Phuthuma wins some time

“Although the Nigerian Communications Commission (“NCC”) set a deadline for payment of the fine by Monday, 16 November 2015, shareholders are advised that the Nigerian authorities have, without prejudice, agreed that the imposed fine will not be payable until the negotiations have been concluded”

To market to market to buy a fat pig. I was not sure how to approach the message today. My mother’s family all lives in Paris, they are all fine and well, a little shaken up, I guess that is to be expected. These attacks are well co-ordinated, they could have been a lot worse if it wasn’t for some smart security work. I have little to say on the matter other than that humanity always seems to both uplift you and hit you with the same heavy hammer.

The French people showed solidarity last evening, in the memorial events, defying the government’s wishes that they stay indoors. People solve peoples problems, this one is trickier. It is of course not just Paris, it is the bomb attacks in Beirut too, the bomb on board the Russian jetliner. All attacks on civilians designed to strike fear into the hearts of all. It is understandable that in a time like this people are scared, people feel helpless, and angry. And as such people want maximum force to be met with maximum force. You can’t mix religion and violence, at the heart of all religions is respect, humanity and peace.

The number 13 rocks up in each and every month, all 12 have a 13th. An airline, theatre or building might not have the number 13, this is a superstition that is intertwined with religion. The fact that at the last supper there were 13 people at the table, and Jesus was of course betrayed by Judas. I recall as a teenager sitting a teddy as a 14th guest at Christmas dinner. In order of course to not have 13 folks at the dinner table.

The unlucky number 13 may well go back further than that, with the oldest laws known to mankind, the Code of Hammurabi. Something about the 13th law being omitted. Apollo 13 mission (I read that book, wildly scientific, fun though). Why Friday and the 13th of the month are bad together I have no idea, a Norse god by the name of Frigg is supposedly where the day Friday comes from. Frigg is the wife of Odin and is the god of wisdom. Friday, wisdom and unlucky, do those things go together? For Frigg’s sake, now you know where that comes from.

Notch up Friday’s moves as wildly vicious. Not necessarily unlucky though, stocks globally fell over concerns of global growth which fed again into commodity prices. Locally stocks fell sharply, down one and two-thirds of a percent. For the week oil prices have fallen over 6 percent. It was not however the commodity stocks at the head of the losers on Friday, it was the stocks that had moved sharply over the last few weeks, stocks like Capitec and Naspers, PSG and Discovery which were hit hardest. Emerging market selling of the high flyers. Emerging market flavours on Friday were insipid at best, downright stale and un-tasty for a while now I am afraid. All tarred with the same brush.

Over the seas and far away, in New York, New York stocks sank sharply, tech stocks heavily beaten up, the nerds of NASDAQ sank over a percent and a half, the Dow Jones lost nearly one and a fifth percent, the broader market S&P 500 down by 1.12 percent. The stronger Dollar weighed on global emerging market currencies, we are not alone in that regard. All the majors were slammed, I am afraid that there was very little to be excited about, unless of course you were comfortably short the equities market.

Some of the stocks that had decent results recently and had been on a tear all came under serious pressures, I think that at the fringes it may well be very much to do with the pending Fed rate hike. This is not too dissimilar to the August wobble, although everyone seems “fine” with a rate hike in the month of December, the chances continue to improve, ironically with all the good data. The US is seemingly alone in that regard, the Japanese just racked up their second successive quarter of negative economic growth, i.e. not growth. And the technical definition is a recession. That won’t help the mood.

Company corner

MTN have released a SENS this morning updating shareholders on the ongoing negotiations around the fine in Nigeria. The middle part reads as follows:

Shareholders are advised that the Executive Chairman of the Company, Mr Phuthuma Nhleko, has personally met with the Nigerian authorities to continue the ongoing discussions with them regarding the fine of N200,000 for each unregistered subscriber (“the fine”), the equivalent of US$5.2 billion imposed on MTN Nigeria by the Nigerian Communications Commission (“NCC”). These discussions include matters of non-compliance and the remedial measures that may have to be adopted to address this.

Although the Nigerian Communications Commission (“NCC”) set a deadline for payment of the fine by Monday, 16 November 2015, shareholders are advised that the Nigerian authorities have, without prejudice, agreed that the imposed fine will not be payable until the negotiations have been concluded.

You can read into that however you want. One, you can say that the delay means that there could well be a lower fine instituted on the company, as the negotiations are ongoing. Two, you could read into this that the Nigerian authorities are standing firm, and MTN are scrambling for more time. I was taken to task by some fellow on Twitter who obviously thought that my objections to the Nigerian fine as being overreaching, heavy handed and downright dumb for long term investors was one sided, pointing out that the BP fine was taken in its stride.

I was then feeling a little vindicated and almost fed the trolls when I saw this Bloomberg story: MTN Suffered ‘Shake Down’ by Nigeria Regulator, Wells Fargo Says, in which the fund manager is quoted as saying “MTN Group Ltd. has been the victim of a “shakedown” by Nigerian regulators” and (t)he fine “is outrageous by any rational stretch of punishing the company”. Exactly. And, wait for it, the point I was trying to make all along this has “seriously negative investment implications” for the country. Whilst I agree that all companies must abide by all the rules of the lay of the land, it is possibly more than a little dumb to cook, hang, draw and quarter the golden goose.

There are signs that the powers that be are thawing a little, the vice president was making noises about how important telecommunications were to taking the economy away from the reliance on oil revenues. Agreed. Time to make all companies more successful and collect more revenues for infrastructural development, that will facilitate the way forward. I am sure that many entrepreneurs in Nigeria wish for all of the above. We continue to watch, we continue to advise shareholders to do nothing with the shares until we have something concrete.

Linkfest, lap it up

It has been a while since I have seen someone say that we need to return to the gold standard and given that the FED is going to raise rates, it won’t be coming up much. Many people on the street still think that money needs to be linked to something like gold. Money is just a way to speed up trade and make the exchange of goods ands services easier, the result is that linking it to something just makes money inefficient and ends up damaging the economy – Why No One Should Support the Gold Standard

It is always interesting to see how human biases have a huge impact on the decisions we make. Most of the time we do not realise that we are doing it – What Interest Rates Can Teach Us About Behavioural Biases

Home again, home again, jiggety-jog. The G20 met in Ankara in Turkey over the weekend, pledging to target the IS money sources, black market oil. Who buys the oil? Who then sells the arms? I guess those are fair questions. Markets are understandably lower across Asia and called lower across Europe too. As well as US futures, we should start lower here to begin with.

Sent to you by Sasha and Michael on behalf of team Vestact.

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