Tag: Covid-19 pandemic

By Londiwe Buthelezi for News24

The number of “ghost town” malls,  ubiquitous throughout South Africa in the past two years, is declining as the demand for retail space strengthens.

According to the FNB Property Broker Survey for the first quarter of 2022, brokers are seeing an increase in demand for retail space to rent.

According to IOL, by the end of 2020 South Africa had seen a 50-70 percent growth in e-commerce, with an increased uptake in online retailing, click-and-collect and video streaming. Furthermore, online spending on goods and products (other than travel and accommodation) doubled in 2020, reflecting a 102 percent increase. By 2021, the industry had witnessed an additional 39 percent growth, with e-commerce accounting for 14 percent of the total card payment sales.

Retail and office space were the hardest hit by Covid-19 lockdowns in SA. As some of their small retail tenants went under, landlords were forced to offer rental discounts to those who could still pay rent. In many instances, they kept annual rental increases lower – if they effected increases at all.

In the FNB survey, the Retail Property Sector moved sharply in the right direction, showing improvement. In the second and third quarters of 2020, 90% of brokers surveyed indicated an increase in vacancy rates. In the first quarter of 2022, 72.8% said they’d seen a decrease in the vacancy rates.

FNB said this is thanks to the normalisation in economic activity that the sector is experiencing this turnaround for the better.

With most lockdown restrictions gone, more companies are thinking about expansion strategies again, and new businesses have also been formed.

“During 2021, we saw a significant recovery in the economy out of the recession of the 2020 lockdown year, and this appears to be continuing into 2022. The result seems to be a proliferation of new smaller businesses emerging, demanding considerable additional space,” wrote FNB in the report.

The bank said that even when asking brokers about their near-term expectations, brokers expect growth in the small business segment, which should continue to boost retail property demand.

However, FNB is cautious about expecting too much from the consumer spending front for now. The bank said even though the FNB-BER Consumer Confidence Index has improved significantly from the extreme low of -33 recorded in the second quarter of 2020, confidence levels are still in the negative territory, which affects expenditure by households.

The index stood at -13 in the first quarter of 2022 and was actually weaker than in the last quarter of 2021 when it stood at -9.

“If one views what a sample of consumers say, it remains a fairly ‘downbeat’ environment it would appear,” wrote FNB.

 

Pandemic boom for Zoom, Netflix falters

By Noel Randewich and Sinéad Carew for Reuters

The collapse of Netflix’s stock on Wednesday after the company reported its first loss of customers in a decade is the latest drastic sign that Wall Street is abandoning streaming services and other pandemic winners and questioning whether they still merit growth stock valuations.

With Netflix shares tumbling 37% after the entertainment heavyweight’s disastrous quarterly report late on Tuesday, its stock market value has now fallen by two thirds from its peak of over $300 billion late last year. read more

Netflix’s market capitalization now stands at about $100 billion, by far the smallest among the so-called FAANG group of stocks – which also includes Facebook-owner Meta Platforms (FB.O), Amazon (AMZN.O), Apple (AAPL.O) and Google-owner Alphabet (GOOGL.O) – that fueled much of Wall Street’s rally in the years prior to the 2020 COVID-19 pandemic.

Facebook-owner Meta Platforms, the next least valuable FAANG company, was worth about $550 billion on Wednesday, with its stock dropping about 7% as investors dumped a range of former stay-at-home winners in the wake of Netflix’s report.

Portfolio managers who focus on high-growth stocks with pricey valuations may reflexively snap up Netflix’ deeply discounted shares following Wednesday’s selloff, putting aside the company’s increasingly difficult challenges with market saturation, password sharing and uncertainty in markets such as Ukraine and Russia, predicted Jim Bianco, president of financial market research firm Bianco Research in Chicago.

“I think it’s going to take some time for them to start to recognize whether or not Disney and Roku (ROKU.O) and Netflix and Hulu and Paramount might not be growth companies any more, that they might have hit their saturation point,” Bianco said.

Netflix’s poor report and stock selloff impacted other streaming-related stocks: Walt Disney (DIS.N) fell 5.8%, Paramount Global (PARA.O)dropped 8.1%, Warner Bros Discovery (WBD.O) fell 5.2% and Roku lost 5.8%.

Walt Disney’s video steaming service pushed Disney’s stock higher immediately after it was unveiled in 2019 and helped the theme park operator weather pandemic-related shutdowns. However, after peaking a year ago, Disney’s stock has steadily lost ground and it is now trading at levels below when Disney+ was unveiled.

Disney’s venture into video streaming lifted its forward price/earnings valuation to levels similar to Netflix’s in 2020, with Disney’s PE briefly reaching as much as 72 at a time when Netflix was valued at 58 times earnings, according to Refinitiv data. But both companies’ PEs have since fallen in tandem, reflecting tougher competition as more streaming services entered the market and the increasing financial burden of producing top tier content to attract and keep customers.

Other companies that benefited during the pandemic have also given up more of their gains in recent months as consumers venture out of their homes and shift their spending habits. Peloton Interactive (PTON.O), Zoom Video Communications (ZM.O) and Pinterest (PINS.N) have all tumbled in recent months and are now down more than 60% over the past 12 months.

While competition is growing across the streaming industry, Truist analyst Matthew Thornton believes Netflix is the most vulnerable because it is the largest and most well-established.

“They’ll feel it more than an emerging challenger,” Thornton said.

While Disney has also been hurt by pulling out of Russia because of the war in Ukraine, Thornton said the impact has already been well telegraphed to investors.

Analysts on average expect Disney to report a 29% year over year jump in revenue to $20.1 billion when it provides its quarterly results on May 11, according to Refinitiv. Analysts expect it to report a March-quarter net profit of $1.8 billion, almost double from a year ago.

Source: MyBroadband

The Covid-19 ministerial advisory committee (MAC) has warned that stricter lockdown measures are needed as a third wave is looming.

News24 reported that the MAC has raised concerns that large gatherings are contributing to the increase in cases in recent weeks.

South Africa has seen a steady increase in Covid-19 cases, with the Free State, Northern Cape, Gauteng, and North West experiencing the start of third waves.

The increase in coronavirus cases started a month ago, when the average daily positives per week was at 1,170.

In May Covid-19 infections increased rapidly, with the average daily positive cases per week increasing to 3,487.

Professor Adrian Puren from the National Institute of Communicable Diseases said many provinces are experiencing a rapid increase in cases.

Puren said some areas are already in the midst of a third wave or have not properly exited a second wave.

Amidst the rise in cases, the National Coronavirus Command Council (NCCC) will meet today to consider limits on large gatherings and an earlier curfew.

According to the News24 report, South Africa could soon be moving to an adjusted level 2 of the lockdown.

Daily cases

This does not come as a surprise. Many experts, including Marc Mendelson, professor of infectious diseases at the University of Cape Town, has called for limits on large gatherings.

Mendelson said South Africa needs to put stricter lockdown measures in place, especially around indoor and mass gatherings, to limit the spread of Covid-19.

He said indoor and mass gatherings are linked to super-spreader events, which South Africa should guard against.

Mendelson called on the government to immediately ban mass gatherings and limit indoor gatherings, including at churches, casinos, and other indoor areas.

Professor Alex van den Heever from the Wits School of Governance also said limiting mass gatherings was the right thing to do.

Winter periods make it difficult to contain the virus, which means that even with restrictions it is challenging to avoid another wave.

If South Africa can address gatherings, however, it will reduce the possibility of a severe third wave.

 

Is a second hard lockdown looming?

Murmurs of a second “hard” lockdown started last week, and grew louder over the weekend after KwaZulu-Natal Premier Sihle Zikalala said at a press conference that “looking at the statistics around us, we can now safely say that we are definitely going back into a hard lockdown – if there is no urgent and drastic change in behaviour.

“Let me make this clear: a second wave of Covid-19 will be stronger and deadlier, not only in terms of taking human lives, it could deal our economy a major blow,” Zikalala said.

Zikalala was talking about the increasing infection rate in KwaZulu-Natal, but he was backed up by statements from Free State health spokesperson Mondli Mvambi, and Mangaung metro spokesperson Qondile Khedama.

Last week, Minister of Health Dr Zweli Mkhize and his wife both tested positive for Covid-19, and he reiterated his call for preventative hygiene measures and social distancing.

As Europe and the US both battle with a second wave, South Africans have started paying closer attention to the number of cases.

Minister Mkize said at a recent press conference that “our epidemiological reports are showing that in the country, over the last seven days there has been an increase of 9.1% in new cases. Similarly, over the last 14 days, there has been an increase of 10.7%.”

He said that in the last seven days, there was a marked increase in the number of new cases in the Western Cape. The province recorded a 42% increase in new infections, and that the government’s terminology defines this significant spike in new cases as a “resurgence”.

However, President Cyril Ramaphosa on Tuesday addressed the rumours during a question-and-answer session between the president and the National Council of Provinces.

He said that rumours that the country will be placed under another hard lockdown were untrue.

“I don’t want people to be alarmed. That is simply not true. If it gets there, I will advise the nation.”

National Treasury now estimates that job losses could be between 690 000 and 1.79-million due to the impact of the Covid-19 pandemic on the South African economy.

The 690 000 job losses are likely in the event of a quick recovery; the larger figure is a worst-case scenario.

The sectors that will see the largest impact are likely to be:

  • Manufacturing;
  • Construction;
  • Trade;
  • Catering and accommodation; and
  • Financial and business services.

Avis Budget Rent-a-Car, part of the Barloworld Group, announced that a total of 978 employees would be affected by retrenchment, according to a Fin24 article. This is nearly half of the employees of the company.

Meanwhile, the Bidvest Group’s shares fell more than 5% on Monday after the diversified services and trading company warned of possible job losses as a result of coronavirus-related disruptions across its operations.

This is in addition to running list of companies in South Africa who have gone into business rescue, or foresee retrenchments and job cuts.

These include:

  • Phumelela Gaming and Leisure (currently in business rescue)
  • Afarak Mogale and Afarak South Africa (currently in business rescue)
  • SAA (currently in business rescue)
  • SA Express (currently in business rescue)
  • Edcon (currently in business rescue)
  • Comair (currently in business rescue)
  • Tiger Brands
  • Cell C
  • Pam Golding
  • Prasa
  • Flight Centre
  • SAB

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