| Tuesday 12 October 2021 Good morning Voornaam,
Remember the "transitory inflation" that the US Fed has been talking about? With oil now trading well above $80 a barrel and the knock-on effect on any goods that need to be moved around (like food), it's not looking quite so transitory anymore.
After a big miss for September US jobs numbers vs. estimates, the Fed will feel empowered to continue printing money. Some form of tapering must come, but employment is the primary goal while governments use inflation as a tool to make unsustainable debt problems go away.
This isn't good news for consumers in countries like South Africa. Our inflationary pressures are typically driven by input costs (like oil) rather than rampant consumer spending. This puts government in a difficult position in terms of interest rate and other decisions.
The ruling party also won't like the fact that fuel price hikes and load shedding will provide the backdrop to the municipal elections on 1 November 2021. We are in for an interesting few weeks as a country.
On the plus side, provided you don't do too much mileage, this might be the time to pick up that bargain V8 you've always wanted to drive. You can hedge it out by owning Sasol shares, which are up nearly 40% in the past 6 months.
Jokes aside, the truth of it is that we need consumers to spend in our tourism sector this December. It doesn't really help our economy if all the money goes into putting fuel in our cars.
In company news, Blue Label Telecoms renewed its cautionary announcement. That was enough to send the share price nearly 5% higher, even though the market doesn't know yet why the company is trading under cautionary.
RFG Holdings (which many of you will know as Rho des) has concluded its acquisition of the frozen foods business from Pioneer Foods. The Competition Commission included public interest conditions that are acceptable to both parties, which is good to see.
RMB Holdings, which is now just a property holding company after several unbundlings in the broader RMB stable, has received a formal approach from Brightbridge Real Estate to acquire most of the property assets. This would not include the Integer Properties portfolio. The proposed deal value is R1.75 billion and does not constitute a firm intention to make an offer at this stage. RMB Holdings' share price closed around 6% down on the day.
Today's feature articles look at a pair of potential delistings in the small-cap space.
Alaris Holding s is the subject of a firm intention announcement by an interesting consortium of investors, which includes Mauritian-listed Tadvest Limited.
CSG is only at non-binding indicative offer stage, with African Rainbow Capital sniffing around the company at an indicative offer price of 35 cents per share.
The JSE's revolving exit door continues. Unfortunately, there isn't much of a queue of companies waiting to enter the market. This situation is concerning for enthusiasts of small- and mid-cap companies on the JSE. On the plus side, Capital Appreciation Limited released a promising trading statement.
With all this corporate activity on the market, make sure you get up to speed on cash vs. share offers by listening to the latest episode of Magic Markets. It will help you make sense of SENS.
Finally, some very sad news from us. Allan Greenblo, whose work you became familiar with through his articles in Today's Trustee that we regularly published in InceConnect, has sadly passed away. Alec Hogg wrote a lovely tribute in Biznews whic h we have permission to republish today.
Alban Atkinson, Managing Director of Ince, wished to share the following words about Allan:
"I first met Allan when he was MD of BDFM in the mid 90's and Ince was an advertising client. I spent many hours with Allan over the following 25 or so years. I was there when he launched Today's Trustee, a publication with a purpose to ensure a fairer society. He was a true and loyal South African who always sought the truth and never flinched when faced with those who challenged this truth. I will miss our times together; they were precious. To Riana and family, may the memories of a man of honour help to ease the pain."
With Allan's family in our thoughts, I wish you a productive Tuesday.
The Finance Ghost
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