<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1110" height="740" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-1110x740.jpg" alt="" class="wp-image-395422" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-1110x740.jpg 1110w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/01/GettyImages-1131125549-1-scaled.jpg 2048w" sizes="auto, (max-width: 1110px) 100vw, 1110px" /><figcaption>oMalayitsha (transporters) Charles and his colleagues buy groceries for family which will be transported across the border to Zimbabwe on February 20, 2019. &#8211; Items are loaded in Johannesburg onto trailers attached to minibuses which make the 550 kilometres (340 miles) journey north to the border of Zimbabwe, where economic situation has dramatically deteriorated, pushing inflation above 50 percent, and shortages of household essentials have become widespread. (Photo by GULSHAN KHAN / AFP) (Photo credit should read GULSHAN KHAN/AFP via Getty Images)</figcaption></figure>



South Africa’s annual average consumer inflation&nbsp;slumped to a 16-year low in 2020 as a government shutdown of the economy to stop the spread of the coronavirus extended a six-month recession.&nbsp;&nbsp;



Statistics South Africa said&nbsp;the consumer price index (CPI)&nbsp;averaged 3.3 percent,&nbsp;the&nbsp;lowest&nbsp;annual average rate since 2004,&nbsp;and the second lowest since 1969, dampened by a strong rand&nbsp;and&nbsp;subdued economic activity.&nbsp;



For December,&nbsp;annual inflation&nbsp;came in at 3.3 percent,&nbsp;slightly lower&nbsp;than November’s reading of 3.2 percent.&nbsp;The monthly increase&nbsp;was&nbsp;0.2 percent, up from zero&nbsp;in November, mainly as a result of&nbsp;food and non-alcoholic beverages with&nbsp;monthly increases&nbsp;of&nbsp;6 percent and 0.5 percent respectively.&nbsp;



CPI has remained within the South&nbsp;African&nbsp;Reserve Bank’s 3%-6% target band since July.&nbsp;



The outbreak of Covid-19 forced many governments to shatter economies and close borders as authorities sought to stop&nbsp;its spread following the discovery of the first cases in Wuhan, China. A second wave of infections in December forced President Cyril&nbsp;Ramaphosa&nbsp;to re-impose some restrictions.&nbsp;



Economists are forecasting a contraction of about eight percent in gross domestic product for Africa’s second largest economy and a rebound this year.



But they warn that recovery is now being threatened by continued lockdowns and worsening power shortages.&nbsp;

SAFRICA-ZIMBABWE-ECONOMY-TRADE

South Africa’s consumer inflation neared a 50-year low in 2020

<a href="https://www.cnbc.com/quotes/?symbol=BTC.CB=">Bitcoin</a>&nbsp;briefly climbed above the $16,000 mark on Thursday, hitting a level not seen since early January 2018.



The cryptocurrency’s price rose as high as $16,019 just after 5 a.m. ET, according to data from industry site CoinDesk. It was last trading more than 1% higher at around $15,800.



The last time bitcoin breached the $16,000 level was Jan. 8, 2018, according to CoinDesk data. The reason for the move higher on Thursday wasn’t immediately clear, but it comes as a number of companies appear to be warming to crypto.



Last month, fintech giant <a href="https://www.cnbc.com/quotes/?symbol=PYPL">PayPal</a> announced it would add new features letting users trade bitcoin, ether, bitcoin cash and litecoin. By early 2021, the company also plans to let customers use crypto to shop with its network of 26 million retailers.



Meanwhile, Square said last month that it had bought $50 million worth of bitcoin. The U.S. fintech firm, which is run by&nbsp;<a href="https://www.cnbc.com/quotes/?symbol=TWTR">Twitter</a>&nbsp;CEO&nbsp;<a href="https://www.cnbc.com/jack-dorsey/">Jack Dorsey</a>, has long offered crypto services to users of its popular Cash app.



Bitcoin, the world’s best-known and most valuable cryptocurrency, has more than doubled in price this year, a wild ascent that’s reminiscent of its monster rally in late 2017 that saw it narrow in on the $20,000 mark.



Some crypto fans say it’s down to the unprecedented wave of stimulus from governments and central banks around the world aimed at tackling the coronavirus crisis. Such measures, they say, devalues fiat currencies, making bitcoin an attractive alternative.

106737355-1602234446157-gettyimages-872670632-set04375-bitcoin_24oct2017_kw0564

Bitcoin breaks above $16,000 for the first time since January 2018

(Reuters) &#8211; Wall Street’s main indexes fell on Wednesday as Treasury Secretary Steven Mnuchin said it was difficult that a deal on more fiscal stimulus would be reached before the presidential election in November.



The downbeat comments added to the fragile sentiment following a mixed bag of quarterly earnings reports from major Wall Street lenders.



“At this point getting something done before the election and executing on that would be difficult just given where we are and the level of detail, but we’re going to try to continue to work through these issues,” Mnuchin said at a conference sponsored by the Milken Institute.



U.S. House of Representatives Speaker Nancy Pelosi and Mnuchin had a productive discussion about relief proposals, but the administration’s lack of a national strategic testing plan remained a “major area of disagreement”, a Pelosi spokesman said. They will speak again on Thursday, he added.



“The market is a little worried about not having that extra support for the next couple of months into the holidays,” said Thomas Hayes, chairman at Great Hill Capital LLC in New York.



“This was viewed as a bridge to a full therapeutic or a vaccine (but) everything is getting delayed and without the stimulus, there’s not that short-term bridge that we needed to get to the vaccine, to get us to the finish line.”







Fading hopes of a deal on federal aid, as well as a halt in trials of a COVID-19 vaccine and a treatment have pulled the three main stock indexes back from one-month highs, but investors have held out for stimulus after the Nov. 3 presidential election.



At 12:50 p.m. ET, the Dow Jones Industrial Average was down 0.53%, the S&amp;P 500 was down 0.69% and the Nasdaq Composite was down 0.97%.



Goldman Sachs edged up as strength in its trading business helped quarterly profit surge 94%, but Bank of America and Wells Fargo shed 4.0% and 5.4%, respectively, after a disappointing showing.



The S&amp;P 500 banks index dropped 1.4% as the third-quarter earnings season took off amid improving expectations over the extent of the drop in overall profits for S&amp;P 500 firms.



Analysts now expect earnings to fall 18.9% from a year earlier, according to Refinitiv IBES data, versus a 25% drop forecast on July 1.







Markets have also begun to digest the prospect of a Democratic victory, strategists and fund managers said.



While many investors view Democratic candidate Joe Biden as more likely to raise taxes, they are increasingly pointing to potential benefits of a Biden presidency, such as greater infrastructure spending and less global trade uncertainty.



Energy stocks rose the most among major S&amp;P sectors on the back of a rise in oil prices. [O/R]



UnitedHealth Group Inc dropped 2.8% despite raising its profit forecast as the U.S. insurer said it was difficult to predict the fallout of the COVID-19 pandemic on earnings.



Declining issues outnumbered advancers 1.18-to-1 on the NYSE and 1.60-to-1 on the Nasdaq.



The S&amp;P index recorded 22 new 52-week highs and no new low, while the Nasdaq recorded 100 new highs and nine new lows.

wall street

Wall Street slides as Mnuchin says stimulus difficult before election

LONDON (Reuters) &#8211; The Bank of England asked banks on Monday how ready they are for zero or negative interest rates, following up its announcement last month that it was considering how to take rates below zero if necessary.



Other central banks have pushed rates into negative territory in an attempt to spur banks to lend more, and the BoE said in September it was looking into what such a policy might mean in Britain.



“As part of this work, we are requesting specific information about your firm’s current readiness to deal with a zero Bank Rate, a negative Bank Rate, or a tiered system of reserves remuneration – and the steps that you would need to take to prepare for the implementation of these,” Deputy BoE Governor Sam Woods said in a letter to banks.



The BoE and lenders had to understand the implications of any such moves “since the MPC may see fit to choose various options based on the situation at the time,” he said, referring to the central bank’s Monetary Policy Committee.



Woods said he wanted to know if there were any technology challenges to implementing zero or negative rates.



“We are also seeking to understand whether there may be potential for short-term solutions or workarounds, as well as permanent systems changes,” he said.



The BoE set a deadline of Nov. 12 &#8211; a week after its next monetary policy announcement &#8211; for banks to respond.







Most euro zone banks have held off passing negative rates on to the bulk of their retail customers despite borrowing costs being below zero for the majority of this decade.



However, UK banks would likely face a sharper hit to profitability if they opted not to shift rates in line with the Bank of England due to their differing business models.



Banks in most euro zone countries charge customers a fee for having accounts, whereas in Britain such charges are rare, and lenders’ returns are largely based on the difference between lending and deposit rates.



Money markets last week pushed back bets that the BoE would cut rates below zero. Investors see rates falling below zero in May 2021, instead of March.&nbsp;<a href="https://www.reuters.com/quote/BOEWATCH">BOEWATCH</a>



The BoE cut its benchmark rate to record low of 0.1% in March to help the economy through the coronavirus crisis.



Its next move is widely expected to be an increase in its 745 billion-pound ($972 billion) bond-buying programme in November.







Sterling and British government bonds were little changed in early trade on Monday.



Governor Andrew Bailey has said the BoE’s assessment of negative rates was not a sign that it would cut rates below zero, and Woods echoed those comments in his letter.



Banks earn money from interest and negative rates would hit profitability, but Wood’s letter made no specific mention of this, focusing instead on the technical preparedness of lenders.



An accompanying questionnaire asked banks how their retail and wholesale business’s IT systems could cope, and how much time and money it would cost to make short-term “tactical” and permanent “strategic” changes.



Banks are already under pressure to help households and businesses struggling with the pandemic. They also could face a reduction in access to markets in the European Union when Britain’s post-Brexit transition period expires.

london

Bank of England asks banks how ready they are for sub-zero rates

NEW YORK (Reuters) &#8211; There have only been two direct listings on the New York Stock Exchange in the last two years. There are about to be two more in a single day.



Data analytics company Palantir Technologies&nbsp;<a href="https://www.reuters.com/companies/PLTR.N">PLTR.N</a>&nbsp;and workplace software maker Asana Inc&nbsp;<a href="https://www.reuters.com/companies/ASAN.N">ASAN.N</a>&nbsp;are set to debut on the U.S. stock market on Wednesday bypassing an initial public offering (IPO).



The last direct listing was workplace messaging platform Slack Technologies Inc&#8217;s&nbsp;<a href="https://www.reuters.com/companies/WORK.N">WORK.N</a>&nbsp;debut in 2019, which came a year after music-streaming service Spotify Technology SA&nbsp;<a href="https://www.reuters.com/companies/SPOT.N">SPOT.N</a>&nbsp;went public without an IPO.



It is a seminal moment for some investors and corporate executives who have been pushing to shed investment banks as their middlemen. For years, they have criticized IPOs as chummy deals that allowed bankers to allocate the most shares to their top clients.



“Ever since the IPO process has existed, entrepreneurs and their investors have believed that bankers have sub-optimized and taken too much for themselves,” said Ben Narasin, a partner at U.S. venture capital firm New Enterprise Associates.



“If Palantir and Asana are successful, which they should be, more and more companies will return to looking seriously at direct listings,” Narasin added.



IPOs have been on a tear this year, as companies rode the stock market rally that followed the coronavirus-induced slump. Companies have launched almost $50 billion in U.S. IPOs so far in 2020, excluding special purpose acquisition company (SPAC) IPOs. This has already outpaced the haul for all of 2019 and is on track to be the busiest since 2014 and second biggest since 2000.







In 2020, the price of a newly listed company’s shares has risen by an average of 38% on the first day of trading, according to IPOScoop data and Reuters calculations.



This has fueled renewed criticism among investors snubbed by the investment banks underwriting the IPOs, as well as suspicion among some companies that bankers are leaving money on the table in their IPO to help create a first-day trading “pop”.



Phil Hellmuth, an angel tech investor and poker player with over $20 million in career winnings, said in an interview that he tried to buy $500,000 worth of shares in data warehouse company Snowflake Inc&nbsp;<a href="https://www.reuters.com/companies/SNOW.N">SNOW.N</a>&nbsp;during its $3.36 billion IPO earlier this month.



Hellmuth knocked on the door of four hedge funds, acquaintances in Silicon Valley, mutual fund Fidelity, and one of the banks underwriting the Snowflake listing, but had no success getting into what has been this year’s largest IPO. As a result, he missed out when Snowflake’s shares more than doubled in its debut.



“If I can’t get a piece, the average investor has no chance to get a piece,” said Hellmuth.



Snowflake CEO Frank Slootman told Reuters he had no regrets with how the company’s IPO went.Slideshow&nbsp;( 2 images )



Fidelity said it was not possible to ascertain why an investor was unable to participate in an IPO without knowing the customer’s details.



In a direct listing, no shares are sold in advance, as is the case with IPOs. The company’s share price in its market debut is determined by orders coming into the stock exchange.



The downside is that the companies involved cannot raise money, though both NYSE and Nasdaq have requested U.S. regulators allow them to change their rules to allow companies to sell new stock in a direct listing.



This inability to raise funds has so far curbed the enthusiasm for direct listings of many cash-hungry companies, especially during the economic downturn brought about by the pandemic.



“I think we were going to see more direct listings this year but for COVID-19. Many companies that were thinking about a direct listing switched to an IPO for the capital raise aspect,” said Ran Ben-Tzur, a capital markets lawyer at Fenwick &amp; West LLP.







<h2 class="wp-block-heading">NO MONEY RAISED</h2>



Palantir and Asana are two technology companies defying the coronavirus downturn.



Palantir will also be the first direct listing where the majority of shares will be restricted from being sold until after the company reports 2020 earnings early next year. Such lock-up agreements are standard in IPOs but have so far been absent from direct listings and can result in a company achieving a higher valuation.



“Banks have done the math on the impact of not having lock-up agreements in a traditional IPO and believe that without a lock-up structure a company will not able to raise at as high of a valuation because there’s no scarcity of shares,” Ben-Tzur said.



For Asana, whose investors will not be subject to any lock-up restrictions, one reason the company was attracted to a direct listing was the desire for a fairer way to price the shares, according to a person familiar with the matter.



Asana declined to comment.



Kevin Hartz, who took the event-ticketing company he co-founded, Eventbrite Inc&nbsp;<a href="https://www.reuters.com/companies/EB.N">EB.N</a>, public through an IPO two years ago, said in an interview that more companies are considering alternative ways to go public including direct listings in search of a better price-discovery process.







“It’s still a very broken process for new issuances like the Snowflake IPO. By underpricing, this brought significant dilution. That is not an optimal outcome for the company nor existing investors,” said Hartz.



Both Palantir and Asana hired banks to provide financial advice for their direct listings. On the direct listings done to date, a smaller group of banks have shared a smaller pot of fees.



For its 2019 listing, Slack, which was worth around $23 billion when it started trading, expected to pay $22.1 million in fees to three financial advisers. By comparison, 26 banks earned $85 million in commissions from the 2017 IPO of Snap Inc&nbsp;<a href="https://www.reuters.com/companies/SNAP.N">SNAP.N</a>, which was worth about $31 billion at the time of its public listing.

396×276(11)

Wall Street’s IPO enemies ready one-two punch

BOSTON (Reuters) &#8211; Top asset managers Vanguard Group Inc and BlackRock Inc&nbsp;<a href="https://www.reuters.com/companies/BLK.N">BLK.N</a>&nbsp;on Thursday introduced new exchange-traded funds that exclude oil companies, coal producers and other industries that a growing number of investors want to avoid.



The so-called ESG funds use environmental, social or governance criteria to pick investments.



“In our conversations clients continuously bring up the topic,” said Rich Powers, head of ETF product management for Vanguard, the largest mutual fund company with $6.6 trillion under management.



Researcher Morningstar Inc&nbsp;<a href="https://www.reuters.com/companies/MORN.O">MORN.O</a>&nbsp;found flows into such funds reached a record pace this year, taking in $20.9 billion through June, just shy of the annual record of $21.4 billion for all of 2019.



The demand partly reflects the performance of the funds, which has often topped traditional investment products this year. That was despite many funds being held back by strategies such as not owning high-performing energy stocks, as second-quarter results showed.



The Vanguard ESG U.S. Corporate Bond ETF&nbsp;<a href="https://www.reuters.com/companies/VCEB.O">VCEB.O</a>, the company&#8217;s first fixed income offering in the sector, will track the Bloomberg Barclays MSCI U.S. Corporate Select Index, which excludes oil and gas, alcohol and civilian firearms companies.







Previously the manager launched ESG equity products including the Vanguard ESG US Stock ETF,&nbsp;<a href="https://www.reuters.com/companies/ESGV.Z">ESGV.Z</a>&nbsp;now with about $2 billion in assets.



BlackRock, with $7 trillion in total assets, will offer three ESG stock funds that recreate exposure to S&amp;P indexes of large, mid-cap and small-cap companies.



The ETFs will screen out companies with certain levels of investment in the thermal coal, oil sands or shale energy sectors, BlackRock said.



Reporting by Ross Kerber; Editing by Richard Chang

rig-drilling-drilling-rig-oil

Vanguard, BlackRock add new climate-focused ETFs as demand soars

LONDON/JOHANNESBURG (Reuters) &#8211; Ghana, Africa’s largest gold producer, is planning an up to $500 million listing of its gold royalty fund in London in October, though the deal could still run into political opposition, three sources familiar with the matter told Reuters.



Agyapa Royalties, a government-backed fund that holds equity interests including mining royalties in the state&#8217;s gold assets, has hired Bank of America&nbsp;<a href="https://www.reuters.com/companies/BAC.N">BAC.N</a>&nbsp;and JPMorgan&nbsp;<a href="https://www.reuters.com/companies/JPM.N">JPM.N</a>&nbsp;to pursue an initial public offering (IPO) on the London Stock Exchange this year, the sources said.



Royalties are payments that give the owner the right to receive a percentage of production from a mining operation, or retain a stake in them.



Ghana wants to take advantage of the precious metal’s strong performance this year to raise $400 million-$500 million from the IPO, the sources said. The fund’s shares will also be listed on the Ghanaian Stock Exchange.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="800" height="600" src="https://www.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862.jpg" alt="" class="wp-image-374206" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862.jpg 800w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-300x225.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-768x576.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-696x522.jpg 696w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-600x450.jpg 600w" sizes="auto, (max-width: 800px) 100vw, 800px" /><figcaption>Ghana. Shutterstock </figcaption></figure>



Yet, the listing could be derailed or pushed back because of resistance from Ghana’s main opposition party ahead of a December general election, the sources said.



“It’s genuinely 50-50 at the moment, but if the local politics works out, the deal is ready to go this year,” said one of the sources.



Ghana’s finance ministry was not immediately reachable due to a public holiday. JP Morgan declined to comment while Bank of America did not immediately respond to a request for comment.



If it goes ahead, the listing would benefit from a surge in gold prices as the COVID-19 pandemic pushed investors into safe-haven investments.







While the spot gold price has come off a record high hit in August, it is still up a whopping 27% so far this year at $1,931 an ounce&nbsp;<a href="https://www.reuters.com/quote/XAUUSD">XAU=</a>.



Canadian companies Yamana Gold and Wheaton Precious Metals have both signalled their intention to add a London listing this year.



For London investors, it is an opportunity to increase gold exposure and potentially fill the gap left by South Africa’s Randgold, which delisted in 2018.



The deal would also come at a time when the market for IPOs has come roaring back after a dismal first half of the year, with The Hut Group&nbsp;<a href="https://www.reuters.com/companies/THG.L">THG.L</a>&nbsp;sealing a 5.4 billion pound ($6.99 billion) float last week.

gold-is-money-2430051_1280

Ghana plans $500 million London listing of gold royalty fund: sources

(Reuters) &#8211; The Nasdaq was on track for its worst two-day fall since March on Friday as investors dumped heavyweight technology stocks, while concerns around a patchy economic recovery also hit the S&amp;P 500 and the blue-chip Dow.



The tech-heavy Nasdaq fell as much as 9.9% from Wednesday’s all-time record high and the S&amp;P 500 dipped briefly below its February peak.



Mega-cap companies Apple Inc, Microsoft Inc, Amazon.com Inc and Facebook Inc, were down between 1.9% and 3.6%.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" src="https://www.cnbcafrica.com/wp-content/uploads/2020/07/wall-street-1.jpeg" alt="" class="wp-image-376568" width="703" height="525"/><figcaption>Wall Street, New York</figcaption></figure>



“It’s just position squaring &#8230; not surprising since we’ve seen a pretty sizable run up in the tech space in the last three or four weeks,” said Jack Janasiewicz, portfolio strategist at Natixis Investment Managers in Greater Boston Area.



Losses were more pronounced in the Nasdaq, which have powered the stock market’s stellar recovery from the coronavirus-led crash, climbing as much as 82% from March lows. The benchmark S&amp;P 500 and Dow have surged about 60% from their troughs.



Earlier in the day, the Labor Department’s closely watched employment report showed jobless rate fell to 8.4% from 10.2% in July, steeper than economists’ forecast of 9.8%. Nonfarm payrolls, however, increased less than expected last month.



The data added pressure on the White House and Congress to restart stalled negotiations over the next coronavirus relief package to lift the economy out of the worst recession since the Great Depression.



Technology, communication services and consumer discretionary indexes posted the steepest percentage declines among the major S&amp;P sectors.







Underperforming value stocks including banks and airlines rose between 1.0% and 1.6%. Both the indexes are down more than 30% this year.



“There are segments of the cyclical trade that you might be starting to see some rotation in to, but I don’t think it’s the big picture value-growth trade reversal yet,” Janasiewicz said.



Fund managers warned Thursday’s declines may be a preview of a rocky two months ahead as institutional investors return from summer vacations and refocus on potential economic pitfalls.



The run-up to the Nov. 3 U.S. presidential election is also expected to add to the volatility.



Wall Street’s fear gauge hit a more than 11-week high earlier in the session.



At 12:58 p.m. ET, the Dow Jones Industrial Average was down 303.91 points, or 1.07%, at 27,988.82 and the S&amp;P 500 was down 48.08 points, or 1.39%, at 3,406.98. The Nasdaq Composite was down 261.35 points, or 2.28%, at 11,196.75.



The S&amp;P 500 and Dow were headed for their worst two-day decline since mid-June.



Broadcom Inc gained 3.5% after the Apple Inc supplier forecast fourth-quarter revenue above analysts’ estimates.



Declining issues outnumbered advancers for a 2.26-to-1 ratio on the NYSE and for a 2.76-to-1 ratio on the Nasdaq.



The S&amp;P index recorded no new 52-week highs and one new low, while the Nasdaq recorded 19 new highs and 84 new lows.

Tech rout deepens, Nasdaq set for worst two-day fall since March

(Reuters) &#8211; Tesla Inc (<a href="https://www.reuters.com/companies/TSLA.O">TSLA.O</a>) on Tuesday unveiled its biggest program of new share sales as a public company, seeking to cash in on soaring Wall Street interest in the electric carmaker to raise up to $5 billion that will ease future debt pressures.FILE PHOTO: A Tesla SuperCharger station is seen in Los Angeles, California, U.S., July 9, 2020. REUTERS/Lucy Nicholson



The move comes a day after a 5-for-1 stock split took effect, Tesla’s first since its initial public offering in June 2010, and follows a nearly six-fold increase in the value of its shares this year.



Tuesday’s share sale comes as Tesla seeks to massively expand production of its existing vehicles and build new factories near Berlin, Germany and Austin, Texas. The company also plans to launch new lines of vehicles, including a semi-truck called the Tesla Semi and its futuristic Cybertruck.



Tesla said it plans to use proceeds from the offering to strengthen its balance sheet and for general corporate purposes.



Craig Irwin, a Roth Capital Partners analyst who has the equivalent of a ‘hold’ rating on the stock, on Tuesday said the capital raise did not come as a surprise.



“They will need cash for all the facilities they are building, and new growth initiatives,” Irwin said.



Ten major banks, including Goldman Sachs (<a href="https://www.reuters.com/companies/GS.N">GS.N</a>), Bank of America Securities (<a href="https://www.reuters.com/companies/BAC.N">BAC.N</a>), Citigroup Global Markets (<a href="https://www.reuters.com/companies/C.N">C.N</a>) and Morgan Stanley (<a href="https://www.reuters.com/companies/MS.N">MS.N</a>), will conduct the sale, the electric carmaker said in a filing, giving no deadline for its completion. (<a href="https://bit.ly/3gNy91t">bit.ly/3gNy91t</a>)



David Whiston, an analyst at Morningstar Research, said it remained to be seen how much money Tesla will ultimately raise. The company had $8.6 billion in cash and cash equivalents at the end of June.



“I can understand them taking advantage of the stock’s incredible run, but they don’t need the money right now,” Whiston said.



Tesla in February had announced plans to raise $2 billion in a stock offering.



Tesla shares, which rose about 8% in early premarket trading, retreated to trade about 1% higher on the day after the news.



The company’s high-flying stock has risen another 70% since the split was announced on Aug. 11, and was trading at over $2,000 before the division on Friday.



With a market capitalization now around $465 billion, it became the world’s biggest car company by value in July and has propelled Chief Executive Officer Elon Musk’s personal fortune past $100 billion.



Musk has repeatedly assured investors over the past year that Tesla would not need to raise more money for costly expansion initiatives or to pay down debt.

How Elon Musk Took Tesla To Hell And Back With The Model 3

Tesla launches $5 billion capital raise, tapping in on share surge

JOHANNESBURG (Reuters) &#8211; South African state companies have requested billions of rand in funding from the government to help them weather the impact of the coronavirus crisis, a finance ministry presentation to parliament showed on Tuesday.



Loss-making state companies have long been an Achilles heel for Africa’s most industrialised economy, requiring bailouts that have placed its public finances under huge strain at a time of weak economic growth and helped push its sovereign credit rating to “junk” status.



The South African Post Office had requested 4.9 billion rand ($292.87 million) in support, broadcaster SABC was seeking 1.5 billion and airports company ACSA had applied for an equity injection of 3.5 billion because of the impact of COVID-19, according to the presentation by National Treasury officials.



Ailing power utility Eskom’s financial performance was worse than budgeted for as a result of limited economic activity during the pandemic, and arms firm Denel faced the risk of entering bankruptcy protection or being liquidated, it added.



The companies did not immediately respond to a Reuters request for comment.



Denel, which makes military equipment for South Africa’s armed forces and clients around the world, told Reuters last week that it was not planning to seek new government equity injections despite a liquidity crunch aggravated by the pandemic.



It is unclear how much funding will be issued to the state firms. South Africa’s economy is forecast to contract at least 7% this year because of the coronavirus crisis and its budget deficit could balloon to as much as 16% of GDP in the current fiscal year.



One bright spot was agricultural lender Land Bank. It had resumed interest payments to lenders from Aug 11, the presentation showed, after defaulting earlier this year and being promised a bailout in a June budget.



($1 = 16.7310 rand)

South African state firms request bailouts over COVID-19

JOHANNESBURG (Reuters) &#8211; South African state defence firm Denel is not planning to seek new government equity injections despite a liquidity crunch aggravated by the coronavirus crisis, its interim chief executive told Reuters.



Denel, which makes military equipment for South Africa’s armed forces and clients around the world, is one of several troubled state-owned companies in the country that have been kept afloat by government bailouts in recent years.



It has struggled to pay salaries this year amid export restrictions and declining revenue. Last week the government said Denel made a 1.7 billion rand ($100 million) loss in the 2019/20 financial year.



“At this stage it is not in our plan,” Talib Sadik said in an interview, when asked whether Denel would approach the government for further bailouts. “Our view is that we also need to fix our own house, because what we have is a bit of moral hazard happening.”



Sadik became interim CEO this month after his predecessor Danie du Toit resigned, without giving reasons.



Du Toit had told Reuters in a July interview that Denel’s survival could be at stake if conditions attached to an earlier bailout &#8211; which was earmarked to pay down government-guaranteed debt &#8211; were not eased.



Denel received 1.8 billion rand from the state in 2019 and in this year’s budget was promised another 576 million rand, which it is receiving in instalments.



Sadik said that although Denel was not asking for more money from taxpayers beyond what was promised in this year’s budget, it was talking to the defence ministry about a retainer to help it maintain some capabilities the government considers strategic.



Denel, which makes equipment ranging from armoured vehicles to attack helicopters and missiles, does not need to enter a local form of bankruptcy protection called “business rescue” despite speculation in local media, he said.



State-owned airline South African Airways entered business rescue last year.



Sadik said Denel had started discussions with the Public Investment Corporation and other bondholders about rolling over more than 2.6 billion rand of debt maturing next month.



“In the past we have successfully rolled over,” he said.



Executives are trying to reach a settlement with labour unions about salary payments owed to some staff and hope to conclude one or two equity partnerships by April next year as part of a turnaround strategy.



($1 = 16.9239 rand)

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South Africa’s Denel not planning to seek further bailouts

The lender, in the midst of a turnaround drive when the pandemic struck, had already warned that bad loans would blow a hole in its performance and drag earnings down by up to 97%.



“Given our focus on preserving capital, we do not envisage declaring an ordinary dividend for 2020,” the lender said in its results statement, adding that its capital levels were expected to remain resilient.



The bank’s headline earnings per share &#8211; the main profit measure in South Africa &#8211; stood at 67.7 cents ($0.0396) in the six months to June 30, compared with 920 cents a year earlier.



The impact of a 297% rise in credit impairments was felt across all of its units. Its operations elsewhere in Africa, which were expected to bolster the earnings of South African banks following one of the world’s strictest lockdowns in their home market, posted a 388% rise in credit impairments.



Absa has been on an aggressive drive to grow revenue elsewhere in Africa following its split from Britain’s Barclays in 2017.



Eager to gain back lost ground under its former parent, the bank set itself a series of ambitious targets and ramped up in areas like lending, where it could be more aggressive than had been possible under Barclay’s.



Now it looks set to suffer one of the biggest blows to performance due to bad loans amongst all of South Africa’s major lenders.



Its return on equity &#8211; a key profitability metric &#8211; fell to 1% from 14% previously.



On a normalised basis, which accounts for Absa’s separation from Barclays, headline earnings per share fell by 82%.



($1 = 17.1172 rand)

Absa Reboots Image As 100 Years Of Barclays In Africa Ends

S.Africa’s Absa says full-year dividend unlikely after interim profit tumbles

JOHANNESBURG (Reuters) &#8211; South Africa’s Nedbank Group Ltd said on Thursday that its headline earnings per share (HEPS) for the half year that ended June would fall between 67% and 72% from the same period last year.



HEPS &#8211; the main profit measure for South African companies &#8211; would be between 402 cents and 472 cents, it said.



Nedbank, which is among the top four lenders in the country, will be announcing its half yearly results on Aug. 26.

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S.Africa’s Nedbank says half year profit will fall by over two-thirds

(Reuters) &#8211; Fear is ebbing on Wall Street, with stocks on a bull run in the midst of the global coronavirus pandemic.



The Cboe Volatility Index , known as Wall Street’s “fear gauge,” is near its lowest level since late February and options markets are showing diminishing concerns of a near-term drop in equities.



The S&amp;P 500&#8217;s&nbsp;<a href="https://www.reuters.com/finance/markets/index?symbol=.SPX">.SPX</a>&nbsp;run to fresh highs has come as some of Wall Street&#8217;s biggest banks, including Goldman Sachs, UBS Global Wealth Management and Morgan Stanley, turn more bullish on stocks and are urging clients to remain exposed to equities. The index ended at a record high on Tuesday, confirming a bull market, according to one definition.



Investors may well heed their advice: nearly 80% of fund managers surveyed by BofA Global Research, the highest level in more than a decade, expect the global economy to grow over the next year. The survey also showed falling allocations to cash, another sign of increasing bullishness.



The growing optimism is in contrast to the fear and gloom that prevailed on Wall Street only months ago, after the S&amp;P 500 plunged 34% in just 23 trading days and the economy entered a recession that would turn out to be its worst since the Great Depression.



Although financial pain remains acute for many Americans, monetary support from the Federal Reserve and expectations for advances in fighting the coronavirus pandemic have made investors more confident in betting on the future, said Quincy Krosby, chief market strategist at Prudential Financial.



“You have a market that sees that we’re getting closer and closer to a more normal world,” she said.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" src="https://www.cnbcafrica.com/wp-content/uploads/2020/07/wall-street-1.jpeg" alt="" class="wp-image-376568" width="661" height="494"/></figure>



Options markets are among the areas reflecting fading investor worries. Demand for protection against drops in U.S. equities of 30% or more has fallen as volatility has eased in recent months, said Paul Sandhu, BNP Paribas Asset Management’s head of multi-assets quant solutions in the Asia-Pacific region.



“The fear has definitely lessened over the (past) couple of months,” he said.



Meanwhile, selling of protective put options in individual stocks is up over the past week, said Christopher Murphy, co-head of derivatives strategy at Susquehanna Financial Group. Put sellers profit if the underlying stock does not drop to a specified level.



The put selling suggests investors are less worried about the downside, Murphy said.



In futures markets, net long equity positioning is now at its highest level since early March, with increases in both large-cap and small-cap stocks, Deutsche Bank data showed.



The increasingly bullish positioning dovetails with the messages coming from big Wall Street banks. Goldman Sachs, for instance, raised its year-end target for the S&amp;P 500 earlier this week to 3,600 from 3,000, citing expectations for outsized growth in U.S. corporate earnings and gross domestic product next year.



Stocks have dipped since Tuesday, but several market strategists said they saw the pullback as routine rather than a sign that equities had been overbought.



Yet there are plenty of reasons for investors to be nervous and some remain skeptical of buying near all-time highs.



One concern is the potential of market volatility stemming from delayed or contested results in November&#8217;s U.S. presidential election. The Dow Jones Industrial Average&nbsp;<a href="https://www.reuters.com/finance/markets/index?symbol=.DJI">.DJI</a>&nbsp;fell 5% in two weeks on the heels of a vote recount in the 2000 presidential election, UBS noted.



Other risks include a resurgence of COVID-19 cases, delays in a vaccine or delays by lawmakers in providing more stimulus to the still-ailing economy.



Some of that uncertainty has been reflected in the price of gold, a popular haven that has climbed to record highs this month. Prices recently got an additional boost after Berkshire Hathaway Inc (<a href="https://www.reuters.com/companies/BRKa.N">BRKa.N</a>) disclosed a stake in Barrick Gold Corp (<a href="https://www.reuters.com/companies/ABX.TO">ABX.TO</a>).



Still, some investors believe the prospect of economic recovery now outweighs those risks. Keith Lerner, chief market strategist at Truist/SunTrust Advisory Services, is maintaining an overweight position in U.S. equities.



“We’re not taking anything off the table,” he said. “We’re staying with the primary trend, which is still higher.”

Fear fading on Wall Street as investors learn to love the new bull market

ABUJA/LAGOS (Reuters) &#8211; The World Bank is unlikely to approve a much-needed $1.5 billion for Nigeria in August as planned due to concerns over desired reforms, three sources familiar with the talks told Reuters.



A delay in financing from multilateral lenders could leave Africa’s biggest economy and top oil producer, battered by low crude prices, unable to fully finance a record 10.8 trillion naira ($28.35 billion) budget. The central bank has said Nigeria’s balance of payments gap this year will be $14 billion.



The World Bank, which has said Nigeria could be heading toward its greatest fiscal crisis in 40 years, had aimed to bring the loan to its board for approval this month, but the sources said negotiations over what Nigeria will do to secure it were incomplete.



“They are not convinced about the reforms,” a source close to the government said. All three sources declined to be named due to the sensitivity of the negotiations. The source added that the currency was the core issue.



World Bank loans are often contingent upon reforms. It has not outlined any demands, but said previously that it was “recommending” a more unified, flexible exchange rate. Fuel subsidies and electricity tariffs are also being discussed.



Another banking source said the loan could now not be approved until October.



Nigeria’s finance ministry directed queries to the World Bank. In a statement, the lender said discussions were at&nbsp;an advanced stage, but confirmed that it had not presented the loan to its board.



“Of particular importance are the steps the government is taking to marshal the needed fiscal resources for a pro-poor response to the crisis and undertake the reforms that will help ensure a robust recovery,” the statement said.



Nigeria’s policy of supporting the naira has become more costly since the oil price slide, as it relies on oil for 90% of its foreign exchange. It has devalued the naira twice this year, but the sources said that was not enough for the World Bank, which wanted fuller reform of the naira policy.



Nigeria also said it had eliminated fuel subsidies through a “floating” price cap, but two of the sources said the World Bank felt the mechanism was not sufficiently transparent.



($1 = 381.00 naira)

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Nigeria’s $1.5 bln World Bank loan delayed over reforms -sources

JOHANNESBURG (Reuters) &#8211; South African food producer Tiger Brands has entered into two separate sale agreements for its processed meats units for 428 million rand ($24.68 million), it said on Monday.



Molare Proprietary Limited will buy the abattoir business at Olifantsfontein while the meat processing factories at Germiston, Polokwane and Pretoria will be acquired by Silver Blade Abattoir Proprietary Limited, a wholly-owned subsidiary of Country Bird Holdings.



($1 = 17.3430 rand)

Enerprise_corned_meats

South Africa’s Tiger Brands to sell processed meats units for $24.6 mln

NEW YORK (Reuters) &#8211; Investors are girding their portfolios for market moves ahead of the U.S. presidential vote, as election season kicks into higher gear with the Democratic National Convention in the coming week.



Though elections have loomed large on investors’ radar this year, their influence on markets has taken a backseat to the coronavirus pandemic and unprecedented stimulus from U.S. policymakers.



That may change in coming weeks, investors said. Some are beefing up cash positions or making bets on a flare-up in volatility as they eye a range of outcomes, including the possibility that the contest between President Donald Trump and presumptive Democratic nominee Joe Biden may yield a result that is not immediately certain or likely to be disputed.



“There’s plenty of reasons to believe that the election outcome is going to be drawn out,” said Lamar Villere, a portfolio manager at Villere &amp; Co. “That’s going to show the cracks in a market that’s been priced for perfection.”



Villere’s firm has raised its cash levels to as high as 20% of assets as a hedge against election-induced volatility in a stock market some say has become richly valued &#8211; the S&amp;P 500 has rallied more than 50% from its lows of the year and trades at its highest forward price-to-earnings multiple in around two decades.



Some investors believe the market’s performance over the next few months could point to which candidate will triumph in November.



The incumbent president has tended to win the White House when the S&amp;P 500 index has risen in the three months before the election, data from TD Securities going back to 1930 showed.



That may be bad news for Trump. While the index is up about 3% for this month, August kicks off what has historically been the weakest three-month stretch of the year for equities, where the average historic return stands at about 0%, according to data from BofA Global Research.



At the same time, no incumbent has been awarded a second term in the midst of a recession, TD securities wrote.



Biden leads Trump by 8 percentage points, according to a Reuters/Ipsos poll released Wednesday after Biden had selected U.S. Senator Kamala Harris as his running mate.



A Biden victory &#8211; as well as a possible Democratic sweep of the House and Senate &#8211; could threaten policies championed by Trump and generally favored by Wall Street, including lower corporate tax rates and fewer regulations, analysts said.



“The full implications of a future Biden presidency could unsettle markets in the first instance,” analysts at Oxford Economics said in a recent note.



A proposed corporate tax rate increase to 28% could shave about 5.5% off 2021 S&amp;P 500 earnings, lower capital spending by around $50 billion and lead to a $100 billion decline in stock buybacks, according to J.P.Morgan.



At the same time, a Biden administration would likely move away from Trump’s trade tariffs in Europe and China, helping international and emerging market stocks outperform U.S. equities in the year ahead, said Stuart Katz, chief investment officer of Robertson Stephens Wealth Management.



At least one of Biden’s flagship policies &#8211; a $2 trillion increase in infrastructure spending &#8211; could further weigh on the already weakened U.S. dollar, Oxford Economics said.



A Trump re-election, meanwhile, could allay concerns over higher taxes but spark renewed fears of U.S.-China trade tensions, said Stephen Innes, Chief Global Market Strategist at AxiCorp.



A second term for Trump could also be positive for oil and gas companies which may benefit from a further relaxation of Obama-era regulations, Innes said.



Investors should also prepare for the possibility that the president could cast doubt on the veracity of the vote or pull out of the race altogether, wrote Joseph Amato, CIO of equities at Neuberger Berman, said in a recent note.



Trump escalated fears of a contested election in a late July tweet, suggesting the election be delayed until people can “properly, securely and safely vote.”



“The further behind he is in the polls, the more provocative his decision-making could become,” Amato wrote.

Financial

South Africa’s consumer inflation neared a 50-year low in 2020

Bitcoin breaks above $16,000 for the first time since January 2018

Wall Street slides as Mnuchin says stimulus difficult before election

Bank of England asks banks how ready they are for sub-zero rates

Wall Street’s IPO enemies ready one-two punch

Vanguard, BlackRock add new climate-focused ETFs as demand soars

Ghana plans $500 million London listing of gold royalty fund: sources

Tech rout deepens, Nasdaq set for worst two-day fall since March

Tesla launches $5 billion capital raise, tapping in on share surge

South African state firms request bailouts over COVID-19

South Africa’s Denel not planning to seek further bailouts

S.Africa’s Absa says full-year dividend unlikely after interim profit tumbles

S.Africa’s Nedbank says half year profit will fall by over two-thirds

Fear fading on Wall Street as investors learn to love the new bull market

Nigeria’s $1.5 bln World Bank loan delayed over reforms -sources

South Africa’s Tiger Brands to sell processed meats units for $24.6 mln

Wall Street Week Ahead: Biden victory? Disputed election? Wall Street prices in November outcomes

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Advertise With Us

Financial

South Africa’s consumer inflation neared a 50-year low in 2020

Bitcoin breaks above $16,000 for the first time since January 2018

Wall Street slides as Mnuchin says stimulus difficult before election

Bank of England asks banks how ready they are for sub-zero rates

Wall Street’s IPO enemies ready one-two punch

Vanguard, BlackRock add new climate-focused ETFs as demand soars

Ghana plans $500 million London listing of gold royalty fund: sources

Tech rout deepens, Nasdaq set for worst two-day fall since March

Tesla launches $5 billion capital raise, tapping in on share surge

South African state firms request bailouts over COVID-19

South Africa’s Denel not planning to seek further bailouts

S.Africa’s Absa says full-year dividend unlikely after interim profit tumbles

S.Africa’s Nedbank says half year profit will fall by over two-thirds

Fear fading on Wall Street as investors learn to love the new bull market

Nigeria’s $1.5 bln World Bank loan delayed over reforms -sources

South Africa’s Tiger Brands to sell processed meats units for $24.6 mln

Wall Street Week Ahead: Biden victory? Disputed election? Wall Street prices in November outcomes

News Tips

Advertise With Us

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