Headlines

  1. Startup Zapper weighs raising funds at near $1bn value.
  2. Unions sign 7% Eskom wage deal.
  3. Euro slumps to two-decade low, oil tumbles as recession fears intensify.
  4. Exxon profit set to soar again; White House wants more oil.
  5. Currencies: USD/ZAR – R16.56, EUR/ZAR – R17.00, GBP/ZAR – R19.79

 

South Africa

  1. Zapper is considering options to raise capital, including a stake sale, that could value the South African startup at nearly $1 billion, according to people familiar with the matter. The Cape Town-based mobile payments business hired Ernst & Young as advisers on a potential deal, the people said, asking not to be identified because the information is still private. Zapper may also consider a combination with a strategic bidder, they said. Nothing has been concluded yet and it’s the type of deal that will determine the valuation, the people said. “Management is excited by future opportunities, underpinned by an innovative technology roadmap,” a Zapper spokesperson said in response to questions about a potential deal. Interested parties place “us in excellent standing for ongoing and future discussions,” the person said, declining to comment further. African startups attracted a record $5 billion in fundraising rounds last year as investors backed firms trying to fix the continent’s thorniest problems, such as insufficient banking infrastructure. Fintech companies have expanded rapidly over the past few years, with several attaining “unicorn” status with valuations of more than $1 billion. Zapper, started in 2014, operates a mobile payments platform with about 250 000 customers and 65 000 merchants. Its solution enables quick settlements using QR code and URL technology and the use of data insights to award discounts. (Moneyweb, 2022)

 

  1. Labour unions have received the go-ahead from striking Eskom workers to accept the power utility’s offer for a 7% wage increase, costing Eskom an extra R1 billion. The National Union of Metalworkers South Africa (Numsa), National Union of Mineworkers (Num) and Solidarity came to the agreement with Eskom on Tuesday. Both Eskom and Numsa confirmed the signing of the wage deal. The long-awaited agreement comes after the strike of essential service workers at Eskom saw the power utility having no option but to implement Stage 6 load shedding last week, plunging the country into its worst bout of rolling blackouts. Apart from the 7% wage bump, Eskom workers have also won a R400 increase in housing allowance as well as the reinstatement of the conditions of service. “The conditions of service which were unilaterally withdrawn, and which caused so much pain to our members, have been restored. We have also secured an improvement from last year, after Eskom imposed 1.5%.” Eskom has further voiced expectations that workers who still remain absent from their duties will return to work tomorrow. However, speaking at a briefing on Tuesday, Num’s General Secretary Makgabo Mabapa said although the union echoes the call for all members to return to work, he can not confirm when they will do so. “We’ll put our focus on those four power stations – [where workers remain absent]- and plead with the workers that the agreement has been signed, what they’ve been fighting for has been resolved therefore they must go back to work. As to when, I don’t know, I don’t want to commit,” (Moneyweb, 2022)

Global

  1. (Reuters) – The euro sank on Tuesday to its weakest level against the dollar in almost 20 years while oil futures tumbled and bond prices rose as investors sought safety after the latest data fueled fears of a global economic slowdown. Euro zone recession fears were exacerbated by concerns about an energy crisis in Europe and by Tuesday’s data, which showed a sharp slowdown in business growth in June, following Monday’s news of a seasonally adjusted May trade deficit in Germany versus expectations for a surplus. Oil prices suffered their biggest daily drop since March on growing fears of a global recession and lockdowns in China that could slash demand. Bipan Rai, North America head of FX strategy at CIBC Capital Markets in Toronto, cited signs of a looming energy crisis in Europe and economic concerns for the euro’s tumble. “The threat of a recession in the euro zone is a more clear risk now relative to before,” Rai said. The euro dropped by almost 1.8% against the dollar to $1.0236, its weakest level since December 2002. It was last down 1.48% against the dollar. Meanwhile the dollar index, which measures the greenback against a group of major currencies, was up 1.31%, after hitting its highest level since December 2002. The dollar is seen as a safe haven in times of acute economic uncertainty. “The demand for the safety of dollar-based assets is up as expectations for economic activity are significantly lower,” said Shawn Cruz, head trading strategist at TD Ameritrade in Chicago. “If people are concerned there’s going to be a slowdown and put their money in the safest place and cut back on unnecessary spending, it can become a self-fulfilling prophesy.” The Japanese yen weakened 0.15% versus the greenback at 135.91 per dollar, while Sterling was last trading at $1.1959, down 1.21% on the day. (Investing.com, 2021).

 

  1. HOUSTON (Reuters) -Wall Street analysts sharply increased their Exxon Mobil Corp (NYSE:XOM) second-quarter profit estimates on Tuesday, after the largest U.S. oil producer projected it could almost double its first-quarter earnings. Exxon’s preview, released on Friday, signaled strong results ahead by oil companies and refiners and brought renewed criticism from the White House and fresh calls for a windfall profit tax by U.S. lawmakers under pressure from voters feeling pain at the pump. The White House repeated its call for oil companies to “use their record profits to expand refining capacity, increase supply, and most urgently reduce costs for the American people.” “This would be one of the strongest quarters in Exxon’s history,” said Credit Suisse analyst Manav Gupta in a note. The disclosures indicated an operating profit of about $16.8 billion, a historic quarterly peak. Official results are due July 29. Analysts raised their quarterly profit outlook on Exxon to about $4.02 per share from $2.99 a share prior to the Friday securities filing. The filing showed Exxon expects oil and gas operating profits of more than $10 billion, $4.5 billion from producing gasoline and diesel, and about $2 billion from chemicals and motor oils. Exxon, like other U.S. oil companies, has been plowing higher profits into debt reduction and plans to buy back up to $30 billion of its shares. At the same time, spokesperson Casey Norton said Exxon was “investing more than any other U.S. company to grow oil and natural gas production.” Its U.S. shale output will rise by 25% this year and oil processing at its biggest Texas refinery will grow 250,000 bpd in the first half of next year, he said. Exxon shares fell 3% to $84.81 on Tuesday as benchmark oil prices slid $10.73 a barrel on worries a possible global recession could hurt demand. The largest refiner among the U.S. oil majors, Exxon will be a key beneficiary of a tight refined products market, analysts said. (Investing.com, 2021).

Chart of the week

America's Trading Partners (VisualCapitalist.com)