has a wicked sense of humour. And then of course non-farm payrolls tomorrow, that is always good value for money.
Sasha Naryshkine, Byron Lotter and Michael Treherne
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