Market Commentary | The week that was
PIC reducing Steinhoff exposure: The Public Investment Corporation (PIC) in South Africa has sold approximately R40 million worth of its stake in Steinhoff International Holdings. The Public Investment Corporation, which manages public sector funds, sold half its stake in the troubled retail business. They held 9.91% of Steinhoff, approximately 423 million shares, since December 2017, which has now declined to 4.22%.
Despite Steinhoff International Holdings' share price collapse, the Public Investment Corporation held its stake in the retail group. A proposed restructuring plan, in which creditors would receive 80% of a new unlisted holding company while existing shareholders would receive only 20%, triggered this. The Shareholders received a warning that voting against the proposal would result in them receiving nothing, leading to creditors owning 100% of the company.
The Public Investment Corporation's decision to divest a significant portion of its investment in the Steinhoff company aims to reduce its exposure to Steinhoff and mitigate potential losses. A decision that indicates efforts to manage their investment portfolio and protect the interests of their stakeholders.
South Africa’s air capacity has risen: Department of Tourism in South Africa indicates a positive trend in the country's air travel industry. Minister Patricia De Lille announced that there has been a 56% increase in air capacity during the first quarter of 2023 compared to the previous year. The growth is reflective of the introduction of 23 new routes in addition to 1.8 million seats.
Furthermore, South African Airways' expansion into various African markets has contributed to the country's attractiveness as a destination.
Minister De Lille also highlighted the increased supply of seats from the Americas, which has doubled in the first quarter of 2023, surpassing 2019 levels.
The Middle East has fully recovered in outbound travel, and Europe has introduced five new airlines and routes to South Africa.
Overall, while the South African air travel industry has experienced positive growth in air capacity and new routes, challenges remain regarding ticket prices and cost concerns. Serious efforts are made to address these issues and leverage emerging technologies to enhance the industry's overall performance
Amazon is focusing on using AI: Amazon is prioritizing the use of artificial intelligence (AI) to enhance its delivery services. The company aims to leverage AI to improve logistics and transportation, ultimately speeding up the process of getting products to customers. Utilizing AI technology, Amazon intends to optimize route planning, enhance package tracking, and increase overall efficiency in its delivery operations. The focus on AI reflects Amazon's ongoing commitment to improving customer experience and ensuring swift order fulfillment.
Markets: The South African Rand fell to a record low of 19.3 per USD on May 12th before trimming losses back to the 19.1 mark, as diplomatic issues and the ongoing power crisis magnified the current flight away from risky foreign exchange. The Rand was trading at R19.04/$, R20.71/€, and R23.77/£. Brent crude is trading at $70.13 a barrel
Looking ahead: It is expected that there will be significant interest in any further diplomatic developments between the United States and South Africa, including the potential impact on local financial markets throughout the week. Stats SA is expected to release the internal trade data for March on Wednesday or Thursday.