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South Africa’s Gigaba Says He Won’t Risk State Pensions



Malusi Gigaba
  • South Africa’s Gigaba Says He Won’t Risk State Pensions

South African Finance Minister Malusi Gigaba said he won’t ask Africa’s biggest money manager to provide funds to bail out state-owned companies that will put the pensions of government workers at risk.

“There is no attempt to dip into pensions for reasons that are unscrupulous,” Gigaba told reporters in Pretoria on Tuesday after a meeting with the board of the Public Investment Corp. The event was scheduled after media reports said that the National Treasury is seeking to use PIC funds to put into struggling government entities such as South African Airways.

The Treasury is in talks with the PIC about buying part of its 39 percent stake in phone company Telkom SA SOC Ltd., and the discussions are ongoing, Director General Dondo Mogajane said at the same event. The government knows that the PIC won’t take the entire stake, which is worth about 11.4 billion rand ($852 million), he said.

Gigaba met with the PIC after the Johannesburg-based Sunday Times quoted Chief Executive Officer Daniel Matjila as saying there’s a plan to remove him after he denied a request from SAA for a 6-billion-rand loan. Speaking in Pretoria, Matjila said he disputed that report, while PIC Chairman and Deputy Finance Minister Sfiso Buthelezi said the CEO had the board’s support.

Bloomberg News reported Friday that the Treasury is seeking as much as 100 billion rand from the money manager. The finance minister reiterated a Monday statement that the ministry hadn’t asked for that amount.

The Pretoria-based PIC has almost 1.9 trillion rand in assets and handles pension funds for South African state workers, including nurses and teachers. As well as cash for SAA, the government needs funds for utility Eskom Holdings SOC Ltd., oil company PetroSA and defense firm Denel SOC Ltd., Bloomberg News reported. A precedent for the PIC to help out came in 2015, when the money manager bought the state’s 25 billion-rand stake in wireless carrier Vodacom Group Ltd. to raise funds for Eskom.

The Treasury is in talks about how to fund SAA and will present some options to cabinet on Wednesday, Mogajane said. It’s still in discussions with Citigroup Inc. after the U.S. lender refused to extend the repayment period of a 1.5 billion rand loan. The PIC has done due diligence on the airline but the carrier fell short of the money manager’s investment criteria, Matjila said.

The CEO cut short a trip to the U.S. two weeks ago to respond to an allegation he used PIC funds to finance a personal project related to someone he is allegedly in a relationship with. The board accepted Matjila’s explanation and said it retains confidence in his ability and integrity. Buthelezi said the board had a duty to look into the allegations and there was no intention to remove him.

The former maths professor has been at the helm since late 2014 and was previously the chief investment officer.

The PIC has holdings equivalent to about 13 percent of the market value of companies that trade on the Johannesburg Stock Exchange.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Oil Prices News: Oil Gains Following Drops in US Crude Inventories



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Oil Prices Gain Following Drops in US Crude Inventories and OPEC High Compliance Level

Global oil prices extended their 2 percent gains on Thursday after data showed U.S crude oil inventories declined last week.

The price of Brent crude oil, against which Nigerian oil is measured, gained 0.2 percent or 7 cents to $43.39 a barrel as at 12:10 pm Nigerian time. While the U.S. West Texas Intermediate (WTI) crude appreciated by 8 cent or 0.2 percent to $41.12 barrels.

Oil prices extended their three days gain after the American Petroleum Institute said the U.S crude inventories declined by 5.4 million barrels in the week ended October 9.

The report released after the market closed on Wednesday revealed that distillate stockpiles, which include diesel and heating oil, declined by 3.9 million barrels. Those stated drawdowns almost double analysts’ projections for the week.

Much of the fall is due to the effects of Hurricane Delta shuttering U.S. production in the Gulf of Mexico, and as such, will be a transitory effect,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“Therefore, I am not getting too excited that a turn of direction is upon markets, although both contracts are approaching important technical resistance regions.”

Also, the report that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, referred to as OPEC+ attained 102 percent compliance level with their oil production cuts agreements bolstered global oil outlook. Suggesting that demands for the commodity are likely not growing and could drag down prices in few weeks, especially when one factor in the reopening of Libya’s Sharara oil field, workers returning to operation in Norway and the Gulf of Mexico.

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Oil Prices Gain on Tuesday Despite Expected Surge in Global Oil Supplies




Oil Prices Rise Despite Expected Surge in Global Oil Supplies

Oil prices gained on Tuesday despite Libya opening Sharara oil field for production, labour in Norway reaching an agreement with oil firms to return back to work and oil workers in the U.S returning to the Gulf of Mexico region after the Hurrican Delta.

Brent crude oil, against which Nigerian oil price is measured, gained 1.77 percent to $42.46 per barrel as at 11:15 am Nigerian time on Tuesday.

While the US West Texas Intermediate (WTI) crude oil gained 2 percent to close at $40.22 per barrel.

The improvement in prices was after oil prices plunged as much as 3 percent on Monday following a resolution reached by Libyan rebels and government to commence oil production at the nation’s largest oil field, Sharara Oil Field.

This coupled with labour agreement with oil firms in Norway was expected to boost global oil supplies and eventually weighed on prices and disrupt OPEC+ production cuts strategy.

However, prices surged after Nancy Pelosi said she would commence talks on $1.8 trillion stimulus package following President Trump’s return to the White House after he was rushed to hospital following a positive COVID-19 test.

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Joe Biden Win Could Boost Oil Prices, Says Goldman Sachs



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Oil Prices to Surge Once Joe Biden Wins -Goldman Sachs

Goldman Sachs, one of the world’s largest investment banks, has said Joe Biden win could boost global oil prices despite weak global economic outlook and COVID-19 negative impacts on the world’s growth.

The investment bank, however, remains bullish on both oil and gas prices regardless of the election outcome in November.

The bank sees oil and gas demand rising enough in 2021 to supersede election results but explained that Biden win could bolster prices by making production more expensive and more regulated for producers in the U.S.

In a note written by the bank’s commodities team on Sunday, it said “We do not expect the upcoming U.S. elections to derail our bullish forecasts for oil and gas prices, with a Blue Wave likely to be in fact a positive catalyst.”

“Headwinds to U.S. oil and gas production would rise further under a Joe Biden administration, even if the candidate has struck a centrist tone.”

Goldman Sachs explained that if incumbent, Trump, is re-elected with pro-oil and gas policies in place that “its impact would likely remain modest at best,” Goldman’s analysts wrote, “given the more powerful shift in investor focus to incorporate ESG metrics and the associated corporate capex re-allocation away from fossil fuels.”

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