Simon Shares

• Ecsponent (JSE code: ECS) have announced they will default on their March preference share dividends. This is a mess and preference shareholders are in a real bind. If you hold any, contact your lawyer.
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Don't shoot the messenger

Gina Schoeman, South Africa economist for the Citibank Global Economics team.

I attended a S&P Dow Jones Global event on Tuesday where Gina delivered the keynote and here are my notes on what she said. Any errors are mine, not hers.

Gauteng is 35% of SA GDP.

Service delivery protests show strength of democracy.

People are leaving small towns due to lack of services and this erodes tax base, making service delivery even harder.

SONA watch list;

• Cosatu Eskom bailout plan.
• SAA business rescue.
• Public sector wage bill.
• Reforms.
• Cabinet reshuffle.

Watch the World Bank Ease of doing Business survey as good metric for Ramaphosa. We're 84th but where under 50 when Zuma took over. SA union rate is 24% and dropping and will drop further.

Members are aging and youth are unemployed.

• Secret strike ballot.
• Manufacturing is very productive, second only to financial services and this offers an opportunity.

Household debt is 75%, down from 84% in 2010. But the nuance is in the data.

SA population growth is 1.5%. GDP growth has to exceed this for people to be getting richer.

Lack of rental inflation is a big driver of low inflation overall.

No VAT increase in the 2020 budget.

Moody downgrade is very likely, but don't worry about that. Worry about Fitch and Standard & Poor dropping us lower because it is now about the recovery.

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