COMPANY NEWS IN BRIEF

JPMorgan double upgrades SA to 'overweight' as JSE, rand rally on post-election optimism



JPMorgan, the world's largest bank by market value, has double upgraded SA assets on optimism that the new government of national unity (GNU) was likely the best post-election outcome for the country's economy.



The US banking giant upgraded SA from underweight to overweight in its Central Europe, Middle East and Africa (CEMEA) asset allocation on Tuesday, saying the tie-up between the ANC, DA, IFP and PA could usher in large offshore inflows into SA assets in the near-term. While JPMorgan said its short-term upgrade could continue into the long-term, it cautioned that risks to its assessment were that no Cabinet was in place yet and the GNU structure had not been tried in almost 30 years.



S&P Global Ratings also said on Tuesday that the GNU's nine-point agenda aims to prioritise structural reforms to address basic infrastructure and service delivery shortfalls and weak investments, while gradually narrowing fiscal deficits.



It said this would likely not cause any significant policy shift in SA and was "broadly favourable" for SA's economic and fiscal outlook, though it cautioned the GNU may struggle to achieve both economic growth while maintaining fiscal discipline given the risks of navigating coalition politics.



-FIN24-



Shell to acquire Singaporean LNG firm Pavilion Energy from Temasek



Shell has agreed to buy Singaporean liquefied natural gas (LNG) company Pavilion Energy from global investment company Temasek in a move the oil major said will strengthen its leadership position in LNG, according to statements on Tuesday.

The announcement confirmed a Reuters' report last Thursday saying Singapore's Temasek was finalising the Pavilion Energy sale to Shell in the coming days in a deal worth hundreds of millions of U.S. dollars.



Shell and Temasek did not disclose financial details of the sale in their statements.

The deal will provide Shell, already the world's top LNG trader, with access to gas markets in Europe and Singapore as it aggressively expands its LNG footprint after raking in billions in profits last year.

It includes Pavilion Energy's 6.5 million metric tons per annum (mtpa) of LNG supply contracts from suppliers such as Chevron, BP, and QatarEnergy sourced from U.S. liquefaction facilities such as the Corpus Christi Liquefaction, Freeport LNG and Cameron LNG.



Shell said the acquisition will be absorbed within its cash capital expenditure guidance, which remains unchanged.

"The deal is in excess of the internal rate of return hurdle rate for Shell's integrated gas business, delivering on its 15-25% growth ambition for purchased volumes, relative to 2022," Shell said in its statement.

Shell planned to expand its LNG business by 20% to 30% by 2030, compared with 2022, and this deal is expected to help deliver these targets, it added.



-REUTERS-



Audi, BMW, and Mercedes-Benz under siege in South Africa



Financially strained South Africans are increasingly looking away from premium cars from brands such as Audi, BMW, and Mercedes-Benz, and these manufacturers admit they’re starting to feel the pinch.



This is because South Africans are choosing to avoid luxury cars and instead buy the new wave of Chinese vehicles entering the market.



The total sales of new vehicles in the first quarter of 2024 decreased by 5.6% compared to the same quarter in 2023 and slightly increased by 0.2% compared to the fourth quarter of 2023.



Various industry stakeholders and banks have noted that this decline is due to economic challenges, high interest rates, and escalating fuel costs.



Record load shedding, stagnant salaries, 475 basis point hikes in interest rates, and the overall escalating costs of living have hammered South Africans, even the rich.



DebtBusters reported that in the first quarter of 2024, the debt-to-income ratio for individuals earning over R20,000 per month is 127%, while it is 172% for those earning R35,000 or more.



These ratios are at or near their highest levels. The company expressed concern that unsecured debt levels are 41% higher for individuals earning R35,000 and more.



They stated that this trend is in line with inflation and suggests that without significant salary increases, these consumers are relying on debt to supplement their income.



-BUSINESSTECH-



Toyota shareholders re-elect chairman despite governance concerns



Toyota Chairman Akio Toyoda and nine other members of the automaker's board were re-elected at an annual general meeting on Tuesday, with shareholders shrugging off concerns about governance and certification test scandals.

Two leading proxy advisers had recommended against Toyoda's re-election. But his re-appointment was widely expected given shareholdings in the automaker owned by other Toyota group firms, record business results and his popularity among Japanese retail investors.



That said, any big drop in shareholder support for Toyoda - a figure which will be released on Wednesday - will not only be embarrassing but could spur further action on governance reforms. Analysts have cited an acceleration of efforts to unwind cross-shareholdings as one possible outcome.

Toyoda's approval rating fell to 85% last year from 96% in 2022. Since then, the world's biggest automaker has been bedevilled by a spate of safety and other certification testing violations at group firms including small car maker Daihatsu as well as at its parent company.



Proxy adviser Institutional Shareholder Services (ISS) had taken issue with the way the automaker has dealt with problems.

New York City's public employee pension funds, for example, agreed with that stance and voted against Toyoda.

"Setting a tone at the top is critical," Michael Garland, who oversees corporate governance for the funds, said in an emailed statement.

Glass Lewis, which had recommended that Toyoda not be re-elected for a second year in a row, said that he was responsible for the board's lack of independence and also cited concerns about its strategic shareholdings and return on equity.



-REUTERS-



Boeing CEO to face harsh Senate questions, new whistleblower claims



Boeing CEO Dave Calhoun will face tough questions from U.S. senators on Tuesday over the planemaker's safety culture as well claims from a new whistleblower employee.



"This is a culture that continues to prioritize profits, push limits, and disregard its workers," the panel's chair, Senator Richard Blumenthal, said. "A culture that enables retaliation against those who do not submit to the bottom line. A culture that desperately needs to be repaired."

Blumenthal said a new whistleblower has come forward after a hearing with a previous whistleblower in April. Blumenthal said on Tuesday that Sam Mohawk, a current Boeing quality assurance investigator at its 737 factory in Renton, Washington, recently told the panel he had witnessed systemic disregard for documentation and accountability of nonconforming parts.



Last week, Michael Whitaker, head of the Federal Aviation Administration, said the agency had been "too hands off" in its oversight of Boeing before the January 5 accident. Another senator has also launched a probe into Boeing.

On May 30, Boeing delivered a quality improvement plan to the FAA after Whitaker gave the company 90 days to develop a comprehensive effort to address "systemic quality-control issues." He has barred the company from expanding production of the MAX.

Last week, Boeing told the U.S. Justice Department it did not violate a deferred prosecution agreement after two fatal crashes of 737 MAX airplanes, a source familiar with the matter told Reuters. The DPA had shielded the company from a criminal charge arising from crashes in 2018 and 2019 that killed 346 people.



-REUTERS-